Category: Updates

New system means farmers must plough their own furrow

10th December 2018

The government’s Agriculture Bill heralds sweeping changes for farmers, which are causing concern in some quarters. Julie Liddle discusses the implications

The Agriculture Bill’s central policy shift is the phasing out of direct payments to farmers for food production and the introduction of an environmental land management (ELM) scheme.

The bill is due for its third reading in the House of Commons later this month (December), before it goes to the Lords for further scrutiny – so there is scope for significant amendment before it enters the statute books in March 2019.

The ethos of the new scheme in a nutshell

The new system will reward farmers for environmental measures as opposed to food production – under the concept of ‘public money for public goods’. Public goods are defined as measures including carbon reduction, protection and preservation of wildlife, improvement in soil, water and air quality, better management of flood risk, and the provision of public access to the countryside.

Direct payments will be gradually phased out over seven years before being totally abolished in 2028. Direct payments will be made on a similar basis in 2019 and 2020 and the phasing out will start in 2021, following Brexit.

It is difficult to overstate the importance of the agricultural sector to the UK economy. Farmland covers 70 per cent of the UK’s land mass, with British farms producing 61 per cent of our food and employing 3.8 million people. Just as crucially, farming supports our largest manufacturing sector – food and drink – which generates £111 billion a year for the UK economy.

Why industry leaders are worried about the changes

Some industry leaders are concerned that the phasing out of direct payments will mean tough times for UK farmers as they compete in an unpredictable global marketplace.

The situation will be exacerbated, they say, because removing the emphasis on food production coincides with a global wheat shortage. The hot, dry weather of recent months has resulted in poor yields and a reduction in exporters’ stockpiles to their lowest levels for 10 years.

Moreover, all speakers on a discussion panel at the Liberal Democrat Party conference in Brighton in September agreed that the Bill represents a ‘missed opportunity’ for the whole food supply chain. Panel members included Ian Wright, Food and Drink Federation (FDF) chief executive, Stuart Roberts, National Farmers Union (NFU) vice president, and Elise Wach of the Institute of Development Studies.

They expressed concern that the bill may fall short in vital areas such as environmental improvement and productivity, while failing to address market volatility, frictionless trade and access to a skilled workforce, post-Brexit.

Key benefits of the changes should also be considered

On the flipside, it can be argued that the new system will support farming businesses with funding designed to enable farmers to increase productivity, as well as collaborating on research and investing in new technologies.

The need to ensure UK farming remains at the top of its game

In the meantime, there remains much to play for as the bill will no doubt be subject to change as it moves through the parliamentary process.

For its part, the NFU wants the government to make the bill truly agricultural by ensuring food production is front and centre of all new measures.

Top priorities for a domestic agricultural policy set out by the NFU include a fundamental recognition of the crucial role of farming and the broad spectrum of benefits it gives to the nation, such as food, plants and flowers, energy and environmental management.

What the NFU wants to see from the reforms

The NFU has set out ten requirements for the bill, including: supporting agriculture to ensure food security; and promoting competitiveness and financial resilience among farming businesses.

In addition, it says the bill must establish a multi-annual budgetary framework that provides certainty for farmers and allows them to plan and invest for the future, while protecting British farming’s high production, animal welfare and environmental standards.

The bill should also facilitate a ‘free and frictionless trade deal’ with the UK’s biggest trading partner, the EU, which the NFU says is ‘absolutely critical’ to our farming industry.

Looking ahead to an uncertain future

It is also fair to say that the Agriculture Bill gives some degree of clarity going forwards. If the transition is effectively implemented, the short-term pain could eventually see the emergence of a more sustainable industry, better equipped to compete in volatile international markets. I suspect much secondary legislation will be published over the coming years as successive governments get to grips with our new and emerging markets.

These are momentous times and the next decade will see wide-ranging and deep rooted changes to the British agricultural sector. In order to thrive and prosper, farming businesses will have to display financial resilience, commercial agility and technical innovation.