Outlook 2023: Plan for transition amid ELM uncertainty

Much uncertainty remains over life after the Basic Payment Scheme (BPS), but farmers should make what plans they can in the interim to minimise the effects of transition on their businesses, says Andersons consultant Caroline Ingamells.

In the short term, the BPS will remain, with amendments, in all parts of the UK.

The suite of Environmental Land Management (ELM) schemes to replace the BPS in England is appearing slowly.

The Sustainable Farming Incentive (SFI) is the first part of ELM to be launched, comprising a number of specific on-farm standards.

See also: Payments, schemes and grants information

Each includes three “ambition” levels – introductory, intermediate and advanced – with different payment rates. At the time of writing (mid-November) only three standards were available – arable and horticultural soils, improved grassland soils, and moorland standard.

Others, including animal health and welfare review, nutrient management, integrated pest management, and hedgerow standards should be available shortly, if not already announced by the time this article is published, plus advanced levels for soils and moorland. Other standards will be added through to 2025.

Given the restricted number of standards on offer and the fact that payment rates are not high, total sums of money available are limited at present.

Unlike the BPS, there is a cost in meeting SFI, so the scheme makes most financial sense where a farm is already carrying out a number of scheme requirements.

Following a review of the agricultural transition, the proposed Local Nature Recovery (LNR) scheme (the second strand of ELM), will be covered by an enhanced Countryside Stewardship scheme.

The plans for Landscape Recovery are unchanged with the full scheme launching in 2024 following the 22 pilots announced this year. 

A further announcement on payment rates under all the new ELM schemes is planned for early in the new year.

Money is also being directed at productivity schemes to improve the efficiency of English farming. These will fund equipment and technology as well as larger capital items, including six-month slurry storage.

In addition, rural economic development will be funded through the new UK Shared Prosperity Fund and the Rural England Prosperity Fund, and is likely to include farm diversification, the conversion of redundant farm buildings, food processing and marketing ventures.

Given the number and diversity of these schemes, it is vital to keep abreast of announcements, investigate and take advice, as well as being prepared to make changes to maximise income.  

Scotland

In August 2022, the Scottish government released a consultation on the proposed Agriculture Bill, designed to make Scotland a global leader in sustainable and regenerative farming.

The scheme is expected to be implemented in 2025-26. While the consultation does provide a general idea of the direction of travel, it remains worryingly short on detail.

It suggests a four-tier framework for payments: Tier 1 will form a “base level direct payment” geared to carbon audits, soil/biodiversity audits and a land management plan, among others.

Tier 2 will include further payments for reducing greenhouse gas emissions and improving biodiversity.

Tiers 3 and 4 comprise indirect payments, including elective payments for conservation, alternative forms of farming and innovation, as well as wide-ranging complementary support such as advisory services and potentially coupled support for the beef and sheep sectors.

The crux will be the amount of money available and tier allocation. Overall, the total is likely to be lower in real terms, and reduced base payments seem inevitable.

It is crucial that the plans are set out in more detail with a clear timetable to allow farmers to plan and adjust.

That said, there is the prospect of another Scottish independence referendum in 2023.

A positive result would delay proceedings, which, economically, would be good for Scottish agriculture, as the current support system provides financial certainty during a period of cost price and market volatility.

Wales

The past year has seen more information released on the Sustainable Farming Scheme (SFS), but greater detail is still awaited.

Wales is now entering a transition period until 2025, when the SFS is set to be introduced. In the meantime, the Basic Payment Scheme will continue, but businesses should not delay making necessary changes.

Several schemes are being carried over and new grants are available to help farmers prepare for SFS.

Funding to help farmers comply with the new agri-pollution regulations remains in place during the transition, and the Glastir Small Grants and Woodland Creation Grants have also been carried over, albeit with new names and slight variations.

With SFS in mind, new grants such as Growing for the Environment aim to increase production of crops and forages that enhance the overall environment and reduce leaching.

It is believed that Farming Connect will continue under the new policy, providing training opportunities for farmers and offering funding towards business plans and nutrient management plans.

Once additional detail is offered on the SFS timeline, this type of funding will help businesses to access future support.