Agriculture funding: Changes and opportunities

People need to eat, but in the current climate farmers could be forgiven for thinking that this basic fact has been forgotten by policy makers. We are faced with the Agriculture Act 2020 that fails to mention food production, instead endorsing at length the concept of public funds for public good. Public good is not defined as such, but the Act and the consequential funding schemes place access to the countryside for recreation, environmental and climate considerations ahead of food production.

New agriculture funding schemes

In this blog, we will explore the changes and opportunities that the new funding schemes, such as the Environmental Land Management Schemes (ELM) and Countryside Stewardship (CS), offer to farmers and land managers.

The end of direct payments

The end of direct payments will be a significant challenge, as this has been a crucial source of income in a world where complex global and domestic influences mean that farmers survive on tiny margins. The UK Government plans to phase out the Basic Payment Scheme by 2027 and replace it with a new system that rewards public goods such as biodiversity, carbon sequestration, and soil health. The Environmental Land Management Schemes (ELMS) are the cornerstone of this new financial assistance scheme, and it comprises three parts: Sustainable Farming Incentive (SFI), Local Nature Recovery, and Landscape Recovery.

Sustainable Farming Incentive

The SFI is the first part of the ELM. This will reward farmers for sustainable land management practices such as reducing pesticide use, improving soil health, and planting hedges. It is a starting point for farmers to get used to the new system, and has been available since 2022 to all farmers who currently receive BPS. The Government has pledged £1.2 billion for the SFI, which will be distributed over seven years.

Local Nature Recovery

The Local Nature Recovery part of the ELMS aims to restore and create wildlife habitats, such as wetlands, woodlands, and hedgerows, at a landscape scale. It will replace the existing Countryside Stewardship scheme, which will close in 2023. The Local Nature Recovery scheme will be piloted in 2022 and fully launched in 2024. The Government has allocated £225 million for this scheme, which will run for seven years.

Landscape Recovery

The third part of the ELM is the Landscape Recovery scheme, which will fund larger-scale projects that will bring about transformative change, such as landscape restoration, woodland creation, and peatland restoration. This scheme is designed to work alongside the Local Nature Recovery scheme and is planned to start in 2024.

Countryside Stewardship

The Countryside Stewardship (CS) scheme will continue to run alongside the ELM until 2023. The CS scheme has been broadened and extended to offer farmers and land managers rewards for environmental work carried out alongside sustainable food production. The scheme includes options for providing food and shelter for wildlife, managing historic features, and promoting public access.

Private Funding

Finally, don’t forget the old fashioned bank or other third party funding institution. Banks in particular are working hard to get to grips with the new environment too in order to support their farming customer base and where there is a business case for a profit generating enterprise, they can help.

Conclusion

The new agriculture funding schemes, ELMS and CS offer a range of opportunities for farmers and land managers to gain financial support for activities that benefit the environment, wildlife, public access. Whilst not a stated aim of the new funding schemes, they do potentially encourage a new look at old fashioned mixed farming and crop rotation schemes that if done right may help to increase margins via improved soil health and reduced inputs. Changes to the way livestock can be housed and fed, for example, if the climate and soil type is right, with more outdoor living and mob grazing may reduce input costs, increase animal health as well wildlife diversity and reduced run off. Carbon sequestration and nitrogen mitigation schemes can also fit in to provide income in relation to poor quality land that was never that productive. And don’t forget too that “out of the box” thinking can assist. The farm on the urban fringe for example can profit from the rise of the doggy outdoor play park. Created from a couple of acres of poor land, stock fenced and with hard standing for parking, an online booking system and a bin can create a steady stream of income and satisfy the public need for outdoor safe spaces.

The next few years will be challenging. It is vital that the Government provides clear guidance, support, and feedback to farmers and land managers, and co-ordinate with other industries such as housebuilding, in order to really enable schemes to be successful on all fronts, not least income generating for the farmer and landowner, and enable the British public to enjoy food security.

If you would like any help or guidance regarding agriculture funding please contact our agricultural law expert, Elinor Davis. Please also take a look at out Agricultural Land, Farms & Estates web page to see the full range of services that we can help with.