Mike Bracegirdle, Head of our Agricultural Department, examines the proposals for the Basic Payment Scheme and how signing up to new Stewardship Schemes could help bridge the funding gap for farmers and landowners.
What are the changes?
The Agricultural Bills proposed transition period will see the Basic Payment Scheme (BPS) funding phased out between 2021 and 2027.
BPS will be replaced by the new Environmental Land Management Scheme (ELMS). ELMS will see farmers paid for the delivery of environmental services and benefits with pricing based on a natural capital valuation approach.
The ELMS will be rolled out from 2025. Prior to this, there will be a trial period for ELMS which is currently underway with pilot schemes running from 2021.
What are the issues?
As yet, very little information has been placed in the public domain as to when this transition will take place. Agricultural advisors are concerned that farmers may face a funding gap shortfall and are urging them to plan for this potential risk.
BPS cuts have been announced for 2021 but no definitive information has been made available. What is known is that business receiving up to £30,000 per annum in BPS will face a reduction of up to 5%. For those receiving £150,000 per annum or more, the reduction will be 25%.
The Government has guaranteed the equivalent cash pot of BPS funding until the end of Parliament, which is expected to be in 2022. But given the uncertainty in Parliament, it is by no means certain that Parliament will run until the end of its term and it is unknown what is to follow after Parliament reaches the end of its term.
As the ELMS roll out is currently planned from 2025 to 2027, it is unclear when ELMs will be available on a national basis and there is no indication of the rates of support which will be available.
The Department for Environment, Food and Rural Affair’s (DEFRA) aspiration is that between 1,200 and 1,500 businesses should enter into the ELMS pilot scheme in 2021, with 5,000 new applicants in the following years.
As far as can currently be ascertained, the ELMS pricing mechanism may be applied by way of farm type or region. It is still not known whether or not farmers and landowners would need to demonstrate management control of the land in order to apply successfully.
What can be done now?
In the circumstances, signing up for new Stewardship Schemes and setting up additional enterprises via diversification would be the key for helping farmers and landowners bridge a subsidy funding gap. Additionally, they would help to eliminate the current uncertainty.
Butcher & Barlow can assist you in making your land work for you and making your business structures more efficient.
We can provide advice on succession planning to include updating your business structure.
We can advise in relation to redundant farm buildings. In the event of a successful planning application, we can assist with setting up of the sale. In addition, we can help with setting up the appropriate site if planning consent has been given for a significant number of units.
Contact our expert Agricultural Team at Butcher & Barlow for more information and to find out how we can assist you.
You can contact the team at our Gadbrook Park office in Northwich on 01606 334 309.