Preparing for agricultural change

This summer, the CLA partnered with Strutt & Parker to conduct a survey to capture farmers’ attitude to the challenges facing farming, how they are responding to the new agricultural schemes and how receptive they are to changing land use.

The future of farming survey was carried out around the time of the launch of the first Sustainable Farming Incentive (SFI) standards, but also against the backdrop of high fertiliser prices and difficult supply chains. The results will help the CLA inform government policy development and support its advisory work.

More than 200 respondents took part, of which 198 were landowners and managers in England, forming the core of this analysis. We want to thank those who took the time to respond – it really helps the CLA’s lobbying.

There was a good geographical spread and range of farm types and sizes among respondents. However, 45% of respondents were in arable/horticulture, which is higher than the 38% in national statistics.

Similarly, while 24% of respondents had less than 100ha (250 acres), this is lower than the 75% in national statistics. It is likely that this survey has a higher number of commercial farms in the sample compared to national statistics.

Around 43% of respondents identified the changes in agricultural policy as the biggest challenge facing their farming business in the next three to five years. Volatile input prices and commodity markets were also a concern for almost one third.

Encouragingly, almost 80% had calculated the annual reductions in the Basic Payment Scheme (BPS) over the transition period. This number is a big increase compared to feedback from CLA webinars earlier in 2022. Over 45% have already taken action to prepare for the loss of BPS, while 35% have a plan, albeit often an informal one. That does leave a core of 20% who have not looked a BPS cuts or made a plan.

There was a range of responses to the challenges facing farming, with 56% focusing on increasing the profitability of core agricultural enterprises, 50% looking to diversify into non-agricultural activity and 42% planning to increase land in environmental schemes.

Other options included contract farming, finding off-farm work, or changing the business structure to reduce costs. Around 5% of respondents stated they were planning to leave farming in the next three to five years.

When it comes to building resilience, reducing costs was a key theme with the focus on benchmarking (39%), changing machinery investment (18%), looking at collaboration (9%), and joining a buying group (9%). Other options included changing cropping or livestock, and undertaking technical and management training. Around 34% were considering professional advice, while 14% planned to sell land or property assets.

When it came to entering into the range of agricultural transition schemes available now or in the future, the most popular option was Countryside Stewardship (64%), which is perhaps not surprising given the greater certainty surrounding details of the scheme compared to many others.

Indeed, 25% felt they could not commit to any schemes as they needed more information. This might also be behind the low interest in the Animal Health and Welfare Pathway, expressed by just 20% for those with livestock.

Around 40% of respondents were interested in joining the SFI scheme in the next three years. When questioned about reasons for not entering SFI in 2022, the most common response was that the payment rates were too low (36%), although for others it was more about waiting to see if it was successful, or for more standards to make it worthwhile.

Some had simply not looked at the details yet or were concerned that it was too bureaucratic. Only 2% were not interested at all, so it is more of a case of getting the scheme design and payment rates right, and the CLA will be working with Defra to achieve this.

Farming is going to remain a core activity for all respondents, with 58% not anticipating changing their current proportion of farmed area, while 9% expect to increase the proportion farmed.

The remaining 35% expected to reduce the proportion of farmed land, most commonly by 10%, but a small number were expecting to reduce the farmed area by as much as 50%. Turning to permanent land use change for nature recovery or climate mitigation, 9% were not willing to change any land, and a further 28% were not sure.

Of the remainder, 13% would consider converting up to 5% of land area in the future, 32% a change for 5%-20%, and 15% over 50% of land area. When asked what public goods they would be willing to deliver, around 80% were keen to deliver biodiversity, soil, water quality and sustainable farming with the right scheme and payment rates. It was lower for public access (30%), and other goods such as natural heritage, flood risk, native breeds and improving plant health, which depend on the situation.

There are some clear messages for Defra on specific scheme design, communications and meeting targets.

Most striking is the level of caution expressed about the SFI, with few rushing to join the scheme. Fast-tracking the launch of new SFI standards in early 2023 and publishing payment rates will provide the information that is urgently needed for business planning.

Promoting the experience of those who have already applied could also dispel the myths that the application process is difficult or time consuming. While Defra communications has improved recently, it is striking to note that 25% of respondents felt they needed more information before making decisions. This becomes even more important when the potential bias in the sample towards the larger and more commercial farms is considered.

Farmers and land managers are crucial in helping the government meet its nature and climate targets while maintaining food production.

It is clear that many businesses are looking at increasing environmental land management, with half of respondents willing to make permanent land use changes, but there is still a high degree of uncertainty, and the reaction will depend on the scheme design and payment rates.