We are in the middle of a process of change that will have a major impact on almost every farmer in the United Kingdom over the next five years. What is it? The introduction of new systems for government support to farmers. In England, most payments will be made through Environmental Land Management schemes (ELMs). To help understand what’s happening, why it matters and how to navigate the new schemes we have put together a question-and-answer briefing pack.
What’s happening to the current system of farm support?
Most direct ongoing payments to farmers are currently made through the Basic Payment Scheme (BPS), which is based on how much land is farmed, subject to meeting “greening” requirements. The BPS is being phased out, and payments have been reduced each year from 2021. From next year, payments will be “delinked” from farming, so they will be made even if farmers have left farming. The delinked payments for each farm from 2024 will be based on the payments made to that farm from 2020 to 2022, but with the amount reduced each year by about 15% of the original payment. The last BPS payments will be made in 2027.
Why is it changing?
The BPS developed as the system for farm support under the European Union’s Common Agricultural Policy (CAP). The CAP was criticised for making payments based on area farmed, and for having complicated application and compliance procedures. Following the UK referendum vote to leave the EU in 2016, the government developed a new policy basing farm support on the principle of “public money for public goods”. The idea is to pay farmers primarily for delivering environmental benefits like improved soil health, increased biodiversity, and reduced greenhouse gas emissions. Some people have raised concerns that the approach neglects food production and food security. The Agriculture Act 2020 provides the legal framework for the new system.
What are Environmental Land Management schemes (ELMs)?
Environmental Land Management schemes (ELMs) are the mechanisms for implementing the new policy in England. The schemes will pay farmers and land managers for providing environmental goods and services alongside food production.
There are 3 ELMs being introduced: the Sustainable Farming Incentive (SFI), Countryside Stewardship (CS), and Landscape Recovery.
What’s the timetable for introducing ELMs?
The government calls the period between 2021 and 2027 the Agricultural Transition. This is the process of moving from CAP BPS direct payments to the ELMs. The BPS will end completely in 2027. Pilots and initial ELMs started in 2022, and will be expanded and developed through the transition period.
What are the different types of ELMs?
There are three different types of ELMs being introduced in England.
The Sustainable Farming Incentive (SFI) will be available for all farmers, and will make ongoing payments to farmers over the agreed period to manage their land in an environmentally-sustainable way. It is the closest equivalent to the BPS, but rewards farmers for specific actions which they can identify and choose as best suited to their land. The main areas covered will be cropland management; grassland management; livestock management; tree and woodland management; boundary and hedgerow management; soil management; nutrient management; integrated pest management; efficient water use; wildlife and biodiversity; and the protection of heritage assets.
Countryside Stewardship (CS) and CS Plus will be developments of the existing schemes to improve local environmental habitats, targeting actions relating to specific locations and features. CS Plus will encourage farmers to work together to improve their environments on a larger scale. Both ongoing and one-off payments will be available. Before this year the government intended to replace CS with a new scheme, Local Nature Recovery, but this has now been scrapped. CS and CS Plus will focus on creating, managing and restoring habitats such as woodland, wetlands, freshwater, peatland, heathland, species-rich grassland, and coastal habitat, as well as connecting isolated habitats to form networks; natural flood management; species management; rights of way, navigation and recreation infrastructure; education infrastructure, events and services; and geodiversity and heritage asset management.
Landscape Recovery will focus on a small number of landscape-scale projects such as large-scale forest and woodland creation, restoration and improvement; ecosystem restoration; peatland restoration; and the creation and restoration of coastal habitats such as wetlands and salt marsh.
What was the recent government announcement about ELMs?
The Environment Secretary, Thérèse Coffey, announced plans to accelerate the roll out of ELMs last week. The Sustainable Farming Incentive (SFI) launched last year with three standards to improve soil health and moorlands eligible for payments. Six additional standards have now been added to start this year. The new SFI standards cover actions on hedgerows, grassland, arable and horticultural land, pest management and nutrient management. Tenant farmers can now apply for the SFI without landlord consent, and the period for agreements has been shortened to three years. The Environment Secretary also revealed a new SFI management payment available worth up to £1,000 a year to help cover the costs of applying for the scheme, and more details of payments available under the Countryside Stewardship (CS) schemes.
Farming and land management leaders were broadly positive about the announcement.
NFU Vice President David Exwood said: “It’s encouraging that Defra has provided us with more detail on the future of the ELM programme and brought forward a broader, more flexible offer for the SFI. For farmers and growers making crucial long-term decisions that are essential to running viable and profitable food producing businesses, it’s vital they have the full scheme details as soon as possible and know how the different schemes will work together. A speedy application and payment process will also be key to give farm businesses some much-needed security.”
Arthur Barraclough, director of leading game and conservation specialists Bright Seeds, welcomed the commitment to increase landscape-scale conservation: “It is highly reassuring to see in print that the emphasis will be to evolve CS to make it more outcome focused with the specifications less prescriptive and more flexible. This clearly puts those who know and tend the land in the driving seat, and that is a positive signal.”
Will farmers be better or worse off with ELMs?
The government is maintaining the overall agriculture budget at 2019 levels for the lifetime of the current parliament, with funds gradually switching over from BPS payments to ELMs, but this does not take account of inflation so there is a real-terms cut in support, and it is unclear what will happen to funding levels after the next election. It is important to remember that the BPS reductions are automatic, but the new ELMs payments depend on farmers making applications in time. Individual farmers could be better or worse off, depending on what ELMs actions they are eligible for and undertake. Defra analysis found that on average direct CAP payments made up 9% of farm revenue and 61% of farm profits in England between 2014/15 and 2016/17, so planning the switch to ELMs will be of crucial importance for many farmers as BPS payments are withdrawn.
What about farmers in Wales, Scotland and Northern Ireland?
Agricultural policy is devolved, so there are different plans for Wales, Scotland and Northern Ireland. In Wales, the Senedd is currently considering an Agriculture Bill which would introduce a Sustainable Farming Scheme from 2025. The Scottish government is consulting about introducing a future Bill intended to address climate change and biodiversity loss, whilst policy development in Northern Ireland is on hold pending formation of a new Northern Ireland Executive.
What about farmers in the Republic of Ireland?
Under the new EU Common Agricultural Policy (CAP), the old BPS has been replaced this year in the Republic of Ireland with the Basic Income Support for Sustainability (BISS). Over the period 2023-27, the Republic will receive €9.8 billion from the CAP.