The Secretary of State for Defra, Michael Gove, introduced the Agricultural Bill 2018 to Parliament this week, in what has been heralded, by the government at least, as the first legislation in over half a century to deliver “a healthier and cleaner environment for future generations”.
But bold statements and spin aside, what does the bill set out and what will it mean for farmers and the wider agricultural sector?
Well, the simple answer is that there are no big surprises beyond what Mr Gove has previously been saying. His previous suggestions that farmers would receive “public money for public good” are indeed reflected in the bill, and as suspected, this will mean significant changes to the subsidy regime as we know it.
Direct payments will remain at the current levels for 2019 and 2020, supposedly with some simplification, and then will be phased out between 2021 and 2027, instead being replaced with a new system that rewards farmers for various “public goods”.
These will be for providing environmental measures on farms that include improvements to soil health, air and water quality, and enhanced wildlife habitats. Opening up the countryside to more public access, improving animal welfare, and support for technology adoption and on-farm research and development are also likely to feature highly.
For anyone who has read through the bill, you will have noted that many statements start with the words “the Secretary of State may….”, and this gives Mr Gove, or his successor(s), plenty of flexibility as to how they implement a new payment regime, at what levels, and which sorts of “public goods” will be most rewarded. This is, of course, by design given that until we have a clear idea as to what sort of relationship we will have with the EU, it is difficult to know what support is going to be necessary for what sectors of our industry.
No information has been given as to exactly how the “pubic good” activities will be measured. Furthermore, no details have been specified as to how quickly direct payments will be cut during the 2021-2027 transition period, or indeed indicated the likely starting level of direct payments during the transition, so if there is wider pressure on public spending after the Brexit deal in 2019, we could see big changes to direct subsidies as early as 2021.
Although there is still plenty of detail to be fleshed out, this doesn’t mean that farmers should not be making plans now. This bill has put in to black and white that farmers will not receive subsidies as they do now, and for most farming businesses that is going to mean the need to review the current business structure and where your income is received from. The key message is that unless your business could currently afford to farm without direct payments, you have the next two years to look at how you operate, and have made plans on how to be significantly less reliant on subsidy money.
Making sure you are as efficient as you can be is a key element of this, but you should also be considering whether there are various features and assets on the farm that can be utilised to provide the “public goods” that Mr Gove is looking for, be that habitats and features that you might not even realise you have, through to reusing redundant buildings on the farm, maybe as education centres or for community use.
In the future, and certainly beyond 2027, it is unlikely that any money will be awarded to farmers simply for farming the land. Money could, however, be available for the methods used to farm land, or what you make the land available for. For example, using farming methods that actively conserve and improve soil health could receive payments, or making land available for flooding as part of a flood alleviation scheme for nearby towns is likely to be looked on favourably.
Indications are that proportionately more of the public money will be available in the form of grants or government backed loans than in recurrent payments. Improving technology and supporting research and development has been given specific reference, and suggests that project funding for farm level trials and technology adoption could increase, especially where a number of farmers are prepared to collaborate.
Although, at this stage, there is very little detail available for farmers to firmly plan what to do to tap in to public funds, Arthey Associates advise that the first step should be to review the current financial performance and level of reliance on subsidy support, and based on the information available in the Agricultural Bill, to then consider what benefits the farm could provide to the public, be that environmental or by virtue of location of features. Undertaking a “health check” of your farm at this stage, will then allow you the time to consider what scenarios would work best for you as the details on future support start to become clear.
Please contact Arthey Associates for details of our “Farm Health Checks” to start the process of preparing for the future.