In Focus: The agricultural transition in England

An overview of the latest developments relating to England’s agricultural transition, what new schemes are available, advice on what steps to take and how members can benefit from the CLA’s expert advice

The agricultural transition from the EU Common Agricultural Policy (CAP) to new domestic policy has moved from talking and planning to action in England. It is still an emerging situation, but the picture is becoming clearer. Most crucially, the 2021 Basic Payment Scheme (BPS) payments have now arrived, with the first reductions applied. This is the real start of the agricultural transition.

When the UK left the European Union, we brought over all existing legislation, including the EU Common Agricultural Policy. This policy had been in place in different versions for over 40 years but was regularly criticised for being poorly targeted and not doing enough for the environment. Leaving the EU provided an opportunity for the UK governments to rethink agriculture policy and design a new policy without the restrictions of the EU.

Defra’s Agricultural Transition Plan sets out how the new agricultural policy in England will be introduced. The BPS will be phased out over seven years from 2021, along with the gradual introduction of the new Environmental Land Management (ELM) schemes, which include a Sustainable Farming Incentive, Local Nature Recovery Scheme and a Landscape Recovery Scheme. To help the transition, and to support a more productive and sustainable farming sector, Defra has also introduced a funded advice programme (Future Farming Resilience Fund), new grants for equipment and infrastructure (Farming Investment Fund), targeted grants for those farming in protected landscapes (Farming in Protected Landscapes fund) and gradual introduction of an Animal Health and Welfare Pathway. There are also new grants for planting and managing new woodland (England Woodland Creation Offer).

New schemes will be rolled out over the next three years, so what can we expect in the short term?

The cuts to BPS are progressive this year, so the level of cuts will depend on the size of the claim submitted in May. The majority of applicants, who claim less than £30,000, will see a 5% cut in their payment. For those with higher claims, cuts are on an escalating scale, in bands.

• Up to £30,000 = 5% reduction on amount within the band for 2021
• £30,000 - £50,000 = 10% reduction on amount within the band for 2021
• £50,000 - £150,000 = 20% reduction on amount within the band for 2021
• >£150,000 = 25% reduction on amount within the band for 2021

In future years, there will be an additional 15% cut across all bands every year. These are not insignificant cuts, and by 2024 all recipients will be receiving at least 50% less in BPS. There will be no BPS payments after 2027.

In the early part of the transition, BPS reductions are being reinvested in the industry through expanded agri-environment schemes and through new schemes to support the transition. Headline points of the schemes are outlined, with details of where to get more information at the end.

A programme of free business advice available to all BPS recipients. There are currently 19 organisations providing this service across England. The advice ranges from group meetings to one-to-one advice. The current programme will run until March 2022, but a further funding round is expected to follow.

The Farming Investment Fund will be made up of two separate schemes – the Farm Equipment and Technology Fund (FETF) and the Farming Transformation Fund (FTF). The first round of the Farm Equipment and Technology Fund, which launched in November/December 2021, is aimed at farmers and contractors involved in agriculture, horticulture or forestry.

This scheme is available to all farmers and land managers with land in or near National Parks, Areas of Outstanding Natural Beauty and the Broads. The funding, which will last until March 2024, will fund projects for nature recovery, climate mitigation, sustainable farming and opportunities for people to enjoy the area. It is being administered by the individual protected landscapes, so please contact them for more information. The first round of funding closes on 31 January 2022.

For those interested in tree planting, EWCO is worth looking at. It has higher payment rates, and is open to smaller areas of woodland, than previous schemes, and is compatible with registration for carbon credits through the Woodland Carbon Code, which could add a useful additional income.

The SFI is the first part of the new Environmental Land Management (ELM) scheme and will be introduced gradually from 2022, with annual applications. Payments are based on meeting a range ‘standards’ with a choice of levels. In 2022 there will be three standards available – Arable and Horticulture Soils Standard, Grassland Soils Standard and Moorlands and Rough Grazing Standard. Information on the requirements were published by Defra in late 2021, with applications expected to be made in spring 2022.

This scheme is being launched in 2022. The review is a fully funded vet visit for diagnostic tests and bespoke advice on management to improve health and welfare. It will initially be available to BPS recipients with cattle, pigs and sheep.

The Countryside Stewardship Scheme will continue to be available for new applicants and renewals until 2024. There were a record number of applications in 2021 for the newly simplified scheme. Improvements and an upcoming review of payment rates mean it is worth considering, if you are not already in the scheme, as a guaranteed income source for five years. The new application window for schemes starting in January 2023 will be open in 2022.

The Exit Scheme will be available to eligible BPS recipients who wish to leave farming. It will provide a lump sum payment based on the annual BPS claim. It is likely that the total payment will be capped, so it will be limited to smaller farms. It will not be suitable for everyone, but for owner occupiers and tenants considering leaving the industry it might be a useful option to investigate.

A new round of funding for free business advice will be available to all BPS recipients and possibly farmers who have not previously claimed.

There will be future rounds of the Farm Equipment and Technology Fund and the first round of the Farming Transformation Fund in 2022. The latter will support larger investment based around a number of themes including water resource management, adding value to agri-food and improving farm productivity.

The first round of funding for innovation investment was launched in October 2021, targeting new technologies and practices. This included Research Starter Projects, Feasibility Projects and Small R&D Partnership Projects, which have now closed but there will be a new call for Large R&D Partnership Projects in spring 2022. There are also two more funds likely to be launched in 2022 - Farming Futures R&D Fund that will target research on longer-term farming solutions, and a Projects to Accelerate Adoption Fund.

The new ELM schemes will be available in full from 2024. Until then there will be a number of pilot projects and gradual roll out of the schemes. The Sustainable Farming Incentive (SFI) is currently being piloted by around 900 farmers, and more of the scheme will be rolled out in 2022 (see above). The other ELM schemes, Local Nature Recovery (LNR) and Landscape Recovery (LR) will be piloted from 2022.

With the imminent start to cuts in direct payments, it is critical that all BPS recipients start to make plans for the future. The starting point should be an assessment of business profitability without BPS, and to identify the strengths and weaknesses, and opportunities for the future. The Future Farming Resilience Fund has been put in place to help you do exactly that, but other advice is available from a wide range of organisations. The funding available for productivity support, and through the ELM schemes in the future, will be important for many businesses, but you should also look at other options, such as ways to reduce costs, new market opportunities, adding value, diversification or new business structures to maintain profitability.

More information on these schemes can be found here. Key information is available in CLA guidance notes on each scheme available on the website or by contacting the CLA national and regional advisers who are at the end of a phone to help with details of the schemes and can direct you to more information.

The agricultural transition in Wales is under development. The Agriculture (Wales) Bill is due in the Senedd in 2022, and new agricultural policies will be implemented from 2024. In the meantime, current programmes will stay in place while work is undertaken to develop the plans for the new Sustainable Farming Scheme. For more information, please contact CLA Cymru.

The CLA has organised a series of free, in-person events, which will take place over February and March. Each event will provide an overview of the changes in farming policy, tailored discussion on the challenges and new opportunities and the opportunity to talk to specialists on the different options available for your business.

For more information about the events taking place in your region and near you and to book click here