Ian Ashbridge, Agribusiness Consultant at Bidwells discusses how the new bill could have impacted much more to the rural industry.
Previous Agriculture Bills, passed into law, delivered huge reforms to British Agriculture, placing the focus on primary production, food security and succession to agricultural tenancies. The 2018 Agriculture Bill claims to deliver a green Brexit, putting the environment first. Both are important aims, but the Bill is depressingly quiet on issues like food production, food security, improving the efficiency and competitiveness of UK agriculture. As such it is a poor successor to the legislative milestones that came before it.
The 2018 Agriculture Bill’s major focus is in allowing the government legal powers, first to adopt the system of paying farmers’ funds under the current Basic Payment Scheme (BPS), and then to dismantle that system over a seven-year period, during which an Environmental Land Management System – “de-linked” from the need to occupy or farmland - will take its place. Almost nothing of the detail of this system is yet known, beyond the idea that it will replace the Basic Payment Scheme and the current Countryside Stewardship regime too.
Business as usual for 2019 and 2020
The current BPS system will remain in place, largely unaltered, for 2019 and for 2020, although the government may introduce “simplifications”. It may be too much to hope that this means a removal of the unwelcome and inefficient Crop Diversification Rule. From 2021, a seven-year transition period begins, with the current system of direct payments removed entirely by 2028.
Initial reading
In the announcement of the Bill’s publication, DEFRA repeated the view that the current system of payment to farmers is manifestly unfair, since it delivers the most money to those with the greatest area of land under their occupation. This is true, since the payments are claimed on an area basis. But it is also worth understanding that it took 45 years of developing policy to get to this point, leaving behind instruments of market intervention to both stimulate and curb food production. It could be argued that the current system is the “least bad” of all the alternatives; that is not to defend it, but to acknowledge that previous governments and policymakers have understood that most systems of supporting farmers are imperfect – but that, so important is food production (and security), that it is worth living with the worst aspects of these policies.
It is difficult, on reading this Bill, to avoid the conclusion that the government is placing environmental ideals above the real needs of food self-sufficiency and security in a nation of 60-odd million people. Certainly, the initial NFU response has been one of dismay at the lack of emphasis on meeting the food needs of a growing population.
Shift in support
If this Bill reflects a shift, from government support for food (and energy) production towards genuine environmental stewardship, it is a huge pity that it does not articulate any further what “farmers delivering for the public good” actually means. The bill gestures towards noble ideas such as “better air and water quality”, “improved soil health”, “flood prevention”, and “public access to the countryside”, but falls short of explaining how these will be defined, measured, or indeed rewarded. Furthermore, it overlooks the Statutory Management Requirements and Good Agricultural and Environmental Conditions which, as part of the current BPS regime, oblige farmers to deliver many of these things anyway. And these cannot be easily dismissed as Brussels bureaucracy from which our farmers will be freed on 29 March next year most of them are already enshrined in English statute law.
The Bill introduces a system of reductions to payments in a similar way to income tax bands – with a 5% reduction for claims up to £30,000, increasing to a 25% reduction for claims of £150,000 and above. Since this applies the biggest reductions to the largest claims it is hard to see how this does not equate to capping payments to larger farms.
Impact on commercial farms
This matters because plenty of modern commercial farms will fall into this category. At last year’s payment rates, an arable farm only needs 660 hectares (1630 acres) to be subject to the biggest cuts. Although the average farm size in the UK probably remains around 150 acres, it is the farmers who have worked hard to develop economies of scale in a bid to become more efficient who will suffer the biggest reductions in support. It is also worthy of note that not all claimants on larger farms are debt-free owner occupiers; many will be renting land and paying a significant sum for doing so.
The Bill proposes that payments are “de-linked” from land under the new system, creating flexibility whereby new entrants can benefit from help to get into farming, or where farmers wishing to exit can gain help to do so. This is an example of how this Bill’s aims are often worthy ones, but where detail is so lacking that it is difficult to envisage the implementation.