Welsh Government consultation on the Sustainable Farming Scheme: Keeping farmers farming

Welsh Government published the final consultation on the Sustainable Farming Scheme (SFS) on the 14th December. The consultation lasts for 12 weeks with the deadline for responses on the 7th March 2024. The document provides substantially more detail than previous consultations and it is the final formal opportunity for individual businesses and stakeholders to shape the details of the final scheme.

CLA Cymru will be engaging with our committees and wider membership throughout January and February with a number of formal and informal meetings. It is of paramount importance that as many individuals as possible respond to the consultation and we will be providing a template with key points to members to use as they so wish. Links to the consultation and impact assessments can be found using the link below.

This document provides an overview of the main consultation document to assist you in understanding what Welsh Government are proposing. We would encourage you to also look at the Welsh Government document and if you wish to discuss anything to do with the SFS and consultation process please get in touch with fraser.mcauley@cla.org.uk.

The SFS will become the main source of support for rural businesses in Wales taking over (in time) from the Basic Payment Scheme (BPS), Glastir contracts, Habitat Wales Scheme and other rural development programmes. Welsh Government aim for the SFS to reward farmers for actions that support the Sustainable Land Management (SLM) objectives as set out in the Agriculture (Wales) Act 2023. These include:

• To produce food in a sustainable manner;
• To mitigate and adapt to climate change;
• To maintain and enhance the resilience of ecosystems and the benefits they provide;
• To conserve and enhance the countryside and cultural resources and promote public access to and engagement with them, and to sustain the Welsh language and promote and facilitate its use.

This chapter outlines the framework of the SFS. We know from previous consultations the scheme will have three layers of actions. The universal layer of actions that all scheme applicants must undertake, optional actions that are tailored towards particular farm types or management regimes, and finally collaborative actions, offering the opportunity to work across larger scales to deliver specific outcomes.

The SFS will start in 2025 with a transition period running from that date until 2029. The universal actions will be required from the beginning with the optional and collaborative coming in during the transition period.

Universal Actions

Everyone who enters the scheme will have to undertake the universal actions with a few exceptions (for example arable farmers not undertaking livestock actions). The section on universal actions outlines the how they contribute to towards the sustainable land management outcomes using specific small logos set out on page 14 of the document. It also includes two of the most controversial rules-mandatory 10% areas of woodland and habitat. For reference the sustainable land management outcomes are:

• Encouraging production of food in an environmentally sustainable manner;
• Improving the resilience of agricultural businesses;
• Reducing emissions of greenhouse gases;
• Maintaining and enhancing the resilience of ecosystems;
• Improving air quality;
• Maintaining and enhancing public access to and engagement with the countryside and the historic environment;
• Mitigating flood and drought risks;
• Helping rural communities to thrive and strengthening links between agricultural businesses and their communities;
• Sustaining the Welsh language and promoting and facilitating its use;
• Maximising carbon sequestration and storage;
• Conserving and enhancing landscapes and the historic environment;
• Improving water quality;
• Achieving and promoting high standards of animal health and welfare;
• Maximising resource efficiency.

Universal Action 1: Benchmarking

This will require you to complete an annual measuring and monitoring self-assessment to optimise business and environmental performance. This will need to be completed by the end of the first year and will likely be some form of key performance indicator (KPI) relevant to your farm type. There will be no consequences for having a lower performance than other farms but the results will be used to determine how your business could be improved.

Universal Action 2: Continuous Personal Development

This will require you to build additional skills by completing an annual training cycle. There will be a range of online training modules that will contribute towards improving the profitability of the farm, health and safety and animal health and welfare. Health and Safety training will be the only mandatory training module with the remainders up to the individual business. The training will be available to registered people within the business. A minimum of six modules per year will need to be undertaken with each module taking approximately one hour.

Universal Action 3 Soil Health Planning

This action aims to build healthier soils through testing and soil health planning. You will be required to test 20% of your farm soils (excluding permanent pasture) for potassium, phosphorous, magnesium, pH and soil organic matter. The aim would be for the whole farm to be soil tested over five years. The soil test results will need to be used to develop a soil management plan that can be encompassed within the requirements for the Wales-wide pollution regulations.

Universal Action 4 Multispecies cover crop

This action requires you to protect you to protect soils from erosion and degradation through the establishment of a multispecies cover crop on all land which is uncropped over winter. Bare land over winter can result in substantial soil erosion over the winter period. By sowing a cover crop on any land that is bare for longer than 6 weeks post-harvest the effect of adverse weather conditions on your soils will be minimised. The cover crop must be at least two species and cannot be just grasses or grass and clover. To evidence compliance with this universal action, you must provide receipts of seeds and records of sowing dates in addition to how you will terminate the cover crop.

Universal Action 5 Integrated pest management

This action requires you to complete an annual assessment of plant protection products used, and alternative methods employed to reduce chemical usage. Integrated pest management (IPM) is a holistic approach to managing pests on your farms. It includes strategic use of plant protection products and alternative management techniques such as wide crop rotations and use of wildlife habitats around fields to maximise the presence of natural predators to pests. You will be required to record how you have used a IPM routine to combat potential pests on your holding.

Universal Action 6 Managing heavily modified peatland

This action requires you to actively manage any modified peatlands to protect carbon stocks on your holding. Welsh Government state peatlands cover only 3-4% of Wales yet store 20-25% of all soil carbon. They are therefore proposing to restrict a number of actions to prevent damaging this vital habitat ranging from restricting lime use, minimal organic and inorganic fertiliser use, overgrazing and minimising earth moving activities.

Scheme Rule

At least 10% of your holding must be managed for habitat alongside the production of food. Using existing mapping systems, Welsh Government will determine what habitats exist on your farm focussing on habitats at a field scale. Wooded habitats will be eligible for the 10% habitat requirement with the possibility of the tree canopy qualifying for the 10% woodland cover requirement. This flexibility for wooded areas contributing to both 10% requirements should allow more holdings to meet these requirements and therefore enter the scheme.

Universal Action 7 Habitat Maintenance Universal Action

This action requires you to maintain existing semi-natural habitats to optimise benefits for grazing livestock and wildlife. Welsh Government will map any semi-natural habitats and provide a range of recommendations and restrictions in order to maintain and enhance that particular type of habitat. An example of a habitat would be enclosed, semi-natural dry grassland- grazed pasture.

Universal Action 8 Create temporary habitat on improved land

This action requires you to create additional temporary habitat features on improved land to meet the scheme requirement for a minimum habitat area. If your holding has less than 10% existing habitat, you will be required to create new, temporary features on improved land such as mixed leys or fallow crop margins to encourage biodiversity. You would need to introduce this additional habitat areas by the end of the first year of the scheme.

Universal Action 9 Designated Site Management Plans

This action requires you to have a management plan in place with Natural Resources Wales (NRW) for designated sites in your control. You will be required to have this plan in place before the end of the of 2029 (the end of the transition period). Where you have an existing Section 15 or 16 agreement you will be expected to have an additional plan for when existing agreements expire.

Universal Action 10 Ponds and Scrapes

This action requires you to manage existing ponds and scrapes, or create new scrapes to boost wildlife associated with water features on your farm. Farms 80ha or smaller need to manage at least two ponds and/or scrapes totalling at least 0.1ha. Farms larger than 80ha must manage at least two ponds and /or scrapes totalling at least 0.2ha.

Universal Action 11 Hedgerow Management

This action requires you to develop hedgerows to become thick, dense, stockproof barriers which also provide valuable shelter, and an important habitat for wildlife. Welsh Government have set out a number of requirements for height and width that must be adhered to in order to meet this universal requirement- specifically at least 2m tall and 1.5m wide with a maximum of 5% gaps along each hedgerow’s length.

Universal Action 12 Woodland Maintenance

This action requires you to maintain existing woodlands to optimise benefits for livestock, wildlife and business diversification. There are a number of measurable outcomes set out in the consultation document that must be adhered to. Importantly, under the SFS, trees and wooded areas will not be excluded from payments as they are under the current BPS in recognition of their multiple benefits to the environment and livestock.

Scheme Rule 10 % Tree Cover

Every farm will be required to have at least 10% tree cover by 2030. Existing broadleaf and coniferous woodland. In addition, scattered and individual trees will be included as will orchards and agroforestry and trees in hedgerows. The 10% will not be calculated from the whole holding but only the areas where tree planting is possible- for example hard standing, priority/high quality habitats. Derogations will be available for tenanted land or SSSIs. Welsh Government will work with farmers to determine what land could be plantable with trees if you are under the 10% threshold.

Universal Action 13 Create new woodland and agro-forestry

This requirement requires you to plant additional trees and woodland to meet the minimum requirement of 10% woodland cover. Welsh Government have set a range of options of different tree planting that is acceptable including block granting for timber, agroforestry, shelter belts, air pollution interception barriers, biosecurity barriers, parklands and orchards.

Universal Action 14 Historic environment- maintenance and enhancement

This action requires you to protect important heritage features from further damage to conserve Wales’s distinctive cultural character. Any identified historic or cultural features will need to be managed using specific guideline form Welsh Government.

Universal Action 15 The animal health improvement cycle

This action requires you to work with your vet to establish an ongoing proactive approach to animal health. All keepers of livestock entering the scheme will need to work with their vet to carry out four specific steps of the proposed cycle. These are, measure the health and welfare performance of their stock, plan how these metrics can be improved (mobility scoring, production data for example, implement changes to improve these metrics and finally review each year. Records of all these actions will need to be kept to demonstrate to Welsh Government this requirement has been met.

Universal Action 16 Good animal welfare

This action requires you to complete competency training and carry out lameness and body condition scoring to improve livestock welfare standards. You will be required to complete online training to support you conduct lameness and body condition as an initial step to improve standards on your farm. You will be required to undertake the training in the first year and repeat every five years.

Universal Action 17 Good farm biosecurity

This action requires you to establish biosecurity protocols to reduce the risks of disease entering or leaving your farm. There are a number of risks to our farm through poor farm biosecurity. Welsh Government will incentivise you to introduce a range of measures including having wash stations and disinfectant on entry and exit to your farm, a livestock secure boundary, biosecurity assessments of incoming livestock and a record of biosecurity actions you have taken.

Scheme Eligibility

To be eligible for the scheme for the universal and optional actions you:

• must undertake agricultural or ancillary activities on agriculture land.
• must have at least three hectares of eligible agricultural land in Wales or be able to demonstrate more than 550 standard labour hours, and
• must have exclusive occupation and management control of the land for at least 10 months of the calendar year.

Farmers entering the scheme must have management control of the land for at least 10 months of the year and maintain all universal actions are carried out for 12 months.

The scheme will be delivered using the existing RPW model and although will be multi-annual, an annual declaration model will be used in a similar way to existing schemes. The application dates will be the same as the current BPS, running from March until 15th May. To enter the scheme, you must be registered with RPW online and possess a Customer Reference Number (CRN).

A requirement of entry to the scheme will be a habitat baseline review to determine how much habitat land you currently have to determine whether you will meet the 10% minimum requirement for woodland cover and habitats.

You will also be required to undertake a carbon assessment within the first year of joining the scheme. Welsh Government are inviting views as to the best option for undertaking a carbon assessment to ensure consistency across the sector.

When the scheme begins in 2024 you will be required to determine whether you wish to claim BPS or enter the SFS, you cannot be part of both at the same time.

Universal baseline payment

You will receive a universal baseline payment based on the area of your farm. The total value of this payment will be made up from four separate payment values:

• maintenance of existing woodland- payment value for each hectare of existing woodland that is managed;
• universal woodland creation- payment value for each additional hectare of newly created woodland once planted;
• universal habitat maintenance- payment for each hectare of semi-natural habitat managed, and/or each additional hectare of temporary habitat up to the required 10% once created;
• universal actions- payment value per hectare covering all other universal actions on the total eligible area.

Welsh Government are considering the need for capping of the universal baseline payment as BPS and the Habitat Wales Scheme currently has.

Stability Payment

Welsh Government propose that if you join the Scheme, and received a BPS payment in 2024, you could also receive a Stability Payment, which is additional to the Universal Baseline Payment. You will receive a Stability Payment if the total value of the Universal Baseline Payment in any of the transition years is less than the ‘notional’ BPS payment the farm business would have received. The aim of the stability payment is to encourage as many farms to enter the scheme from the outset particularly while the optional and collaborative layers of the SFS are still nascent. Please refer to page 67 of the consultation document for the full methodology calculation.

This chapter outlines Welsh Government’s proposed approach to transitioning from the current system to the universal and subsequently optional and collaborative actions of the SFS.

Optional Actions

These will be actions that businesses can choose to deliver based on the topography and system employed on your particular holding. These actions will look to build upon the universal actions and the potential options for this layer are outlined in annex 2 of the consultation document.

Collaborative Actions

These actions will provide farmers across larger areas for example catchments to deliver shared actions that deliver against the Sustainable Land Management Objectives. They could include knowledge and transfer activities across local areas or the development of new supply chains.

As previously stated, the universal actions will need to be delivered from 2025 with the optional and collaborative actions introduced between 2025 and 2029 (the end of what Welsh Government is calling the transition period). During this transition period Welsh Government have stated that, subject to budget, they will provide rural development support to assist businesses in meeting the optional and collaborative actions. This could include grants for infrastructure like yard coverings and slurry handling facilities. Farmers undertaking the universal actions are likely to get priority for the later optional and collaborative actions as they are introduced.

As already stated within this summary, from 2025 you will have the option of entering either the SFS or the BPS. Once you have entered the SFS you can not revert back and new applicants to rural support will not have the option of entering the BPS.

Welsh Government intend to phase out the BPS during the transition period (2025-2029). All BPS payments will be reduced by 20% each year with the first cut in 2025 and the last payment being made in 2028, no BPS payment will be made in 2029.

BPS Entitlements

SFS applicants will surrender their BPS entitlements on entry to the SFS and the national reserve will be closed to new applicants- new entrants will be directed to the SFS. There will also be restrictions on BPS transfers except for those who do so with land. Succession and inheritance transfers will also be allowed.

Payment Capping

Welsh Government are also proposing to change the BPS payment capping model to ensure the tapering of BPS during the transition is the same for all BPS claimants. The table on page 74 of the consultation document sets out how this will work.

This section outlines how Welsh Government intends to regulate the new scheme. There are a number of proposals around secondary legislation that will need to be considered from the CLA legal team to determine the impact and our subsequent response.

This chapter discusses the additional documents published alongside the main consultation document that can be found at the link provided earlier.

This chapter outlines how Welsh Government may use farm data going forward and how Welsh Government will report on the progress towards the SLM objectives as set out in the Agriculture (Wales) Act 2023. The proposals in this sector will be analysed before determining the potential impact on CLA members.