With Brexit on the horizon, the U.K.’s new agriculture bill is expected to drastically change the payments landscape for U.K. farmers — most notably through a new payments scheme known as the Environmental Land Management Scheme (ELMS).
The bill, which is currently making its way through Parliament, intends to replace the existing European Common Agricultural Policy (CAP). It will introduce ELMS over the course of a six-year transition period, beginning in 2021 and finishing by 2027. This will replace all existing CAP payments schemes, including the Basic Payments Scheme (BPS), which provides farmers with regular financial support payments, and various agri-environment initiatives such as the Countryside Stewardship Scheme.
It is expected that ELMS will have a far greater focus on outcome-based environmental payments, although exactly how it will work in practice remains unclear.
“In theory, farmers would receive a payment for achieving outcomes such as delivering clean water or providing more pollination services, but we can’t definitively say what any of the new payment structures are going to look like, because it’s all so conceptual at the moment,” said Claire Robinson, countryside advisor for the National Farmers Union.
“There are also quite a few issues to be resolved around meeting the World Trade Organization rules,” Robinson said. “Are the government only paying when they get the outcome, or making contributions for general maintenance of the land before the outcome is achieved? And how are farmers going to be certain they can deliver them? There could be quite a high level of risk, and cash flow is crucial when you’re running a business. People can’t wait 10, 20 years for a payback that may not happen, so we’ve got to find solutions in terms of how these payments are made.”
The National Farmers Union is hopeful that introducing new schemes will address some of the high-profile failures of the current CAP schemes, namely chronically late payments.
“There’s opportunities to improve delivery and make it a bit more pragmatic,” Robinson said. “With the current agri-environment schemes, there’s farmers who are owed money from 2017, and may still not get it by July this year. But because of the way the Department for Environment, Food & Rural Affairs wrote the contracts, all the risk sticks with the agreement holder, so they haven’t got any legal redress. The main problem is that these schemes are too complicated for everybody to deliver, and the administrative bodies are struggling to meet all the requirements.”
However, other experts predict that the complete elimination of BPS payments under the new bill will lead to more financial hardship than positive consequences within the industry.
“It will mean that an important source of income for farmers will be withdrawn, so that will be very painful for most U.K. farmers who have been rather reliant on that source of income,” said George Chichester, director in the farming department at consultancy Strutt & Parker. “The chances are that the sum of money available under the ELMS will not be as much as farmers are currently getting from the basic payment.”
However, none of the changes will be immediately drastic. While ELMS is still in transition, the bill provides farmers with the option of either claiming BPS until 2027, or taking their remaining BPS payments from multiple future years as a single lump sum. In addition, the government has committed to honoring payments from all existing agri-environment schemes that farmers enter into by December 2020.
But many farmers, especially those who are highly reliant on BPS payments, are likely to wait for further information later in 2019, before making any concrete decisions.
“Right now all we’ve had is timelines,” Robinson said. “We’ll get a formal proposal later this year. The government have just been out to tender asking people to come up with new payment methodologies for future schemes, and whoever gets that will be asked to work up the principles for payments, and then put some values on paper. But there’s a lot to still be decided. For example, there are some sectors within U.K. farming who could go out of business, if the BPS and agri-environment payments aren’t replaced in the right way. But they’re also regarded as looking after high-quality environment, so there has to be some consideration of that.”
