How will the changes in farm payment schemes affect you blog image.  Tree with sun shining through.

I don’t need to tell you that farming is in a period of change but have you considered how the changes in farm payment schemes will affect you and your business?

This blog is set out as follows:

  • The Agriculture Act 2020
  • What do we know so far?
  • Janet Hughes
  • How will the changes in farm payment schemes affect you?

So, what’s driving this change?

The Agriculture Act 2020

The Agriculture Act 2020 gained royal assent on 11th November 2020.  The Bill aims to empower us farmers and land managers and to make sure that we can be rewarded properly for the good work that we do. The Bill is designed to

  • help us stay competitive
  • increase productivity
  • invest in new technology and
  • seek a fairer return from the marketplace

How does this Bill apply to the UK nations?

The provisions on new farm support schemes mainly apply to England. Powers are included in a Schedule for Northern Ireland to enable the preparation of replacement schemes. Some provisions in the Bill apply to Wales (for example to amend Direct Payments rules) but these are temporary. Welsh Ministers intend to introduce this Assembly term a Wales (Agriculture) Bill. In Scotland, the Agriculture (Retained EU Law and Data) (Scotland) Act 2020 gained royal assent on 1st October 2020 keeping farm support approaches largely the same until 2024.

So, in England, The Agriculture Act 2020 sets out how we will be rewarded in the future with public money for “public goods” – such as

  • better air and water quality
  • thriving wildlife
  • soil health
  • measures to reduce flooding
  • tackling the effects of climate change

These incentives are designed to help achieve the goals of the government’s 25 Year Environment Plan and their commitment through the Climate Change Act 2008 to reach net zero emissions by 2050.

It’s also worth noting here that the UK are hosting The UN Climate Change Conference, #COP26 in Glasgow from 1st-12th November which will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. We are going to hear a lot more about the race to Net Zero as we approach the conference.

What do we know so far?

On the 30th November 2020 Defra published The Agricultural Transition Plan which is built on the work carried out since Defra’s consultation Health and Harmony was launched in 2018. It sets out Defra‘s support for us and how, from this year, we will have a seven year transition period to adapt to a new agricultural system. The plan explains the new policy changes in detail, as well as explaining how Defra intend to approach doing the work.

The Agricultural Transition Plan is summarised in a handy booklet ‘Farming is Changing’ which you can download here:

The booklet provides an overview of:

The Basic Payment Scheme, delinked payments and lump sums:

  • The reductions to Direct Payments from 2021
  • ‘Delinked’ payments
  • Lump sum exit scheme
  • Cross compliance

Agri-environment schemes

  • Environmental Land Management (ELM)
  • Sustainable Farming Incentive (SFI)
  • Countryside Stewardship
  • Catchment Sensitive Farming
  • Farmers in Protected Landscapes
  • Tree Health
  • Woodland creation and support

Animal health and welfare

  • Animal Health and Welfare Pathway
  • The Livestock Information Programme

Prosperity and productivity

  • Farm Resilience
  • Trade and Agriculture Commission
  • Innovation, research and development
  • Farming Investment Fund
  • Slurry Investment

It also covers regulation and enforcement.

So, who is in charge of ensuring a smooth transition?

Janet Hughes

That would be Janet Hughes, Defra’s Programme Director for the Future Farming and Countryside Programme who is overseeing the Agricultural transition plan.

Janet recently updated Rural Business Network members at our Future Farming and Countryside Programme Update on the progress made to date and answered a multitude of members’ questions. Members have access to the recording of the event.

How will the changes in farm payment schemes affect you?

“Businesses need to start acting now to consider how they will manage this change and loss of direct income”.

Janet Hughes, February 2021

1. The loss of direct income

We know that we are losing direct payments during the course of the next 7 years, but have you started to consider how that will impact your cash flow?

Calculate your loss of direct payments

Click on the image below to use the AHDB’s business impact calculator to work out what the reduction will be and then you can begin to think how to meet the shortfall.

A calculator

In 10 years…

Then, take stock (no pun intended) and visualise what you want the farm to be in 10 year’s time.  I know this is far easier said than done which is why I organised an interactive event last month ‘Where to start, where to end and how to get there’. The event recording is on the resources section (Pre-start) of this website. You can register for free to access the growing bank of resources.

Farm Succession Planning

A seedling being passed from old hands to young hands to represent farm succession planning

The next step in my humble opinion is a topic that most of us avoid as it is a really difficult subject, Farm Succession planning. Arguably there has never been a more important time to consider succession planning to ensure everything that can be done to mitigate Inheritance Tax is in place

I ran an event on this topic back in October last year. You can view the full event recording in the resources section (Farming updates) of this website.

Business Planning

When you have an idea of where you want the farm to be, it’s time to plan how you are going to get from where you are now to your vision.  I’m afraid what we need to do is a business plan (I heard you groan!).  I’m not saying you need to have a huge document that then sits in the drawer as that is a waste of time.  I’m going to discuss business plans in more detail soon but for now, start thinking about:

  1. Your aim (10-year vision)
  2. Your goals (the yearly steps to get to your vision)
  3. What are your resources and limitations?

Consider:

  • Land
  • Labour
  • Capital
  • Buildings
  • Machinery & equipment
  • Physical limitations
  • Management
  • The external environment

4. What are your options?

Examples could include

  • Traditional livestock / crops
  • Non-traditional: New enterprises / Off-farm income
  • Reorganising assets Selling land or buildings / Leasing or letting out (for example, machinery or a quota) / Machinery sharing / Contract farming / Share farming
  • Environmentally-friendly farming

I’m going to focus on Farm Diversification in next month’s blog.

2. Being paid public money for public goods

Let’s dig a little deeper into Defra’s Agri-environment schemes, specifically the Sustainable Farming Incentive which sits within the Environment Land Management scheme.

Sustainable Farming Incentive

The Sustainable Farming Incentive (SFI) scheme will pay us to manage our land in an environmentally sustainable way.

The scheme will be made up from a set of standards. Each standard based on a feature like hedgerows or grassland, and contains a group of actions we need to do.

We will be able to choose which standards we want to do, and where on our land to apply them.

We’ll be paid for doing the actions within the standards we choose.

SFI is currently being piloted before it launches in 2022.

But what is meant by sustainable farming?

I’ll be honest, when I googled this I couldn’t find an up-to-date answer.  What I did find was an article by independent journalist, Caroline Stocks which was published in the Farmers Weekly back in April 2012 ‘What is sustainable agriculture’.  Caroline reported that there is confusion over just what sustainable agriculture is quoting the government’s then champion for global food security, Professor Tim Benton “In the short term, it isn’t possible to define it,” who went on to add “The rule of thumb is that if you have a farming practice which maintains yields while increasing environmental goods and benefits, then this is sustainable.

“The broad consensus is sustainability is associated with increased resource use efficiency, like improving soil quality, reducing nitrogen run-off, precision agriculture and anything that reduces water use, especially for irrigation. Those are a win-win for farmers and for the environment.”

Professor Tim Benton, 2012

I’m sure, like me, you are becoming increasingly aware of the link between good soil management and increased productivity.  There are a number of organisations that offer support and advice to help us with improving our soil. These include:

Championing the Farmed Environment (CFE) which is a partnership that supports farmers to deliver environmental benefits within a productive farm business. They have a number of recorded webinars you can watch and articles to read on their website.

The Agriculture and Horticulture Development Board (AHDB) has a library of information. If you search with the keyword ‘soil’ it retrieves articles including:

Regenerative Farming

What is regenerative farming event image

A step on from sustainable farming is regenerative farming. I’ve heard the term regenerative quite a lot recently but I’ll admit, I didm’t quite understand what it meant.  Was it the same as conservation agriculture? How does it differ from organic farming?

I therefore organised an event recently to hear from expert Steve Townsend, co-founder of BASE UK and director of Soil First Farming where he answers these questions.

BASE-UK is an independent knowledge exchange organisation run by farmers for farmers and individuals interested in making agriculture sustainable using conservation and regenerative systems such as no-till, strip-till, cover crops, companion crops and integrating livestock.  Their mission is to share and further knowledge on regenerative agriculture, to encourage the sustainability of our agricultural industry by promoting more diverse rotations and less invasive, cost effective methods of establishment.

There is so much being thrown at us right now, it’s easy to get overwhelmed. The Farming Help partnership is a collaboration between The Addington Fund, The Farming Community Network, R.A.B.I, RSABI and Forage Aid and is supported by The Prince’s Countryside Fund. If you are struggling and not sure where to turn, please give them a call.

I hope this blog has got you thinking about how the changes in farm payment schemes will affect you and ways that you can mitigate this. I truly believe there are opportunities for us all. Next month I will be writing about how to prepare for farm diversification. In the meantime, don’t forget to register for the resources section of this website. Take care and stay safe, Jo.