It has been suggested the the Higher Tier Environmental Stewardship scheme may not be open for applications until next summer. Although not yet confirmed by Defra, the CLA stated at its Annual Conference that it had been informed that there would be a significant delay. The scheme was orignally planned to be open in mid 2024.
Although there has been no formal notification from RPA, it appears that the Capital Grants schemes in England have been put on hold whilst a review of the schemes is carried out. We have been made aware that no scheme offers have been made for a while now for applications to the stand alone (‘environmental’) capital grants which are open all year round. Furthermore there has only been one round of the smaller Farming Equipment and Technology Fund (FETF) this year, after being told earlier in the year (albeit under the previous Government) there would be three. It is believed budget pressures and an increase in applications has prompted the RPA to review its offering to ensure there is value for money. An announcement regarding the schemes is expected shortly.
Defra has released its latest Farm Business Income (FBI) figures for England. The data relates to the 2023/24 year – covering harvest 2023 and the 2023 BPS payment. They are an update of the estimates released in the spring (see https://abcbooks.co.uk/farm-business-incomes/). Although titled ‘income’ what the series shows is average profit at the farm level for a typical farm in each sector. The chart below summarises the data for the past few years – all figures are in real terms at 2022/23 prices.
An average is first given for the five years 2015/16 to 2019/20. The data for the four following years has been split into the contribution from each of four profit centres. It shows how important subsidy income (BPS and agri-environmental income) is to the profitability of some sectors of English farming. The light blue columns are our initial forecasts for the current, 2024-2025 year.
The Cereals and Dairy sectors both experienced big decreases especially compared with the high levels seen in the previous two years. Average FBI for Cereals farms fell by 73%, compared with the year earlier; to £39,400 due to lower farmgate prices resulting in a fall in crop output of 19% coupled with higher input costs. Cereals farms actually made a £26,400 loss from its agricultural enterprise in 2023/24, requiring output from diversification (£26,500), the BPS (£26,100) and agri-environment payments (£13,200) to bring it back into profit.
On Dairy farms the average FBI was 68% lower at £70,900 with a fall in the farmgate milk price being the main driver. General Cropping farms also experienced a decline in FBI, but by a lessor extent; by almost a quarter to average £95,300. On these farms, the lower ouput from cereals and OSR was partially offsett by increases in output from potatoes and sugar beet.
The grazing livestock sector continues to struggle even with strong farmgate prices. The FBI on Lowland Grazing Livestock farms fell by 24% to £17,300. Whilst livestock prices remain high, the revenue and closing valuations were lower for sheep enterprises meaning fewer animals sold and lower stocking densities. On LFA Grazing Grazing Livestock Farms the FBI was down 12% to £23,500, with the rise in fixed costs more than offsetting an increase in agricultural output – general farming costs and net interest payments rose by 29% and 67% respectively. It can be seen that Agri-environment and BPS payments at £14,700 and £17,100 respectively are important to these types of farm.
In contrast to the previous sectors, FBI rose for both Specialist Pig and Poultry producers. The average FBI for Pigs increased by 87% to £135,800, mainly due to a 25% increase in pig output reflecting higher throughput and prices for both store and finished pigs. These farms made a £40,100 profit from agricultural activities but notable is their £71,800 profit from diversification activities which includes food processing/retailing and renewable energy. There is always a note of caution around both the Specialist Pig and Poultry figures as the samples are relatively small meaning individual farms can have a large influence on the results, this is possibly what has happened here with the diversified enterprises. Compared to 2022/23, the average FBI for Specialist Poultry Farms rose by nearly a quarter to £143,600. Despite a fall in output from broiler enterprises of 15%, livestock output overall rose by 2%, driven by an increase in output from eggs of 33% which reflected both higher prices and volume produced.
Looking to the current, 2024/25 year, first Defra estimates will be published in the spring. We have included our initial forecasts in light blue on the chart. These are likely to show further falls in the profits from Cereals farms as cereals prices remain lacklustre and yields will be lower. All other farm types are forecast to see an increase with a stronger recovery for Dairy Farms. Livestock prices remain high, likewise potato and sugar beet and the milk price has made a good recovery. The exception being Specialist Pigs which is forecast to experience a small decline as the pig price eases. The full report can be found via https://www.gov.uk/government/statistics/farm-business-income .
Defra has opened a consultation on the regulatory approach and the use of civil sanctions for hedgerow management. Readers will recall, following the end of cross-compliance last year, new rules to protect hedgerows were put in place (Management of Hedgerows (England) Regulations 2024). These were effectively the same as the previous – 2m buffer strip and cutting ban from 1st March – 31st August (see our earlier article https://abcbooks.co.uk/hedgerow-legislation/ ). Also required are new enforcement rules which the RPA will manage and it is these which are currently being consulted on.
The consultation says the RPA is proposing to take an ‘outcome focused regulatory approach’. This means, except in cases of serious harm, it will look ‘to provide advice and guidance in the first instance before taking enforcement action’. If enforcement is required the proposals include four civil santions to be available to the RPA under the Regulations:
Views must be submitted by 10th December and the full consulation can be found at https://consult.defra.gov.uk/legal-standards/consultation-on-hedgerow-regulatory-approach/
The RPA has started to contact those that are due a Recovery Payment following the extreme wet weather last winter including Storm Babet in the autumn and Storm Henk in January 2024. The Environment Agency and Met Office data has been used as follows, to identify which farm businesses will receive the recovery payment.
RPA has then applied the following payment bands to areas identified for each affected business:
Around 13,000 farm businesses will receive this one-off payment as a contribution towards the uninsured costs incurred from returning their land to its pre-flooding condition. There is no need for farmers to submit an application or claim form. The RPA will contact those who are eligible, usually via an email. This will include a list of field numbers that have been deemed to be affected and notification of the payment due which will be made within 28 days of the email unless farmers notify RPA of any changes.
The Welsh Rural Affairs Minister, Huw Irranca-Davies, has announced application windows for further SFS Preparatory Phase schemes. In addition to the schemes announced at the end of July (see https://abcbooks.co.uk/future-support-wales/) the following schemes will also be available with some already open;
In addition to these new announcements a reminder that the Woodland Restoration Scheme has just opened and will close on 28th February and also the Habitat Wales Scheme 2025 will be available on the SAF from 3rd March next year. Details of all the schemes can be found via https://www.gov.wales/rural-grants-payments
From 12th November, an Expression of Interest is no longer required before applying for the SFI 2024 expanded offer. Applications can now be made through the Rural Payments Service without having to wait to be ‘invited’.
Not mentioned by the Chancellor in her Budget speech, but buried in the accompanying documents, was news on the UK Shared Prosperity Fund (UKSPF). This includes the Rural England Prosperity Fund (REPF). The UKSFP replaced money that previously came from the EU for regional and structural funding. The REPF filled the gap left by EU Rural Development funds. It has been announced that the UKSFP will continue for a further 12 months from April 2025. However, funding will be cut from the current £1.5bn p.a. to £900m. The European schemes usually included capital grants for farm diversification projects. In theory, the UKSPF and especially the REPF, could support this too. However, this funding has been given to Local Authorities to distribute. This has seen a patchwork of initatives spring up. Some Authorities have opened grant schemes to which businesses can apply. Others seem to have used the money to fund programmes (e.g. training) or even support their own pet projects. Some appear to have done very little at all with their allocations. Therefore, although the announcment of continued funding is welcome, with the reduction in the budget, and the complex delivery arrangements, it is unlikely to make much difference at farm level.
Victoria Atkins has been appointed Shadow Defra Secretary by new Conservative leader Kemi Badenoch. Ms Atkins was previously Health Secretary but should have a decent grasp of agricultural matters as she is married to Paul Kenward, Chief Executive of British Sugar. She was elected as the Member of Parliament for Louth and Horncastle in May 2015. Prior to her election, Victoria Atkins was a criminal barrister specialising in prosecuting serious organised crime. Robbie Moore has been (re)appointed to Shadow Farms Minister. He is MP for Keighley and Ilkley.
Following the Budget, Defra has released further information on its farming support schemes for 2025. Details can be found in a Defra Blog post – https://defrafarming.blog.gov.uk/2024/10/30/budget-2024-maintaining-momentum/.
Following the Budget, Defra has announced the deductions to delinked (BPS) payments in England for 2025. Readers will recall we have been waiting to find out the reductions for the years 2025-2027. It appears the cuts will be far deeper than we, and many others, forecast. Defra has said, for 2025, it plans to apply a 76% reduction to the first £30,000 of a payment; we had previously estimated 65%. Importantly though, for amounts above £30,000, there will be no payment at all – the deduction will be 100%. This means that all English farms will receive no more than £7,200 in direct payments next year. I.e a BPS delinked Reference Amount of £40,000 will be cut to £7,200 in 2025, reducing from £19,500 this year. This will come as big shock to many, especially on the back of a poor harvest and two difficult autumns.
Defra has confirmed that SFI, Countryside Stewardship (Higher Tier) and Landscape Recovery schemes will continue.
The SFI 2024 expanded offer is open, although still requires an Expression of Interest to be submitted first and an ‘invitation’ from RPA to make an application. There is no indication when the scheme will be freely open.
There will be more information regarding Countryside Stewardship Higher Tier in December (previous announcements has said it would be available ‘in the autumn’). Farmers with expiring HLS or Higher Tier agri-environment agreements this year will be offered an extension to their existing agreement, supposedly to allow them time to move into new agreements in an ‘orderly way’. The long-awaited process for those in legacy HLS agreements and those farming on Commons to transfer into new schemes, which was supposed to have been available from September has been pushed back until next year now – Defra states ‘Next year, we will make it much easier for farmers in legacy HLS agreements and those farming on Commons to transfer into new schemes smoothly, as and when they wish’. This transfer process which was promised at the outset of ELM, appears to keep getting pused back. Furthermore there is no real announcement on the third element of ELM, Landscape Recovery, the previous Government had committed to annual rounds, but there has been no application available this year as yet. The latest announcement says ‘we will share more about future rounds of Landscape Recovery in due course’.
Defra has confirmed it will honour the £60 million which was made available under the Farming Recovery Fund to support those affected by Storm Henk and other severe weather last winter. It has said the RPA will contact eligible farmers directly. It has also stated ‘We will simplify and rationalise our grants offer to prioritise the initiatives that deliver the most critical support for food security and environmental goals in England. We will confirm the plans for our grant rounds in due course’. It is unclear what this is actually referring to, whether this is the capital grants under the Farming Investment Fund, which have not opened as ‘expected’ this year.
