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The Agricultural Transition Plan – Is your business prepared?

The Government unveils the path to “Sustainable Farming” from 2021 – the key points

Written by Matthew Sawdon

Plans to deliver a fairer farming system were set out by the government on the 30th October with the release of the “Agricultural Transition Plan”.

The plan will transform the way farmers are supported from 2021, in the most significant change to farming and land management in half a century and sets out the governments vision for UK agriculture outside of the EU.

However, the paper does not provide all the answers and we hope that further detailed and costed guidance will follow.

Here are some of the key points:

Basic Payment Scheme

The reductions to the Basic Payment up to 2024 are now confirmed as follows:

The bands will effectively operate like income tax. The reductions are deeper and more progressive than originally anticipated. By 2024, all claimant’s BPS receipts will be cut by a minimum of 50%. Larger farms will see about two thirds of their current BPS payments removed by 2024.

Payment Band2021202220232024
Up to £30,0005%20%35%50%
£30,000 – £50,00010%25%40%55%
£50,000 – £150,00020%35%50%65%
£150,000 +25%40%55%70%

A retirement scheme is proposed from 2022, which would assist farmers leaving the industry and enable them to receive a lump sum payment that they would have been entitled to receive at the end of the agricultural transition (2027).

De-linking is likely to be introduced from 2024, after which there will be no requirement to match eligible land with entitlements in order to receive a payment.

The Cross Compliance rules are expected to end in 2024 and will be replaced with a new regulatory approach and we await further detail, but we don’t expect significant relaxation.

Environmental Land Management (ELM) Scheme

DEFRA have confirmed that the scheme will comprise three parts:

1 – Sustainable Farming Incentive

To be rolled out in 2022 and open to all farmers, regardless of whether they claim BPS or are entered into Countryside Stewardship. The scheme will pay for environmental improvements and is designed to be able to integrate into the existing farming system. It is likely that farmers will be able to opt for a “package” tailored to the farm type and containing different options, allowing different degrees of management and corresponding payment levels.

2 – Local Nature Recovery

A focus on creating, managing and restoring important habitats such as woodlands, peatland, species-rich grassland, costal habitats; promoting public access and education and is likely to be very similar to the Higher Tier of the existing Countryside Stewardship.

3 – Landscape Recovery

Targeted at landscape and eco-system recovery projects and aimed at a larger scale so likely to see some collaborative activity, perhaps over areas of 2-3,000+ hectares.

There are no indications on how ELM payment rates will be calculated.  Payments could be linked to income forgone, however payments will need to be attractive in order to encourage participation.

Countryside Stewardship – Mid and High Tier

The existing schemes will remain open for new applicants until 2023.  Existing agreements will continue to be honoured and claimants will be able to extend their agreements until 2024, after which they will be able to enter the new ELM scheme.

We anticipate that funding will be increased, and the administration process will be simplified, an issue which has affected the take up of the schemes since their introduction.

Productivity Funding

In addition to ELMs a number of schemes focused on increasing farm productivity are likely to be rolled out from 2021 onwards, as follows:

Farming Investment Fund – Formed of two parts:

Farming Equipment and Technology Fund – will offer grants towards a specific list of farm equipment and items and will be based on the current Countryside Productivity Small Capita Grant Scheme.

Farm Equipment and Technology Fund – grants for more substantial investment in equipment and technology aimed at increasing business performance.

New Entrants Scheme – funding to assist with accessing land and infrastructure.

Slurry Investment Scheme – grant which will pay a proportion of the costs of covering existing slurry stores and creation of new stores to meet storage requirements

Farming in Protected Landscapes – payments for environmental and access improvements in National Parks and AONBs

Support for Innovation, research and development – support for farmer-led research and development projects to develop technology and solve productivity problems.

Animal health and welfare support – promotion of healthier, higher-welfare animals over and above current regulations. Potential for a ”payments by results” approach and capital grants for equipment.

The changes will see farmers facing a potential income gap as direct payments are reduced over the next four years while the new Environmental Land Management Scheme will not be fully operational until after 2024. Whilst the plan represents a significant insight into the UK government’s vision of agriculture post Brexit and is a hugely historical moment, with only one month to go before the end of the transition period with the EU, there is still a lack of detail on the level of support available from 1 January 2021 onwards.

Our team are well placed to advise farming clients on adapting to the changes and what this means for your business.

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