Defra has issued more details on how Delinking of the BPS is to work. The new information includes how business changes are to be dealt with and also the ability to transfer ‘reference amounts’ if the occupation of land has changed.
We gave brief details of the Delinked payment in February 2022 (see https://abcbooks.co.uk/lump-sum-payments/). To recap, the process is as follows;
BPS payments for the years 2024 to 2027 will not be linked to the occupation of agricultural land
payment will be based on the average of the (English) BPS received by the claimant in the three years 2020, 2021 and 2022 (this excludes any reductions for penalties or Agricultural Transition deductions). This is the ‘Reference Amount’
this Reference Amount will be paid in 2024 to 2027, subject to future Agricultural Transition deductions (which will be 100% by 2028 – i.e. no payment beyond 2027). The official deductions for 2024-2027 have not yet been set by Defra
the farmer must make a BPS claim in 2023 to ‘activate’ the Reference Amount. This can just be the minimum claim of 5 Ha and does not have to be on the same land that generated the Reference Amount
those that opted for the Lump Sum exit scheme will not be eligible for the Delinked payment
claimants will not have to apply for the payments – they will come automatically. Delinked payments will continue to be made in two parts – one in the summer and one in December
Delinked payments will not be subject to the cross-compliance regime, although farmers will still have to abide by all the legal standards that have been included under cross-compliance in the past
The new information that has come out of the latest Defra announcement includes the following;
later in 2023, all those the RPA believes are eligible for a Delinked payment will be sent a statement setting out what their Reference Amount is. It will presumably be possible to challenge this if a mistake has been made
in some cases, there will have been business changes since the start of the 2020-2022 Reference Period. This includes mergers of businesses, splits, inheritance, and the change of trading status (e.g. Partnership to Company). If this has resulted in the business having a new SBI from that in the Reference Period, the Reference Amount can be transferred to the new SBI. The new business still needs to have made a BPS claim in 2023 (apart from some inheritance cases)
it will also be possible to voluntarily transfer Reference Amounts. This might be the case if one party has given up land during the Reference Period, but they wish the new occupier to receive the benefit of Delinked payments from it until the end of the BPS in 2027. This is especially relevant in tenancy situations. Defra has stated that this will be a private matter for the parties involved whether they wish to do this – the Department will not get involved in disputes. There will be a transfer period in early 2024 to allow these changes to be made.
For the full Defra guidance see – https://www.gov.uk/guidance/delinked-payments-replacing-the-basic-payment-scheme
Three of the country’s largest farmer-owned procurement groups have formed a joint-venture to increase their buying power. Fram Farmers, Anglian Farmers (AF Group), and Woldmarsh Producers have joined forces in the ‘Agri Procurement Alliance’ (APA). This will initially be used to purchase fertiliser for members. If successful, it may grow to cover other farm inputs, but the buying groups are keen to point out this is not the start of a merger process – they will continue to operate as independent businesses.
The AHDB has released research on key competitor nations to the UK in various agricultural commodities. This looks at costs of production in the 2019-2021 period using AgriBenchmark data. Overall, it found the UK was relatively high-cost in beef and pigmeat production. It was middle-ranking in terms of cost of production for wheat, barley and lamb. For dairy products, we are quite competitive globally (but not as low-cost as New Zealand producers). The full analysis can be found at – https://ahdb.org.uk/trade-and-policy/export-opps/competitors.
A brief reminder that the last day to submit a 2023 BPS claim in England (without penalty), including Young and New Farmer applications and to transfer entitlements is 15th May. All scheme rules and details on how to claim can be found via https://www.gov.uk/government/publications/basic-payment-scheme-2023 The revenue claim window for Countryside Stewardship and Environmental Stewardship is also open and closes on 15th May.
There has been no further announcement on when the six new SFI options for 2023 will be available. When they were originally announced (see our January article) it was stated that farmers would be able to apply ‘from the summer’. A June scheme opening was suggested. But as we approach this date, no more detail has been forthcoming. As soon as we know anything, we will publish an article. Another outstanding SFI question that has yet to be answered is the question of adding Standards to existing agreements. The original rules state that an SFI agreement can be amended on its yearly anniversary. This would mean that those that have already signed-up for the Soils Standards over the past few months would have to wait some months to enter the six new 2023 SFI Standards until the anniversary rolled around. There was a view that a derogation might be available for these people to enter earlier but, again no details have been forthcoming. For those not already signed-up to the existing Standards, but considering it, we would suggest that they now wait for a couple of months for more information and, hopefully, more Standards, to become available.
For the Government to achieve its ambitious target of net zero in 27 years and to reach its environmental targets set out in the Environmental Improvement Plan (EIP), it acknowledges it will require a step-change in investment. Recently two pieces of policy have been released addressing ‘Green Investment’ and how to ‘mobilise’ private investment in this area. Mobilising Green Investment: 2023 Green Finance Strategy is an update to an earlier 2019 Strategy. The 2023 Strategy represents the latest policy blueprint developed jointly by HM Treasury, the new Department for Energy Security & Net Zero, and Defra. It aims to ‘strengthen the UK’s position at the forefront of the rapidly growing global green finance market, while driving private investment to deliver our energy security, net zero and environmental objectives’.
Alongside the Green Finance Strategy, and perhaps of more interest to land managers, Defra has released a Policy Paper entitled Nature Markets: A Framework for Scaling up Private Investment in Nature Recovery and Sustainable Farming. The Framework sets out;
core principlesto ensure markets operate with integrity and deliver positiveoutcomes.
current rulesfor how farmers and other land and coastal managers can accessmarkets and combine income streams, and plans to further develop policy in thisarea.
a new arrangement with the British Standards Institution (BSI) to develop a suiteof high-integrity nature investment standards. These will enable new markets todevelop and emerging markets to scale up and operate soundly
next stepsto clarify and develop institutional and regulatory roles and market infrastructure needed to ensure good market governance.
Overall, the Nature Markets Framework provides a good summary of the current state-of-play in these developing environmental markets. It also sets out what the Government plans to do in the future to help them develop further. For those with an interest in this area it is probably worth a read (and only 38 pages).
The second round of the Water Management Grant opened on 19th April and will close on 12th July 2023. This is part of the Farming Investment Fund (FIF) and offers grants of between £35,000 and £500,000 for capital items which help improve farm productivity through more efficient use of water for irrigation. This is by using best practice irrigation application equipment and to secure water supplies through constructions of reservoirs. A list of eligible items can be found in the guidance at https://www.gov.uk/government/publications/water-management-grant-round-2/about-the-water-management-grant-round-2-who-can-apply-and-what-the-grant-can-pay-for. As in the previous round there will be a two stage application process. The first stage will be an online eligibility checker and to see how the project fits with the priorities of the scheme, this can be found via https://check-farming-transformation-fund.defra.gov.uk/water/start. Those successful at the first stage will be invited to make a full application by 31st October 2024.
Further to our article in December (see https://abcbooks.co.uk/nutrient-mitigation-scheme-2/) developers wanting to build new housing within the Tees catchment area can now apply to buy nutrient mitigation credits. This is the first scheme that is completely ‘up and running’; Defra and Natural England are working to provide similar projects in affected catchments across the country. Developers in the Tees catchment will need to calculate how many credits are required to mitigate the nutrient pollution caused by the proposed house building, using the Teesmouth nutrient budget calculator (version 2.2). These calculations are submitted as part of the Planning Application.
Defra and Natural England have been working with partners, such as the Wildlife Trusts, in affected catchments to ‘identify and develop’ additional mitigation projects such as creating new woodland or wetland areas. These will then be used by Local Planning Authorities (LPAs) and developers to unlock the building of new homes across the country, whilst also contributing to nature recovery. Natural England is working with LPAs and other partners to identify opportunity and need in each catchment – it is recognised that the scheme will develop at different rates in different catchments, but could potentially be a further income stream for some landowners.
The legislation to allow gene editing technology to be used commercially in England has passed into law. The Genetic Technology (Precision Breeding) Act received royal assent on 23rd March 2023. This provides for a streamlined regulatory system for precision-breeding techniques. More onerous regulations will remain in place for genetically modified organisms (GMOs). Gene editing ‘switches on and off’ genetic coding which is already present in an organism, whereas GMOs include genetic material introduced from a separate organism.
The new rules will initially apply to plant breeding, before being rolled-out later to farm animals if proved successful. The legislation only applies to England with Scotland, Wales and Northern Ireland still to approve the commercial use of gene editing.
It will be some time before farmers are growing gene-edited crops however. Secondary legislation is needed to implement the new rules, with estimates that this could take two years. Also, the Food Standards Agency (FSA) will need to approve any products produced from gene-edited crops before they can be placed on the market. Defra’s estimate is that it may be five years before crops are ready to be grown commercially.
Defra has recently put out a Press Release announcing £110m worth of funding available to support rural businesses and community groups between 2023 and 2025. This is not actually ‘new’ money, as it was announced last autumn (see our article from September 2022 https://abcbooks.co.uk/rural-funding-boost/). But it is a timely reminder that there will be support for projects such as farm diversification, boosting rural tourism and for start-up local businesses to create opportunities for rural areas. The funding will be operated by Local Authorities and is a ‘rural top-up’ to the UK Shared Prosperity Fund (UKSFP) which is worth £2.6bn. Those who have a project which fits into the categories above are urged to contact their Local Authority. Each LA will operate its own process for allocating grants – and many are not yet operational. It is expected that some will be running individual ‘calls for projects’ similar to that under the previous LEADER funding.
