Farming is Changing – What will it mean for you?

Defra has published information to help farmers and those in the farming industry understand changes to farming policy that will come into effect in England from 1 January 2021.

The structure of these future changes is outlined in the booklet ‘Farming is Changing’.  

Defra will be phasing out ‘Basic Payment Scheme’ (BPS) payments, closing existing agri-environment schemes and introducing a new approach.

The new approach will include:

  • Environmental Land Management, a new way to pay farmers and land managers to produce public goods, for example through nature-friendly practices
  • grants and other help to improve farm productivity and prosperity
  • a new approach to farming regulation and enforcement

The changes coming in 2021 include:

  • the removal of greening rules
  • the first reductions to BPS
  • improvements to cross compliance
  • more money available through schemes and grants (funded through the BPS reductions)
  • improvements to existing schemes

Information from the Defra booklet is summarised and added below and further information is available via the additional booklet from Defra ‘The Path to Sustainable Farming: An Agriculture Transition Plan 2021 to 2024’.

The detail provided below may be divided up into 1. Payment Schemes; 2. Agri-Environmental Schemes; 3. Prosperity & Productivity; and 4. Regulation & Enforcement.

A number of schemes and pilots await further consultation in 2021; although additional detail on the Basic Payment Scheme, delinked payments and lump sums are provided, there is less detail for the Environmental Land Management Scheme payments that will come in to top up delinked payments or how compliance will be monitored.   There is an opportunity for those farmers who wish to retire to access lump sums on exit according to certain conditions. 

Other items of interest include farming investment funds (further details to be provided next year) that will provide funding for equipment, technology, and infrastructure that improves farm productivity and benefits the environment.  Grants will be available for a proportion of the total cost of investment. Eligible investments could include things such as: equipment and technology for storing, sorting, or processing products, robotic or automated technology and on-farm water storage infrastructure, including reservoirs.

A final key point is that on delinking of payments in 2024 it is stated Defra will also stop using cross-compliance as the main way to inspect and enforce against baseline regulations (the regulatory requirements all farms have to meet).

Summary outlined below:

  1. Payment Schemes

The Basic Payment Scheme, delinked payments and lump sums

Removing the greening rules from 2021 onwards will not affect the overall payment received by each farmer. The greening money will instead be added to farmers’ BPS entitlements. Farmers who declared EFA cover crops on their 2020 BPS application must keep these in the ground until 15 January 2021.

The rules that apply to permanent grassland in Natura 2000 sites and the Environmental Impact Assessments rules that apply to some other permanent grassland will remain in place.

Other simplifications to the 2021 scheme include:

  • removing the requirement for farmers to use all their payment entitlements at least once every two years
  • removing the requirement for farm businesses with land in England and another UK nation to have all their land treated as one ‘holding’ for the purposes of the BPS
  • extending the application period for force majeure applications to 8 weeks

Reductions to Direct Payments from 2021

The government plan to phase out Direct Payments in England from 2021 to 2027. Payments will be reduced progressively. All payments will be reduced, but there will be bigger reductions on the higher payment bands. These bands will work like income tax bands. For example, everyone will have a reduction of 5% on their first 30,000 of payments in 2021.

Reductions will be applied to the total payment the farmer would have been due in each year, including the total BPS payment and any young farmer payment.

The payments will be reduced by the following percentages in 2021-2024:

Payment band

Scheme year

2021

2022

2023

2024

Up to £30,000

5%

20%

35%

50%

£30,000 - £50,000

10%

25%

40%

55%

£50,000 - £150,000

20%

35%

50%

65%

More than £150,000

25%

40%

55%

70%

               

This equates to the following reductions:

Payment value before progressive reductions

2021 payment

2022 payment

2023 payment

2024 payment

£5,000

£4,750

£4,000

£3,250

£2,500

£10,000

£9,500

£8,000

£6,500

£5,000

£20,000

£19,000

£16,000

£13,000

£10,000

£40,000

£37,500

£31,500

£25,500

£19,500

£80,000

£70,500

£58,500

£46,500

£34,500

£160,000

£134,000

£110,000

£86,000

£62,000

Payments will be reduced each year until the final payments for the 2027 scheme year. No further BPS payments or delinked payments will be made after the 2027 scheme year.

 ‘Delinked’ Payments

In 2024, Defra plan to replace BPS with ‘delinked’ payments. When payments are delinked, it will be unnecessary to farm the land to receive the payments, until they have been phased out. Double payments will not be made. Farmers could be offered a lump sum in place of any further BPS and delinked payments to which they would have been entitled. Their BPS entitlements would be cancelled.

Delinked payments may be received even if a farmer chooses to stop farming altogether. Those who continue farming will still have to comply with standards on the environment, animal and plant health, and animal welfare, but compliance will be managed through new arrangements that will replace cross-compliance.

Eligibility for delinked payments will be based on a reference period. For example, it may be necessary to have claimed, and been eligible under BPS, in a particular scheme year or years.

There will be a consultation in 2021 before Defra set the reference period and decides when to introduce delinked payments.

Lump Sum exit schemes

In 2022, Defra will introduce an exit scheme to help farmers who wish to retire to do so. They will be offered the chance to take a lump sum in place of any further BPS and delinked payments.

Rules for lump sum payments will be set following consultation with farmers, early in 2021. Defra plan to introduce exit payments from 2022, subject to this consultation.

Cross compliance

In 2021, Defra intend to address some of the most significant areas of concern with cross compliance by:

  • not having a penalty as the default response to a breach of the rules
  • making the use of penalties more proportionate through changes to the verifiable standards, where possible
  • allowing the Rural Payments Agency to apply more proportionate and flexible approaches, such as better communication, to encourage more constructive and advisory interactions with farmers
  • targeting more of their efforts to areas of high risk.
  1. Agri-Environmental Schemes

Environmental Land Management

Defra’s Environmental Land Management offer means that government will pay farmers and land managers to deliver ‘public goods’. This includes actions that contribute to:

  • clean and plentiful water
  • clean air
  • protection from and mitigation of environmental hazards
  • mitigation of and adaptation to climate change
  • thriving plants and wildlife
  • beauty, heritage and engagement

Trials have been conducted with some 3,000 farmers and land managers and a 3-year National pilot of Environmental Land Management is to begin in 2021. It is stated that participants will be paid a competitive rate and further details will be published early 2021.

This Environmental Land Management offer is to be made up of the following components:

  • Sustainable Farming Incentive (SFI)
  • SFI will pay for environmentally sustainable land management actions that all farmers can do.
  • SFI will be open to all farmers.
  • SFI eligibility for 2022 is available to all farmers in receipt of BPS.
  • From 2022 Defra will be bringing forward certain elements of this ‘Sustainable Farming Incentive’ SFI component in a scheme called the ‘Sustainable Farming Incentive 2022 (SFI2022)’.
  • Information on this scheme will be published by June 2021. Those with an existing environmental agreement will be able to apply for SFI alongside other agreements. It will not be possible to receive payment for the same action twice through different schemes.
  • Local Nature Recovery

Local Nature Recovery will pay farmers and land managers for actions that support local nature recovery and deliver local environmental priorities.

Local Nature Recovery agreements will be available from 2024, following a national pilot starting in 2021.

  • Landscape Recovery

Landscape Recovery will involve bespoke agreements to support long-term, land use change projects, including rewilding where appropriate.

Defra will begin some pilot Landscape Recovery projects between 2022 and 2024, and then make the full scheme available from 2024.

  • Countryside Stewardship

The Countryside Stewardship scheme will continue to be available for existing and new applicants until 2024, with the last new applications being accepted in 2023.

Anyone in a Countryside Stewardship agreement that starts after January 2021 who secures a place in the Environmental Land Management scheme will be able to withdraw and transfer to the new scheme with no penalty at agreed exit points.

All new agreements starting after 2024 will be managed through the new Environmental Land Management scheme.

Defra, Natural England and RPA are currently considering the best Countryside Stewardship options for future scheme applicants to use for wood pasture restoration, especially in the uplands.

Air quality will also be an objective of the scheme. This means applicants can now apply to plant a minimum of 0.1ha of trees in areas designated a priority to reduce air pollution. This is in line with the current minimum area required for planting trees for water quality.

Important changes have been made to Countryside Stewardship agreements starting from 2021. For these agreements, Defra have:

  • removed the application of additional penalties for the over-declaration of land and scheme breaches; instead just adjusting the claim to the found area
  • changed approach to inspection, focusing on an on-site review that looks at whether or not the environmental outcomes have been achieved, and that doesn’t disproportionately penalise farmers
  • developed a system of warnings to give agreement holders a chance to put things right, where that is possible, and still get paid, and offering signposting to advice or guidance to help get things right
  • extended the application period for force majeure applications to 8 weeks in line with the Basic Payment Scheme
  • Catchment Sensitive Farming

Holdings in High Water Quality Priority Areas could benefit from Catchment Sensitive Farming advice or a Countryside Stewardship capital grant.

The advice and the grant are designed to improve water quality in a high-priority area. Catchment Sensitive Farming will continue to be available from 2021.

  • Farmers in Protected Landscapes

From 2021, the government will provide funding through the Protected Landscapes bodies to support farmers, particularly upland farmers (75% of whom live and work in Protected Landscapes).

The funding will be for farmers and other land managers to make improvements to the natural environment, cultural heritage and public access on their land. It will fund:

  • Farm-level projects to diversify incomes and prepare for Environmental Land Management
  • Wider infrastructure and projects on farmland, to support farmers and rural economies
  • Tree Health

Defra will launch a new Tree Health scheme in 2024. This will replace the Countryside Stewardship Woodland Capital Tree Health Restoration and Improvement grants. A pilot for this scheme will run in 2021.  The pilot will include support for felling and the treatment of diseased trees in certain situations and restocking following felling. Participants will be invited to apply for this pilot and further details about eligibility will be provided when the scheme guidance is published in April 2021.

  • Woodland creation and support

There are several schemes available for increasing, protecting and managing trees, forests and woodlands

  • The Woodland Creation Planning Grant
  • Countryside Stewardship
  • Woodland Carbon Fund
  • HS2 Woodland fund
  • Woodland Carbon Guarantee

The Forestry Commission will offer further information on this.

  • Animal Health and Welfare

Two animal health and welfare advice schemes will remain available into 2021: The Bovine TB Advisory Service and the Bovine Viral Diarrhoea ‘Stamp it Out’ project.

  • Animal Health and Welfare Pathway

The Animal Health and Welfare pathway will continue in 2021 and is intended to support farmers to produce healthier animals to the very highest standards of welfare by providing financial assistance, strengthening the regulatory baseline and improving consumer transparency.  From 2022, Defra will provide capital grants and financially support vet visits for health and welfare management planning and diagnostic testing. They plan to introduce further support for endemic disease control and for piloting payments-by-results in 2023, contingent on outcomes of ongoing research

  • The Livestock Information Programme

This programme provides multispecies livestock traceability services for farmers and the wider industry.  One part of the programme is the new Livestock Information Service (LIS). This will replace three legacy services that trace cattle (BCMS), pigs (eAML2), and sheep, goats and deer (ARAMS) by the end of 2022.  The new system it is proposed will provide simpler, paperless processes and better data sharing. In time, it is intended to enable improvements in animal health and welfare, productivity and competitiveness.  Defra is working with its counterparts in Scotland, Wales and Northern Ireland to bring together UK data that can be used for animal health, food safety and trade purposes.

  1. Prosperity and Productivity

Supporting the resilience of the farming community

Farm Resilience

Further support for farmers and land managers is to be offered 2021-2024. This will be a time-limited set of business advice and support services aimed at individuals and businesses most affected by the removal of Direct Payments.

Trade and Agriculture Commission

The Trade and Agriculture Commission (TAC) will advise the government on how to make sure UK farmers do not face unfair competition nor have their high animal welfare and production standards undermined.

This was a crucial part of ensuring the Agriculture Act 2020 got enacted due to the risk of standards being undermined by third country imports after Brexit.

It will also identify new export opportunities for the UK agricultural industry – in particular for small and medium-sized enterprises

Innovation, research and development

The future prosperity of the sector relies on increased support for innovation, research and development. More details about the Farming Investment Fund (Equipment & Technology, and Transformation) and an Innovation Research and Development Scheme will follow in April and October 2021 respectively.

Farming Investment Fund

From 2021, funding for equipment, technology, and infrastructure that improves farm productivity and benefits the environment will be on offer.  It will be a competitive scheme split into two funds, for lower-value and higher-value investments.  Grants will be available for a proportion of the total cost of investment. Eligible investments could include things such as: equipment and technology for storing, sorting, or processing products, robotic or automated technology and on-farm water storage infrastructure, including reservoirs.

Detailed information about the eligible investments and scheme guidance will be published in Autumn 2021

Slurry Investment

A slurry investment scheme will be offered from 2022. It will help to reduce pollution from farming and contribute to the government’s 25 Year Environment Plan and Net Zero commitments. This scheme will help farmers to invest in new slurry stores that exceed current regulatory requirements and are proofed against higher standards that are expected to be introduced in the future. Initial focus for eligibility for the Scheme will be on those locations where environmental impact will be greatest and at viable businesses seeking to invest in improved slurry storage.

Alongside this scheme, Defra plan to implement new regulations as part of the Clean Air Strategy to cover all slurry stores.

  1. Regulation and Enforcement

It is proposed that between 2021-2024 there will be ‘improvements to the way regulation and enforcement work’.

When payments are delinked in 2024 Defra will also stop using cross-compliance as the main way to inspect and enforce against baseline regulations (the regulatory requirements all farms have to meet).

Instead it is stated Defra will work with farmers to design a new approach that is more fair, proportionate and effective. This will be consulted on for the ‘new approach’ in 2021. Meanwhile it is stated they will continue to make improvements to existing regulation and enforcement arrangements, starting in January 2021.

For further information on this or any other related matter please contact Nichola Ross on Email: Nichola.Ross@Mills-Reeve.com or Michael Aubrey Email Michael.Aubrey@Mills-Reeve.com or Jessica Burt Email: Jessica.Burt@Mills-Reeve.com 

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