We are going through the largest change to British agriculture since the Agriculture Act 1947, when post war policy aimed to maintain high levels of agricultural production through a system of guaranteed prices negotiated by the Ministry of Agriculture. One thing is for sure we could not now be any further from “guaranteed prices” and producers are in the hands of the retailers.
The reason for providing this post is that we are in a new era of post Brexit farm subsidy; the devolved powers can determine what level and on what basis farmers receive subsidies and support for farming and managing the land, if any at all. In previous years the Basic Payment Scheme (BPS) kept some farmers afloat and we want to ensure that farmers can continue for future generations to farm profitably and sustainably. We will detail what the changes are and why they are happening, what is going to be the new norm and what to expect from these new schemes.
What’s happening? The Agriculture Act 2020 sets out the reduction in direct payments from the BPS, referred to as the agricultural transition plan. This will end in 2027 and it will be replaced with a new system of Environmental Land Management Schemes (ELMS).
In most cases farms throughout England have been able to continue with support of the BPS; however this has started reduce and by 2024 it will almost be half of what farmers have received historically. This will have a large impact on most farm holdings and will result in change.
It is worth considering that other countries have also reduced or eliminated farm subsidies, such as New Zealand. In the 1990s the farm subsidies there were removed and a mass exodus from the industry was expected; however this did not happen. There was a tough transition period for some New Zealand farmers, but surprisingly only 1% of them were unable to adjust to the change. The others increased productivity and efficiencies making them one of the leading countries for exporting dairy products; we now even have a trade deal with them. If you consider the number of dispersal sales here in the last 12 months, some are already preparing for this change and were able to do so whilst receiving excellent prices for livestock and deadstock with strong demand for land rents or sales.
It is worth considering there are significantly more pressures on farmers and agriculture now, with global warming and animal welfare to name a few, but there are still other options available to those looking to generate additional income to replace the farm subsidy that has been so long relied upon.
As part of the Agriculture Act the Rural Payments Agency will be investing money to improve productivity, the environment and animal health and welfare (or so they say).
Sustainable farming incentive (sfi)
The SFI opened in 2022. This is the first arm of ELMS and it will not match the monetary value received by farmers under BPS. It aims to enhance ‘arable’, ‘horticultural’ and ‘improved grassland’ soil health. In comparison farmers received approximately £238 per Ha (£95 per acre) through the BPS; the payments for the SFI can range from £22 per Ha (£9 per acre) to £40 per Ha (£15 per acre). Whilst it is evident the SFI will not replace the income from BPS improving soil health, should improve the productivity and longevity of the land and the crops grown. The uptake so far has been negligible, which hopefully will see an increase in the rates offered.
Countryside stewardship schemes (css)
The CSS has been open since 2015 and replaced the historic ELS and HLS agreements and with all of these schemes there is much paperwork and there are many hoops to jump through. However the CCS has been simplified since its commencement and the payment rates have also been increased to attract more applicants. It is worth noting that 2023 is the last year for applications to commence in 2024 on a five year agreement. There are numerous options available to all systems of farming, and if farms are located in Water Quality High Priority Areas additional funding can be available for capital items. Capital items can be a standalone application or form part of a mid-tier stewardship scheme.
The simplified CSS includes a wildlife offer which is also a five year agreement. A minimum of three options needs to be applied for the various revenue options and it is not competitive. A Mid-tier application allows for both revenue and capital items, which competitive. Those farmers in a countryside stewardship may have the opportunity to leave early to take up other available grants or apply for the SFI as well.
Below are some sample holdings that may be suitable for CSS and the various options that are payable
Dairy farm with a mixture of permanent and temporary grass leys
- CSS code = GS2 – Permanent grassland with very low inputs £132 per Ha (£53 per acre)
- CSS code = GS4 – Legume and herb rich swards £358 per Ha (£144 per acre)
- CSS code = BE3 – Management of hedgerows £9 per 100m for 1 side of a hedge
Arable holding growing winter and spring combinable crops
- CSS code = AB6 – Enhanced over winter stubble £493 per Ha (£200 per acre)
- CSS code = SW4 – 12-24m water course buffer strip on cultivated land £512 per Ha (£207 per acre)
- CSS code = AB9 – Winter bird food £640 Ha (£260 per acre)
All of the above options provide an insight to the potential income per year but the application and annual claim do require time. There are over 150 different options available to choose from including capital items and the maintenance of weatherproof traditional buildings with a payment rate of £4.03 per m2.
Even if the annual income from the CSS is of a similar amount to the historic BPS, there is still additional management time and work involved which ultimately comes at a cost to anyone applying.
In some cases stewardship schemes can be off putting to those renting or purchasing land. If you are proposing to do this soon, it is worth considering the impact the options/ restrictions may have on the farming ability of the land.
Although CSS is not suitable to all farms and the SFI may not be attractive from a monetary point of view, both are worth considering as in some cases land is already being farmed in accordance with the options, thus naturally meeting the requirements: Clearly a win win scenario.
If you are interested in the potential schemes and generating a further income to your farming business, please get in touch.