This time last year, we were warning farmers of the likely impact of the Agriculture Bill and the forecasts for a ‘green Brexit’. Defra are still in the process of sending out further information, however, it was made very clear in a new release last week that a seven-year transition period from 2021 to 2027 will be taking place and farmers will see a reduction in their direct payments during this period until they are completely phased out. The release did not tell us of anything particularly new but summarised several prior releases.

In line with the exact percentage reductions to direct payments published back in October last year, farmers will begin to see a reduction in their direct payments from 2021. A more specific timeline is to be released once the Agriculture Bill has been passed through parliament and the UK has left the European Union (EU). We do know that in the first year of the transitional phase, farmers will see the largest reduction to the higher payment bands in a staggered approach to payment reductions. Later years will then be decided based on future plans and government spending.

In order to provide opportunities for both new entrants and support for existing farmers wishing to expand, landowners should expect the requirement to farm the land to be ‘delinked’ from the payment over this transitional period. Defra has said, with possible delinking to commence as early as 2021, that they plan to make the payments regardless of whether the recipient continues to farm or not. On top of this, farmers may be offered a ‘one-off’ lump sum as early as 2021, instead of any direct payments they would receive over the transition period. A consultation to assess how best this would work is outlined in the Defra release plan but there remains an incentive for farmers to retire.

Improved communication and data-sharing is outlined to be the main priority in future UK agricultural regulation.

By 2021, short term regulation of the industry will lead to the design of a future regulatory system through farmer involvement. The aims for future policy to improve transparency in the supply chain were outlined, with an emphasis on tree, plant and animal health. There will be improved access to data for farmers, which will replace the European Producer Organisation system for a UK specific organisation and Defra will publish, maintain and enforce statutory codes of practice. Reviewing tree health grants and coordinated responses to supporting local action groups for tree health and animal health were also included within the government release. Investment in soil health is an interesting omission but we are still not looking at the final version of the release.

Current Programmes

Within the government information released, it is important to be aware that the current government have committed funding for the lifetime of Rural Development Programme projects commencing before the end of 2020. However, future support for rural areas may be developed through the UK Shared Prosperity Fund post-EU exit.

As part of current plans, there is to be a period of time in which both the Countryside Stewardship agreements and new Environmental Land Management (ELM) scheme will operate. New Countryside Stewardship agreements are currently predicted to be available for the first few years of the agricultural transition period. The guarantee that no one in a Countryside Stewardship agreement will be unfairly disadvantaged in a transition to ELMs is emphasised in the government release, qualifying that the agreement offers ‘a viable, long-term source of income for providing environmental benefits’.

Future schemes

The year of the launch of the new ELM scheme is planned for 2024. Defra emphasises that the new scheme will not act as a subsidy, but is purely a payment for environmental benefits for those that are awarded agreements. The new ELM scheme is designed to provide funding for:

  • Clean air
  • Clean water
  • Reductions in environmental hazards and pollution
  • Thriving plants and wildlife
  • Enhanced landscapes
  • Mitigation and adaptation measures to minimise the impact of climate change.

Other future funding schemes, farmers may benefit from include:

Animal welfare grants programme

Within the animal welfare grants programme, provision of one-off payments for investment in technology, training, innovation, equipment and infrastructure are proposed to be made available for farmers to improve welfare beyond baseline standards. A payment by results scheme is also included by Defra in their release. The scheme would provide ongoing payments rewarding animal welfare enhancements above baseline.

Productivity improvements and R&D support

Investment support during the agricultural transition period is also highlighted as a possibility for boosting productivity. Financial assistance for investments in technology, equipment and infrastructure were all included in the release as potential help farmers need to be aware of. Finally, support for research and developments projects to improve productivity and address the take-up of innovative solutions were the last point Defra made in the release. The proposed Innovation R&D package would help farmers work with research organisations, building on the £90 million Transforming Food Production initiative as the UK prepare to leave the European Union.

Time to adapt

Despite the indefinite timeline, it is very clear that the agricultural transition period will begin in 2021 and all farmers will start to see a reduction in their direct payments. A clear signal for all farmers to begin preparations now to adapt and make their farm more resilient to the changing environment is evident.

For more information on how your business will be affected by the reduction in direct payments, please contact James Dunn, Technical Director for Business Management with the ADAS Land Management Team or call 07920 879094.

James can put you in touch with your local ADAS consultant to help you calculate the size of the reduction you will see to your own current direct payments in 2021 and what you can do to prepare and adapt.