Farm subsidies: Calls for clarity and improved funding ahead of ELMS introduction

Part of this should include ‘substantial details’ on the Sustainable Farming Incentive scheme, which forms part of the new Environmental Land Management Scheme (ELMS), designed to replace the EU Basic Payments Scheme following the UK's departure from the EU.

In a letter to the UK minister for food, farming and fisheries Mark Spencer, the chair of the environment, food and rural affairs committee Sir Robert Goodwill urged the government to increase farm subsidies which would be paid under ELMS and publish more information about it.

The current lack of detail on funding and the scheme itself is creating uncertainty and making planning for the future ‘extremely challenging’, the chair argued.

What is ELMS?

ELMS is set to replace the basic payments scheme, which provided payments based on the amount of land farmed, with payments for the provision of ‘public goods’, such as hedgerows that encourage biodiversity. The ELMS will comprise of three parts – Sustainability Farming Incentive (SFI), Local Nature Recovery, and Landscape Recovery. The SFI is assumed to be the part that would be most attractive for farmers to join, since it is open to those eligible for the basic payments scheme. Meanwhile, Local Nature Recovery will replace Countryside Stewardship and pay for ‘locally-targeted actions’ to improve nature in the farmed landscape, and Local Nature Recovery is aimed towards large-scale projects such as recovering and restoring streams and rivers.

In addition to publishing more information on the new ELMS, Sir Goodwill has said that farm subsidies should be increased if the target uptake is to be met. He wrote: “If ELMS is well managed and the payment rates are increased it would be a step forward, but this will only happen if farmers are given certainty over the future of farm funding. ​

“However, these new schemes can’t do everything. The government also needs to set out what support it’s going to provide above and beyond ELMS to help farmers cope with a crisis in rising costs. This is urgent. Farmers are facing inflation of between 20% and 35% on the essentials they need to produce food and look after our land.”​

Payment ‘layering’

Minister Spencer alongside Janet Hughes, program director of the Future Farming and Countryside Program, appeared before the Efra committee earlier this month as part of an inquiry into the rollout of the new ELMS.

They explained that instead of a lump sum, the new program will rely on so-called payment layering to allow farmers more flexibility over which parts of the scheme they want to join based on what’s suitable for the farmers' land. Payments by result and local partnerships are also being considered for inclusion in the ELMS.

Asked if the government would consider extending the basic payments scheme, Spencer said: “Let’s be clear, the basic payment scheme is ending. We’ve committed that it would end within seven years, so that is still the case. As that payment scheme goes down, we are looking to introduce new schemes and those payments will go up.”​

Explaining the rationale of the new system, Spencer added that the government will aim to ‘motivate new people and achieve fresh outcomes’ whilst trying not to ‘punish people who have done the right thing for decades’ through ‘overzealous regulation’. He and Hughes assured the committee that the approach would be more ‘pragmatic’ compared to that in the past to ensure fair dealing.

“Overzealous regulation is one of the barriers that stops people from going for these schemes,”​ Spencer explained. “Our exit from the EU has allowed us to be more pragmatic in our approach, a bit more flexible. Defra has done much better with those who had made a genuine mistake and assisting them.”​

To ensure farmers and land managers have a ‘clear path’ during the transition, there will be free business advice provided to those who need it, Hughes said. She added that in some instances, current farmer agreements were being extended to avoid ‘cliff edges’ as the transition into the new scheme takes place. “If you are on an HLS [a high-level scheme] and you are worried about moving to countryside stewardship or SFI, now we’ve got that flexibility to make it as smooth as possible,”​ she said.

Payment rates ‘woefully low’

Committee members raised the issue of ‘woefully low’ payment rates, asking if there’s scope for subsidies to be increased given the current pricing pressures facing farmers. The lack of capital payments and other funding incentives were also discussed.

Spencer admitted that the government had received similar feedback and said that the rates are ‘always under review’, adding: “It’s not just about the payments - it’s about making these schemes easy to understand, deliver and engage in.”​

Hughes explained that the department is working on making the information about the available funding as easily accessible as possible. Asked about the current levels of uptake, she revealed that this stands at 30% across all environmental schemes. The SFI alone has 1,500 completed applications since the scheme opened to the public in July, and around 1,100 of these already approved. Another 2,500 applications had been started but not yet completed, she added.

Further details on the ELMS are set to be published in December 2022.

Non-ELMS support

In his letter to the minister, Sir Goodwill urged the government to consider introducing additional payments for farmers struggling with the increase of input costs. These should be separate from the ELMS payments, which should be used for long-term support, according to the chair.

He wrote that based on witness evidence, these measures could include emergency intervention in markets; reform of the supply chain through existing powers in the Agriculture Act; planning policies to support farm development; immigration policies that support skilled and seasonal workers, or upgrading the rural grid, renewable energy production and improving rural internet connectivity.

“The committee recommends that the government detail what additional financial and non-financial support it will offer to farmers to respond to this crisis and helps secure UK domestic food production,”​ Sir Goodwill wrote.