The brave new world of post-BPS subsidy is steadily becoming more visible as new information is released by DEFRA.
Lump Sum Exit Scheme
The claim process for this is now fully understood. Those familiar with claiming New and Young Farmer entitlements from the National Reserve may recognise this process. This is because the RPA does not actually need to see the evidence demonstrating that the land on which the claim is based is no longer occupied by the claimant. The evidence must instead be presented to an appropriately qualified professional, who will fill out a form, provided by the RPA, confirming they are satisfied that the necessary conditions have been met. (This includes Land Agents.)
While, as the RPA initially predicted, this scheme has hardly provoked a run to the hills, it perhaps offers just enough of an incentive to tip some of those considering retirement into taking action. We therefore advise those who have not already done so to carefully consider the Lump Sum Exit Scheme, and to do so now.
Sustainable Farming Incentive (SFI)
This first tier of ELMs may perhaps become the most important scheme in the new world we are now entering. A full suite of RPA guidance has now been released for the early upcoming version of the SFI. Applications, we have been told, are to open in “late June”. This early version will feature only Improved Grassland and Arable Soil standards and a standard for Moorland. Capital items will not be initially available under the SFI, although we understand they are forthcoming. However, SFI land will initially be eligible for Countryside Stewardship capital grants.
Notably, there also appears to be a more lenient approach to breaches and penalties than under existing payment schemes. SFI penalties guidance offers a range of “good reasons” under whose circumstances a claimant may not be penalised at all even when they breach their agreement. These explicitly include supply chain problems, bankruptcy, serious illness or criminal damage by third parties, but other situations may also be considered. This is a substantially longer list than force majeure provisions under Countryside Stewardship. Cross Compliance penalties do not apply to SFI or new Countryside Stewardship agreements starting this January but continue this year and next for BPS.
We now have full knowledge of at least what DEFRA intends all standards under the incentive to be called, but aside from those either released or in the pilot we still do not yet know what work, or payment, these will entail. DEFRA intends that 70% of farmland is in the scheme by 2028, which implies they expect 30% of land will not be. Unfortunately, the SFI looks like it will offer a lower payment than the BPS for a greater effect on a conventional, relatively intensive farm business. This may mean many such businesses cannot justify these requirements and eventually find themselves running free from subsidy altogether. However, unlike Countryside Stewardship, the application process for this scheme appears quite simple, and it can be left after a year without penalty; there is no risk of finding oneself the prisoner of an unwanted agreement. We therefore recommend that all farmers consider SFI and, unless it appears utterly unfeasible to do so, put a little land under, if nothing else, appropriate introductory standards just to understand how the incentive might fit the farm business going forward.
Annual Health and Welfare Review
We have known for a while roughly what this scheme entails. The Government will cover the price of a vet visiting a livestock farm to make recommendations about specific disease resistance and the general health of the herd. Further grant funding may then be available for carrying out these recommendations.
We now know a little more of the scheme’s detail. A successful claim requires at least 5 ha of BPS eligible land to have been available on the 16th May 2022 with at least 5 BPS entitlements. Curiously, there is no apparent requirement for a claim to actually have been submitted, or seemingly for the entitlements to match the land. Under the current guidance it looks like the review grant could be claimed by a farmer with 5 ha Non-SDA land but with 5 ha Moorland, SDA, or even Welsh or Scottish entitlements. We can probably expect DEFRA to correct the latter obvious oversight when the scheme opens for applications.
Eligibility for the scheme also requires that the number of beasts on the farm is above a specified minimum of 10 cattle, 20 sheep or 50 pigs. Payment rate also varies by animal species and use: £684 for pigs, £436 sheep, £522 for beef cattle and £372 for dairy cattle. A review can be claimed each year for each species on the farm, which would imply that in any given year a farmer can claim a review for pigs, a review for sheep and a review for either dairy or beef cattle. Given the scheme’s overall structure, there may be an error in DEFRA’s wording and both types of cattle review may in fact be claimable in one year. We will need to wait for the scheme to be officially released before this is confirmed either way.
Local Nature Recovery
This “tier 2” is the ELM scheme about which we still know the least. However, it is gradually leaving its twilight zone following a new set of revelations. Specifically, DEFRA has now let us know that the scheme will initially cover:
- managing feeding, shelter and breeding areas for wildlife on arable farms
- managing, restoring and creating grassland habitats such as species-rich grassland on farms and in the wider countryside
- managing, restoring and creating wetland habitats such as ponds, lakes, reedbeds and fens
- managing, restoring and creating lowland heathland
- managing, restoring and creating coastal habitats such as sand dunes, salt marsh and shingle
- managing and restoring areas of upland and lowland peat and moorland on farms and in the wider countryside
- targeted measures to support the recovery and reintroduction of particular wildlife species, such as creating and managing nesting and feeding habitat, and to tackle non-native invasive species
- managing and creating trees and woodlands, including agroforestry, traditional orchards and tree planting on areas of farms – noting that the England Woodland Creation Offer will be the main scheme for woodland creation until 2025
- nature-based solutions for water – such as creating and managing in-field vegetation, buffer strips and swales to reduce and filter runoff and contribute to natural flood management
- restoring rivers, flood plains, streams and riparian habitats
Many of these will be familiar to existing Stewardship claimants. For now payment rates are conspicuously absent. We are told, as ever, that further information will arrive “later this year”, with a (presumably pilot) scheme for a limited number of applicants to appear first. It is good to see at least a little progress here, even if some gaps remain.
In all, we have definitely seen a little more of how the new schemes will look, enough perhaps to let the industry make some early adaptations. This may mean considering how to alter the farm to draw as much income from the new schemes, accepting a lower income and attempting to adapt accordingly, or it could even mean utilising the Retirement Lump Sum while the window for this is open. The current moment is a chance to adapt to these changes before they take full effect and also consider Biodiversity Net Gain and nitrate and phosphate offsetting opportunities with woodland carbon planting and the arrival soon hopefully of the code for soil carbon.
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