Environmental Land Management Scheme Update

At the end of January, DEFRA published an update on the Environmental Land Management (ELM) suite of schemes, setting out how the government proposes to pay for environmental goods and services in the coming years. As the  Environment & Conservation Manager, I have been analysing the highly complicated details and see limited but crucially important opportunities for farmers and landowners to benefit from new Sustainable Farming Incentive standards.

The recent Defra announcement was very long and somewhat confusing, and much of it was dedicated to reiterating the options already available through existing schemes. But it did provide details of six new Sustainable Farming Incentive (SFI) standards that will be launched later this year:

• Hedgerow standard
• Integrated pest management
• Nutrient management
• Arable land standard
• Improved grassland standard
• Low input grassland standard

These new standards will sit alongside the three existing standards – arable soils, improved grassland soils and the moorland standard, which were launched last year. Defra confirmed that existing SFI agreement holders will be able to add new standards and new land into their current agreement, although it is not yet clear whether they will have to wait until the anniversary of their agreement to do this.

Defra also announced an SFI Management payment to reflect the cost to farmers of entering and maintaining their SFI agreement. This payment will be £20 per ha, up to a maximum of £1,000. It is assumed it will be possible to add this to existing agreements, but again the guidance is not clear.

In addition to the changes to SFI, Defra has confirmed that the planned middle tier of ELM – the Local Nature Recovery Scheme – will no longer be going ahead. Instead, the intention is to develop the existing Countryside Stewardship (CS) scheme by offering a wider range of options designed to deliver the public goods that the current scheme does not cover. Details of these additional options will probably be announced later in the year.

With regard to the new SFI standards, the announcement is light on detail, but Defra has published indicative payment rates for the actions that will be involved.

Hedgerow Standard

Integrated Pest Management

Nutrient Management

* but with more requirements in CS in return for a higher payment rate (£382 per ha)

Arable Land Standard

Improved Grassland Standard

Low Input Grassland Standard

As can be seen from the above list, most of the actions in the new standards have equivalent options in the Countryside Stewardship Scheme. This overlap between SFI and CS is somewhat confusing for farmers in terms of knowing which scheme to apply for. In each case (bar one), the payment rate is the same in both schemes, but the detail of the management needed may be subtly different. For example, in the low input grassland CS options (GS2 or GS5) no supplementary feeding of any kind is allowed, but this is not a rule in the Low Input Grassland SFI Standard.

Possible advantages of considering the SFI route are that payments are made quarterly, rather than annually in arrears, and the online application process is much simpler.

As well as potentially more flexibility in the management prescription, record keeping requirements are likely to be much less onerous in SFI than in CS. In SFI, the commitment is only for three years, rather than five, which makes it easier for some tenant farmers to access. On the other hand, a Mid-Tier CS agreement can leverage far more in the way of capital grants for water quality management and boundary restoration.

What is also clear from this overlap between schemes is that there is not much new for farmers to apply for that will help offset the loss of BPS payments in the next few years. Any farmers already in CS or its predecessors simply have no way of making up this lost income at present. Early in the New Year, Defra announced that many payment rates in CS were being increased but, while this is most welcome, it is woefully short of what is required.

The fundamental problem is that payment rates in CS are based on the principle of “income foregone”. This means that farmers are only compensated for the income they lose as a result of entering the scheme. In other words, they are not expected to be financially better off. If the Government’s vision of “public money for public goods” is to be realised, the payments that farmers receive will need to be based on the value of the environmental goods and services they provide to society, not the income they are losing as a result. Payments for CS options (or their SFI equivalent) will need to be at least £200 per hectare higher across the board to offset the loss of BPS while delivering the environmental gains DEFRA are aiming for.

Even in this simplified summary, the complications and confusions farmers and landowners face in identifying new opportunities for support are obvious. So is the crucial importance of making the most of every opportunity to add as much SFI funding as possible to existing CS participation as BPS payments disappear. As professional advisors, the commitment to help our clients extract maximum advantage at such a difficult time has never been greater.