The Government has at last published the long-awaited Agriculture Bill, together with substantial policy guidance and a summary of responses from the Health and Harmony consultation. Savills welcomes the Bill, which sets out a bold vision for future agricultural, environmental and food chain regulation in the UK, but is warning farmers and land managers to carefully examine what impact the loss of Basic Payment Scheme income will have on their businesses. These impacts will be felt by both trading businesses dependant on subsidy, and those letting or renting land on tenancy arrangements.
Emily Norton, head of rural research at Savills UK explains: “The statements accompanying the Agriculture Bill set out the broader context for agricultural and environmental policy reform in the UK, whereas the Agriculture Bill sets out the structure under which the Secretary of State can give financial assistance to farmers and land managers in England. If you are currently an “active farmer” and receive BPS, there is no guarantee that you will qualify for payments under the new Environmental Land Management Scheme.
“Future financial assistance payments will be linked to the provision of “public goods”, such as granting public access, mitigating climate change or managing land or water in a way that protects or improves the environment. It is not providing any element of income support for returns from agriculture. This infers that categories of land such as forestry and scrub areas previously excluded from direct payment support may qualify for financial assistance payments. There will be no presumption of eligibility based on the existing direct payment scheme.”
The total budget to be invested in UK environmental land management and the basis on which the value of public goods will be determined are also not confirmed.
Stuart Nicholls, food and farming consultant for Savills in the South East, added: “This will be important because a targeted spend per area to ensure balanced investment across the regions will produce very different outcomes compared to a pure public goods approach. Improving access arguably provides the highest returns to the public, yet this will also produce a bias in spend towards the most densely populated regions of the UK. Conversely, targeted spend on woodland creation for example may benefit those upland areas with the lowest bare land values the most. This detail is still up for grabs”.
The Health and Harmony consultation responses were published just after the Bill, and revealed the thinking behind the Agriculture Bill was hardly altered by the consultation. “The Government stuck pretty closely to its previously stated policy objectives and the opportunity for the industry to influence the outcomes, therefore, has to be questioned”, suggests Emily Norton.
There are additional powers contained in the Bill that seek to protect agricultural producers from unfair supply chain actions, both in terms of supply chain transparency and in regulating contract terms with producers.
“We are particularly interested in the extent to which these measures will be utilized to help producers mitigate weather and market risk. With the loss of direct payments, farming businesses will be poorly placed to absorb market volatility. We do not want an outcome where investment in innovation, infrastructure and livelihoods is threatened because of farmgate pricing uncertainty. Clarification on the extent of these powers and how they will be enforced to ensure fairness in agricultural supply chains will be welcomed,” Stuart Nicholls continues.
The phasing out of direct payments over the course of the transition period poses the most immediate concern for farmers.
Stuart Nicholls concludes: “As with all things in life, there are things you can worry about and things you can control. In relation to BPS, we advise farmers and land managers to start preparing their budgets without the direct payment element, and start developing a strategy that enables the business to thrive without it. Where the loss of direct payments poses a specific concern to tenancy arrangements, or to inheritance tax planning, we advise that specialist advice is taken to plan ahead.”
