Mark Bridgeman is the President of the Country Land and Business Association and a Northumberland farmer
The Agriculture Bill, which represents the biggest changes in agricultural policy in half a century, returned to the House of Lords last week for its Second Reading. The new policy will support the move to a more sustainable farming industry that can increase wildlife, store carbon, and protect soil, water, and air quality, as well as produce food.
Much of the Government’s agenda is commendable, notably tying payments to the provision of environmental and other public goods. But there is a sting in the tail: sharp cuts, with the phasing out of direct payments will start in six months, and there is still no clarity on how the new system, the Environment Land Management scheme (ELMS), will work in practice. It will take four years before it’s available to more than a very limited number of farmers involved in pilots.
The Common Agricultural Policy (CAP), of which the Basic Payment Scheme or “direct payments” are a part, has been in place for more than 40 years in various iterations. These direct payments are simple to manage, but they have been tainted by poor targeting and value for money. The new policy will replace these payments with “payments for public goods”: payments for managing land in a way that is good for the environment, heritage, and public access. Other programmes will help farmers improve productivity and enhance animal health and welfare.
This is not a small change. Direct payments account for around 58 per cent of the average farm business income, broadly equivalent to profit. This rises to 70 per cent for beef, sheep, cereals, and mixed farms. Only 25 per cent of farming enterprises are profitable without these payments. The replacement of the CAP, set out in the Agriculture Bill, has a lot of good points, but the timing of the change is such that there will be cuts in direct payments a whole four years before the government’s flagship new environmental programme, the Environmental Land Management scheme is widely available in late 2024. Farmers could lose up to 50 per cent of their direct payments by 2024; for some, there might be room to tighten their belt and do things differently, but for many others it means risk of failure, particularly among small, tenanted farmers, or larger farms who have financed innovation and growth through debt, and new entrants.
The farming industry is the foundation of the UK food industry and the Covid-19 outbreak has underlined its role in an adaptable and resilient supply chain. So it is vital that the sector is helped to adapt, and that reform proceeds in a manageable way. This is not about stopping change, but giving farming businesses the time to adapt and make what could be profound changes.
Farmers are used to uncertainty. They must deal with volatile crop and livestock prices as well as extreme weather events, on a regular basis. Many farming businesses are making plans based on what is known of future funding. But this does not mean that all farms will weather the transition period as it is currently laid out.
The best way to kickstart this much-needed agricultural transition is not to remove such a large proportion of current payments before farmers can access the replacement payments. It must begin with a manageable reduction, the provision of information about cuts to individual businesses, and details of future programmes so farmers can plan for the long term with confidence. This means better value for money for the UK Government.
The CLA is supportive of the new agricultural policy but thought must be given to the cumulative impact of the planned cuts in the first phase of transition. It was initially the case that farmers would have more than two years’ notice before direct payments were cut. It is now likely that farmers will have less than six months’ notice. In agricultural planning time, this is not nearly long enough.
The UK Government must look at how it can minimise the risk of viable businesses failing due to short-term cashflow problems. The CLA believes that no farming business should see their direct payments cut by more than 25% before the Government’s new ELMS scheme is available to all. DEFRA also needs to set out, for each individual farmer, what the funding profile of the transition will look like, so they can plan. This will give farmers the information they need to adapt—something that Brexit and now the coronavirus pandemic has made more difficult. Though farming has continued during lockdown, tourism and recreation, which provide crucial additional income for diversified farming businesses, have suffered; more than two-thirds of all farm businesses have diversified income streams, making up almost a quarter of their overall profit.
The Agriculture Bill has sensible goals at its heart. And the CLA recognises the need for change in the sector. But farmers — the people carrying out this change who have been classed as key workers to ensure safe and sustainable food is produced to feed the nation – must be heard. Getting the transition away from the CAP right is crucial so that we can have an industry that can thrive and not be plunged into crisis.