Agricultural Transition Plan update: CLA analysis

At the Oxford Farming Conference this week, Defra Secretary Steve Barclay announced a significant update to England’s agricultural policy, particularly the Sustainable Farming Incentive (SFI) and Countryside Stewardship (CS) schemes.

The industry has been eagerly awaiting this announcement for some months, particularly regarding the new actions and payment rates in both schemes. The Defra secretary confirmed funding uplifts and enhanced environmental incentives, along with a substantial amount of additional detail, which includes an overview of the progress that has been made with the transition and sets out future plans.

CLA experts have been analysing the detailed document and what it means for members. The key points in the announcement are as follows:

• There are 50 new and 50 amended actions to be included across the SFI and CS in 2024, with more than 180 actions due to be on offer by the end of 2024. The actions and proposed payment rates can be found in the technical annex.
• Payment rates for existing SFI and CS revenue options have been reviewed, with an average 10% increase in agreement values.
• There are 21 actions that will attract premium payments that deliver additional environmental benefits, such as agroforestry and lowland peat restoration.
• SFI and CS (both Higher and Mid Tier) applications that include the new actions will open later in the year, and not before the summer, with rolling application windows thereafter. The first agreements will start from the autumn.
• Some previous CS Higher Tier only actions have been moved into Mid Tier.
• The Basic Payment Scheme (BPS) eligibility requirement for the SFI will be dropped in summer 2024.
• Defra and the Rural Payments Agency (RPA) are working on a streamlined application system, with a single process for SFI and CS, and an ability to select different duration for different options.

The new range of actions and payments due to be added to the SFI and CS is really encouraging. In theory, this is the full range of available options, though there may be some tweaks in the coming years. The CLA has been working hard with Defra on the detail behind some of these options, which include improvements CLA members have suggested. These improvements have included improving the payment rates and range of options for grassland farmers, improvements to the woodland management offer and a wider range of payment options for access.

That said, the stuttering delivery of the Environmental Land Management (ELM) scheme is a concern, and the CLA continues to raise these issues directly with ministers, Defra officials and the RPA. While the ambition behind this announcement is welcome, the fact that applications will not open before the summer is immensely frustrating.

The delay appears to be due to the need for further work and testing on the application system. There are IT challenges with creating an automated online application service and determining the compatibility between different land management actions. Rolling application windows provide more flexibility, but as we have seen with SFI 2023, also raises questions regarding the interaction agreement start dates and seasonal cropping cycles. The SFI 2023 offer required thorough testing, which began in the summer, with a controlled rollout of the scheme starting in mid-September. We expect that the 2024 offer will require something similar.

The new schemes issue quarterly payments in arrears, meaning that the first payment for the new actions will be issued at the end of 2024 at the very earliest. This could create cash flow issues for members, with BPS payments due to be cut for all claimants by at least 50% compared to their 2020 pre-cut levels.

The CLA has concerns that the programme of reductions in the BPS payments and the rollout of the ELM schemes is now out of sync and will impact the government’s ability to hit its target spending for the agriculture budget in England of £2.4bn average annual spending across a five-year period. Our estimates show that spending for this year needs to be £2.7bn for this target to be met, which is around £450m more than the previous financial year.

Read CLA President Victoria Vyvyan's response to the latest announcement here.

The CLA has shared its frustrations and concerns regarding the delay with ministers and Defra officials. CLA colleagues will maintain pressure on government, Defra and the RPA to accelerate the testing of the application systems and discuss how member cash flow issues can be mitigated.

Members should be aware that while the timeline for the new SFI actions and CS applications in 2024 is uncertain, the actions within the SFI 2023 offer can be applied for now, having re-opened at the start of 2024. Defra has said that it will be possible to add in new actions to live agreements when they become available and at the 12-month stage. Therefore, if you are interested in delivering a selection of the 23 actions on offer through SFI 2023, you may wish to secure a SFI agreement and associated quarterly payments in the short term. Others may choose to wait until later in the year when a single application can be submitted for all options, though there will be cash flow implications for those that delay.