For the first time in 45 years a UK government presented its own agricultural legislation to Parliament on the 12th September for its first reading. The Agriculture Bill 2018 is the biggest overhaul of farm policy since the end of the Second World War, and the first time in centuries that a legislative framework is being prepared which could see the end of public subsidy solely for the production of food. Whilst primarily focussed on England, it also sets out the legislative framework for Wales and Northern Ireland’s devolved governments to either adopt the English approach, or adjust certain elements to better suit the needs of their farmers/landowners.
The Bill, which progresses first through the House of Commons and then the House of Lords before further amendments are considered prior to it being given Royal Assent, is a legislative framework which enables the UK to “break from” the Common Agricultural Policy. It also prepares the way for new agricultural schemes which will pay for the delivery of certain “public goods”. The Bill is a result of the “Health & Harmony: The Future for Food, Farming & the Environment in a Green Brexit” consultation which closed on the 8th May 2018, and is needed before the end of our membership of the EU on the 29th March 2019. The Bill adopts current EU legislation for the time being, but also sets out the legislative framework and some of the options for the UK’s own post-Brexit agricultural policy.
Subject to the outcome of Brexit negotiations, the existing CAP Basic Payment Scheme (BPS) will continue for at least 2019 and 2020, albeit with the UK expected to take full control in 2020 by then and it being a UK BPS scheme. The agricultural subsidies and process for applying for them will remain much as they currently are in both 2019 and 2020. A UK BPS scheme will then continue for up to a further seven years with reduced/reducing payments. Whilst the Agriculture Bill will be amended as it goes through Parliament, this is very much the start of a process, and the full details of the UK agricultural policy going forward from 2021 are unlikely to be confirmed, based on past experience, until the 11th hour in late 2020. The devil, as always, will be in the last minute detail.
However at this juncture it is now clear as to the general direction the Government is wanting to head on certain aspects, whilst leaving itself plenty of flexibility. Therefore the “tanker” has left port and we now know more clearly the direction in which it is travelling:
- BPS will continue as we know it for 2019 and 2020, with perhaps some slight simplifications or “tweaks”.
- From 2021 there will be a transition period of an indeterminate length, which is currently suggested to continue for seven years, until 2027.
- BPS (UK) will continue through the transition period.
- An Environmental Land Management Scheme (ELMS) will be trialled in 2019 and 2020, and pilot schemes will run during the transition period from 2021 – click here for more information.
- BPS will come to an end as we know it by the end of the transition period.
- The Bill currently mentions that Government support will be provided using ELMS for the following:
|1.||Managing land or water in a way that protects or improves the environment;|
|2.||Supporting public access to and enjoyment of the countryside, farmland or woodland, and better understanding of the environment;|
|3.||Managing land or water that maintains, restores or enhances cultural or natural heritage;|
|4.||Mitigating or adapting to climate change;|
|5.||Preventing, reducing or protecting from environmental hazards;|
|6.||Protecting or improving the health or welfare of livestock;|
|7.||Protecting or improving the health of plants.|
Whilst the above is not an exclusive list, these are what have been referred to in the Bill so far as “public goods”. It does not include food production as such.
- Financial assistance is to be given for or in connection with the purpose of starting or improving the productivity of an agricultural, horticultural or forestry activity.
- There may be an ability to “de-link” BPS payments during the transition period from the need to be farming land.
- Countryside Stewardship will be replaced at the end of the transition period by ELMS.
The Bill also touches on the agri-food supply chain, support for rural development, intervention due to exceptional market conditions, the option to provide aid for fruit & vegetable producer organisations, marketing standards & carcass classification, “fair dealing obligations” of first purchasers of agricultural products, the collection and sharing of data with persons involved with the agri-food supply chain, and notably powers for the purpose of securing compliance for the UK with the World Trade Organisation (WTO) rules.
It is tempting to further analyse the 91 page briefing paper which sets the background to the Bill, but this runs the risk of stepping into an over-emphasis on current political sentiment, which, whilst setting the course for our “tanker”, will now be subject to Parliamentary scrutiny and also further detailed legislation over the next couple of years. The political drive will also have to face the “bureaucratic-application-test” towards the final stages of the process. Therefore any deeper analysis or reliance on the final destination is perhaps too speculative at this stage, especially as the architect of this Bill is unlikely to be the Secretary of State for Environment, Food & Rural Affairs when the practical decisions, especially the money ones, are made.
However it is clear that UK agricultural policy is now heading in a fundamentally different direction and the current political drive is that, apart from the purpose of improving productivity, there may be little financial support for food production. A lot can happen though, in nine years, and it may be that we will never actually reach this point. There are plenty of changes in the air; Brexit disruption of trade with the EU, expansion of WTO trading, a decline in globalisation, trade wars, and increased nationalism.
The Bill does however remove some elements of uncertainty, at least for the time being, and however challenging the direction is, this should now improve confidence moving forward.
Confidence should also return to the entitlement trading market, with the current BPS scheme now continuing not only for 2019 but also for 2020, and then at some level for up to a further seven years. The “delinking” element of the Bill also raises the possibility of increased demand for entitlements leading up to 2021, with a “reference period” being needed to be chosen as the basis for any future delinked payments. This may encourage those thinking of leaving the industry in the next couple of years to delay in order to benefit from these payments before they retire, and will increase the financial incentive for all farmers/landowners to maximise entitlements held and claimed on leading up to 2021. The benefit is the possibility of either annual or lump sum payments without the need to continue farming or to do so with fewer restrictions.
It is helpful to know that we may have up to nine years to ease in a different mix of support, including ELMS and productivity grants, whilst easing away from BPS payments, and to have a glimpse of where we might be post-2027.