Launch of the Sustainable Farming Incentive 2022

This week, at the CLA’s Rural Business Conference, Defra announced the next stage of the transition in England from the Common Agriculture Policy (CAP) to a new set of domestic schemes. The focus this week was on the Sustainable Farming Incentive (SFI), the first of the new Environmental Land Management (ELM) schemes to be rolled out at a mass scale to farmers, starting next year. The SFI will pay farmers to undertake sustainable farming practices, and is designed to be the most accessible of the schemes – Defra hope that 70% of farmers will have signed up to the scheme by 2028. You can read more about the Transition and schemes currently available on the CLA Agriculture Transition Hub.

SFI Pilots have already begun, with several hundred farms signing pilot agreements in recent weeks. The full scheme will be available in 2025, alongside the other ELM schemes, Local Nature Recovery (LNR) and Landscape Recovery (LR). Between now and 2025, and in addition to ongoing pilots, the SFI scheme will be introduced in phases. This aims to provide an additional income stream for farmers as BPS cuts start to bite and to help them prepare for a future where environmental management is a focus of Government farming policy.

Next year, farmers who are eligible for BPS will be able to choose from three SFI standards: Arable and Horticultural Soils; Improved Grassland Soils and Moorlands and Rough Grazing. Further standards (such as integrated pest management, agroforestry, woodland and heritage) will be made available in 2023 and 2024. You can read more in the Government’s update.

SFI standards contain a number of actions to be completed and there are three ambition levels: Introductory, Intermediate and Advanced. Flexibility is built in - you can choose which land to enter into which standard, combining them across the farm as appropriate.

The soil standards are available next year only at Introductory and Intermediate level, the Advanced level will follow in 2023. The standards focus on avoiding bare ground over winter and increasing soil organic matter. Testing soil organic matter is also paid for in both the arable and grassland soil standards. The Moorland and Rough Grazing Standard is only available at the Introductory level this year. Moorland managers will be paid to gather data about moorland soil and vegetation, the public goods they are already delivering, and the opportunities to deliver additional public goods through future environmental management. More information about the SFI is available in a new CLA Guidance Note.

In addition to these three standards, the first part of the Animal Health and Welfare Pathway will launch in spring 2022 with an Annual Health and Welfare Review. This will pay for a yearly visit by a vet for livestock keepers of more than 50 pigs, 20 sheep or 10 cattle, who are currently eligible for BPS. The aim is to identify areas where animal health and welfare could be improved.

There is plenty to welcome in the announcement of the new SFI 2022 scheme. The fact that any part of ELM is widely available before 2024 is welcome and follows persistent CLA lobbying on the need for something to counter-balance the cuts to BPS, which started this month. The approach to SFI looks promising – it is flexible and can be adapted to individual farms, and Defra has promised to revolutionise their approach to monitoring, inspections and penalties.

SFI 2022 will be attractive to many farmers, including those who are already engaging in good soil management. Pressure from consumers, supermarkets and Government, not to mention the clear business benefits, mean that most people are already looking at their soil health. For those that are not, the SFI is a good place to start. For those that are, SFI will provide an income for doing so. Given the importance that ELM schemes will play as an income source for businesses in the future, getting a head start this year is well worth considering.

The payment is based on new payment calculation methods, more generous than those used in previous schemes. But because the SFI 2022 standards are not hugely ambitious, the payments, while welcome, are correspondingly low. In the long term, SFI 2022 is not the answer to the loss of BPS income or the long-term health of the sector.

The Annual Health and Welfare Review is a good opportunity for livestock farmers to receive funded advice from a vet. This in turn could unlock future funding or investment for improvements in animal husbandry.

For CLA members for whom SFI 2022 is not suitable, either because they are ineligible or the standards do not fit into their current business, Countryside Stewardship remains an alternative option for environmental management and will open for new applications next year. Countryside Stewardship provides a guaranteed five-year income stream and can be combined with an SFI agreement where the two are compatible.

There are also a number of productivity schemes available for those who want to focus on making the farming side of their business more profitable. More information about these schemes is available on the CLA Agricultural Transition hub.

While the details announced this week give some much-needed clarity about what’s on offer in the next 12 months, the bigger picture of what the future holds for the sector remains cloudy.

There’s a saying in politics that you campaign in poetry then govern in prose. It’s meant to capture the difference between the eye-catching rhetoric needed to win over hearts and minds, and the less exciting work of turning ideas into workable policies.

This phrase comes to mind when thinking about Defra’s latest announcement. The Government’s initial vision of a post-Brexit agricultural policy based on “public money for public goods” gained widespread acclaim, both in the UK and internationally, as an innovative break from traditional agricultural policy. It helps that Michael Gove, then Defra Secretary of State, has something of the poet’s way with words.

The CLA has supported the vision, which echoed our proposals in the Land Management Contract, and we have been closely engaging with Government on moving from a vision to policy design to implementation. This is slow, painstaking work, which must balance the views of farmer and land managers (hundreds of whom have been involved via ELM Test & Trials, workshops and now the SFI Pilot), Government and environmental organisations.

Given the complexity of the Agricultural Transition, with an array of new schemes due to be introduced in coming years and old ones gradually withdrawn, it makes sense that Defra is taking a phased approach, introducing ELM a bit at a time and taking time to test and learn. As I highlighted in a previous blog, there are both risks and opportunities from the coming new policy. In this context, it’s important to remember that SFI 2022 is only a small piece in a much larger jigsaw. Defra needs to keep communicating that bigger picture to farmers and land managers, who need to know what the end goal is.

At the CLA Conference yesterday, the Secretary of State’s speech was followed by a series of presentations from CLA Members on the theme of climate-friendly farming. These inspiring talks showed us how many farmers are adapting their businesses to improve profitability, resilience and sustainability. Ideas included a focus on adding value and selling directly to customers; using longer rotations, minimum tillage and livestock to build soil fertility and deliver wider environmental benefits. Whilst others spoke of the brave and uncertain new world of carbon and environmental markets.

Some of these businesses have had to take a leap of faith when deciding to do something new or different. But the loss of BPS will provide an impetus for many to make that leap. Businesses face the same broad choices they have had since they first heard about the end of direct payments. Improve the profitability of farming; look at options for diversification; and consider how to maximise the delivery of environmental benefits, whether paid for by the Government or private markets.

Progress has been made on supporting farmers with their profitability. Government productivity schemes have been launched and are worth taking advantage of now – the levels of funding for free advice and capital investment are unlikely to remain this high beyond the transition. In the longer term, ensuring farming is profitable will need serious efforts from Government, the supply chain and the land management sector. Henry Dimbleby’s recent National Food Strategy begins to ask and answer some of these bigger questions. But we wait to hear whether Government is taking this on board, especially the all-important issue of ensuring the efforts of UK producers are not undercut by an influx of cheap imports.

For those who are enthusiastic about the ability of land managers to deliver much-needed environmental improvements, whether it is on the front lines of the battle against climate change or contributing to the recovery of nature, the SFI offer for 2022 might appear fairly thin gruel.

Payments by results, a collaboration between land managers, blending public and private sector funding for environmental management and landscape scale projects are all still being considered within ELM schemes. However, we will have to wait until next year for more information about these more ambitious and innovative ideas, many of which will be in the new LNR and LR schemes.

The government must fill in the remaining details of their blueprint as soon as possible, re-confirming their commitment to an ambitious new policy that unleashes the potential of farmers and land managers to play their part in delivering on the Net Zero and ecological agenda. This means using the SFI to incentivise gathering data on environmental baseline, creating long-term and holistic land management plans and encouraging farmers to design their farming system around the climate and environmental benefits they can deliver. With many farmers already doing this and the supply chain moving in the same direction, it’s past time the Government caught up.