12 Sep A NEW DAWN FOR AGRICULTURAL POLICY
A NEW DAWN FOR AGRICULTURAL POLICY
We are about to see the biggest shake-up of farming policy in decades, as today, DEFRA has launched its new Agriculture Bill which will be put before parliament for its first reading.
The Agriculture Bill sets out how farmers and land managers will in future be paid for “public goods” instead of receiving funds under the current direct payment subsidy system.
So as the new Agriculture Bill starts its journey through the long corridors of parliament, what can we expect to see at this stage;
Direct Payments and Simplification
For 2019, direct payments will be made on the same basis as now, subject to simplifications where possible, and this will also apply for 2020. There will then be an agricultural transition period in England between 2021 and 2027 as direct payments are gradually phased out. DEFRA are keen to look to simplify the application and administration process, and this will be instigated as soon as possible, subject to the terms of the overall Brexit implementation period.
During the agricultural transition period, it is envisaged direct payments will be split into four bands, with different reductions applied to each band throughout the transition period. If your direct payment is up to £30,000, the percentage reduction applied will be 5 per cent. For a direct payment band of £30,000 to £50,000, a 10 per cent reduction, between £50,000 to £150,000, a 20 per cent reduction and over £150,000 a 25 per cent reduction is suggested to be applied.
So for example, if your direct payment is £45,000, it is suggested a 5 per cent reduction would be applied to the first £30,000, and thereafter a 10 per cent reduction will be applied for the next £15,000. The percentage reductions are likely to be increased somewhat further throughout the transition period but further detail will follow.
Golden Umbrella Payments During Transition Period
The Bill creates some radical, forward thinking proposals, in that farmers will be offered the opportunity during the agricultural transition period up to 2027 to take farm payments in a lump sum. It is envisaged this will help new entrants get into the sector and give farmers flexibility to plan for the future. Direct Payments will be “delinked” from the requirement to farm the land, and therefore these payments, which may be calculated according to money received in previous years, can be used by farmers to invest in their business, diversify their activities or else retire from farming and give way for new people to enter. The detail is not yet known, but this is likely to create opportunity for many farming businesses.
Environmental Land Management Schemes
From next year, DEFRA plans to introduce a new Environmental Land Management Scheme which will pay farmers and land managers for providing “public goods”, such as better air and water quality, improved soil health, higher animal welfare standards, public access to the countryside and measures to reduce flooding. It is envisaged that these will take the form of muti-annual contracts based on land management plans which are developed by farmers, who can apply to join the scheme at any time. Public goods will be valued according to natural capital principles, and under the new system, farmers and land managers who provide the greatest environmental benefits will secure the largest rewards. The draft Bill suggests that all farmers will be able to access some kind of environmental package, but the financial benefit will be linked to the value of the public good delivered.
The Bill will also be underpinned by measures to increase productivity and invest in Research and Development. For example, there will be funding available for farmers to come together to develop and get involved in research projects that they want and need, whether that be on improving soil health or sustainable livestock farming. The government hopes that this will lead to practical gains for farmers that help them become more profitable and reduce their environmental footprint.
Supply Chain Measures
The Bill also sets out how the government will strengthen transparency in the supply chain to help farmers get a better deal in the marketplace. By collecting data from across the supply chain, the government will help food producers strengthen their negotiating position at the farm gate and seek a fairer return.
This new domestic policy is undoubtedly a huge shake up to the current system as government looks to promote a strategy which delivers wider ‘public good’ in exchange for financial support. Many farming businesses will need to plan ahead for the forthcoming financial reduction, but also to seek the opportunities the Bill creates. The golden umbrella payments and environmental land management schemes will open opportunities for businesses, and these should be explored once further detail is released.
We have a great team at Brockthorpe Consultancy operating across Northumberland, Yorkshire and Lincolnshire and would be happy to have a chat to talk through what the Agriculture Bill means for you and your business.