The seven-year transition proposed by the Agriculture Act 2020 began in November 2021. The core element in this transition period is to move funding for farms off the EU Basic Payment Scheme (BPS) and onto the new Environmental Land Management Scheme (ELMS). However, the move to change the subsidy program has not been without controversies, as farmers are pushing back to delay the new subsidies that reward farmers for eco-friendly practices.
Read on to understand more about the pushback and what it could mean for you and your farm or agriculture venture.
BPS pays farmers for the land they own, regardless of their environmental impact, whereas the new ELMS subsidy rewards farmers for eco-friendly schemes and sustainable farming practices. In an ideal world, this motion is positive, but the National Farmer’s Union (NFU) urges the UK government to delay the ELMS until 2025 and keep the BPS system in place.
This is not because the NFU is against rewarding green initiatives but rather because farmers in England face losing at least half of their subsidies by 2024 following Brexit. The government plans to cut basic payments by a minimum of 50%, which were the primary source of funding under the EU Common Agricultural Policy. There is no clear view of how farming businesses can generate income streams. The uncertainty of future schemes coupled with rising costs and losing the BPS is a cause for concern for farmers across the UK.
The NFU wants to provide UK farmers with some stability in the current tumultuous times. There are numerous challenges facing the UK agriculture, farmers, and the industry right now, most specifically:
The economic arguments made by the NFU seem reasonable, all they are asking for is a 5-year delay, but there has been pushback against their proposal to delay ELMS. Analysis done by the Green Alliance shows that delaying ELMS would see the agricultural carbon emissions being half of what they could be in 2035 if the scheme went as planned. Saving on carbon emissions is cumulative. If there is a delay in ELMS, this will put more pressure on other industries to decarbonise even faster to make up for the loss in the farming sector, leaving a substantial gap in the UK’s net-zero plans.
By agreeing to the NFU’s petitions to half the ELMS scheme, the UK’s climate targets will be put at risk and undermine the transition that UK’s best farmers have already invested in. The Green Alliance argues that it would be better to help farmers build a nature-positive, carbon-negative food production system, rewarding and incentivising sustainable farming practices ahead of the competition.
Many farmers have begun to take steps to limit the financial impact of their business, like buying fertiliser in advance or reducing the number of cattle on the pasture to make grass last longer as a food source for the cows. However, with prices rising next year, farmers are concerned about the long-term and financial challenges ahead.
Inflation, a recovering supply chain that’s shaky after a pandemic, and a war in Europe, all coupled with a period of reductions in direct subsidies, present a dire outlook.
The Agriculture and Horticulture Development Board (AHDB) recommends farmers understand their business and the market pressures it faces to plan for the future. The ELMS payment rewards farmers who engage in sustainable farming practices, so they can consult with experts like Granter on measures they can already take. Actions like improving soil health and water quality, enhancing hedgerows and promoting integrated pest management apply to the Sustainable Farming Initiative (SFI) rewards scheme.
The second tier of ELMS pays for actions supporting nature recovery and delivering environmental priorities next year. The third tier is the final, long term project comprising the Landscape Recovery Scheme. These incentives include large scale tree planting and peatland restoration.
However, should the NFU’s petition go through, farmers would continue to get the BPS until 2025, giving them time to get their finances in order before focussing on sustainability.
Either way, now more than ever, farmers and agriculture ventures need as much financial support as possible. Most farms and agriculture businesses qualify for R&D tax claims. We can help you untangle the claims process and the data you have on hand, and we can put a claim together for HMRC so you can get much needed additional funding. Get in touch with us, and we can see how we can help make things easier for your business.