Christopher Monk

Mar, 08 2021 3 min read

The Agriculture Act 2020 is now on the statute book and the four UK territories are working out variations for their own agricultural policies. In England, there is a lot we still do not know but a general direction has been set in the agricultural transition plan, phasing out the Basic Payment Scheme (BPS) from 2021 to 2027. Annual payments are reducing according to size of claim, delinking in 2024 (annual payments whether you farm or not) and some farmers will be able to take their remaining payments as a lump sum in 2022.

Future support is based around the Environmental Land Management Scheme (ELMS) with three component parts.  The broad and shallow, widely available Sustainable Farming Incentive (SFI) is due to start from 2022 and will be open to all BPS recipients. The other two components – ‘local nature recovery’ and ‘landscape recovery’ – are delayed until 2024 and likely to be more successful if you collaborate with neighbours. There is a National Pilot for farmers with ideas and enthusiasm for ELMS in 2021.

Preparation and applications for ELMS will be from farmers, land managers and their advisers and for local/landscape recovery plans there will be contracts between farmers and government with, sadly, no real idea of value or payment at this stage. Countryside Stewardship (CSS) can continue to fill the gap with break clauses and promised transition to ELMS.

As expected, there is a big gap before ELMS will be in operation and larger claimants are losing two thirds of their present BPS payment by 2024. That is about £60 per acre! But all is not lost.

We need to look closely at farming businesses now we know the general direction. Start by benchmarking and considering long term objectives.

Farmers and landowners should decide their options and plan for the next five years. Some will be able to rely on diversification and farming will contribute less to overall profitability. Others will reduce costs significantly including inputs, introducing new systems and reducing overheads. Regenerative agriculture is a good example and the buzz word in crop management which in theory reduces inputs, helps reorganise workload and enhances soil condition while addressing damage to the environment.

Reviewing business structure and farming arrangements is important. Those with Farm Business Tenancies (FBT’s), Contract Farming Agreements (CFA’s) and Joint Ventures (JV’s) should look at the terms and adjust for reducing BPS, cutting overheads and new environmental operations.

We are expecting productivity grants and incentives including a farm equipment technology fund for specific items of machinery and a farming transformation fund which could offer more substantial grants for investments in equipment, technology or infrastructure. While it must be worth applying for all relevant grants in future, the investment should be part of your overall plan to improve productivity.

Ultimately biodiversity net gain and carbon sequestration to achieve targets under the Environment Bill will encourage farmers and rural land managers to adopt new projects and provide opportunities if you have a post Brexit farming plan.

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