Basic Payment is slowly being phased out, and over the last few months DEFRA and the RPA have been announcing how the BPS will be replaced. This article attempts to review what we have been told to date, and particularly the most recent announcements about the Sustainable Farming Incentive (SFI) which is the main “direct replacement” in England for area based subsides.
From 2021, BPS is being phased out, and from this year direct payments made to farmers are being reduced, with all farmers having the BPS payment at least halved by 2024. This table identifies the BPS reduction dependent on total claim value:
| BPS Reductions until 2024 | ||||
| Payment Band | 2021 | 2022 | 2023 | 2024 |
| Up to £30,000 | 5% | 20% | 35% | 50% |
| £30,000 – £50,000 | 10% | 25% | 40% | 55% |
| £50,000 – £150,000 | 20% | 35% | 50% | 65% |
| £150,000 + | 25% | 40% | 55% | 70% |
The new scheme will fall under the Environmental Land Management Scheme (ELMS) which is replacing all agri-environment schemes previously funded by the EU, and that scheme will be made up of 3 principal components:
1) Sustainable Farming Incentive (SFI)
2) Local Nature Recovery (phased in from 2023)
3) Landscape Recovery (pilots to commence 2022)
Sustainable Farming Incentive
This is the area of the new scheme that will be of most relevance to most farmers, and there will be an opportunity to apply for the early roll-out this scheme in 2022, following the pilot that is taking place at the moment on just under 1000 farms. The RPA claim the SFI will achieve the following: “we will pay farmers to produce public goods such as water quality, biodiversity, animal health and welfare and climate change mitigation, alongside food production”. There will be a number of standards which are being developed at this time and they will be introduced incrementally in the coming years.
From 2022, the SFI will offer payment on the following 3 standards (called Early Rollout):
1) Arable and Horticultural Soils Standard
2) Improved Grassland Soils Standard
3) Moorland and Rough Grazing Standard (at introductory level only) This is only for land above the moorland line and will not be discussed below).
Eligibility
All farmers eligible for BPS will be eligible for SFI, ultimately it will be phased in so that you do not have to be eligible for BPS to apply but that its unlikely to come in before 2024.
Cross border parcels will not be eligible for the scheme. We believe the devolved nations will operate wholly independently of each other going forward.
The SFI will operate on a parcel basis, therefore you can enter fields into the scheme on a parcel-by-parcel basis and there is no requirement to include the entire farm in an agreement. Additionally, following the trial it should be possible to enter fields also in a Countryside Stewardship agreement so long as the management option and the requirements of the SFI did not overlap i.e. double payment. For example, if you had a GS4 (legume and herbal ley option) on a parcel you would not be able to include this parcel in the intermediate level for improved grassland soils where there is a requirement to have a certain percentage of herbal leys.
There is no minimum or maximum amount of land that can be entered into the scheme.
Agreements
SFI agreements will last for 3 years, and there should be flexibility to amend them every 12 months from their start date, including allowing the incorporation of additional standards as they become available, adding more land, and increasing ambition levels. In exceptional circumstances farmers may be able to reduce ambition or land coverage. It is expected after the first term of 3 years, agreements will be renewed, by which time standards and payment rates will have been renewed.
The person applying should have “management control” of the land for the duration of the agreement, and that person is deemed to be the party actually farming the land, i.e. the owner occupier, tenant or those farming commons in a collective. Those farming land under licences are not deemed to have management control, however, a word of caution to those letting land out on a licence for the majority of the year and claiming the BPS payment, the SFI requires a much more active management requirement of that land, and if you are not undertaking active management of your land, it is time to reconsider those arrangements. Active management control would include tasks such as fencing, hedge trimming, topping, fertiliser spreading, re-seeding (this should not be undertaken by a licensee on a grazing licence at all), drainage, re-hanging gates etc…. all a licensee should be doing is grazing their livestock and managing that stock accordingly or taking a prescribed number of cuts by mowing.
They have not announced when applications should be made, but they have confirmed it will not clash with BPS applications, and they aim to pay the first SFI payments before the end of the year. In the long term it is anticipated that applications will be made throughout the year without a defined payment window.
SFI payments will be paid quarterly, commencing 3 months after each agreement starts.
Organic farms can enter the SFI and are likely to be well placed to adopt the higher levels of ambition within soil standards, there will be a future organic standard providing an easily accessible, holistic package for organic farmers.
Standards
There are 3 standards announced for the 2022 roll-out with other standards in various stages of development, in the long term each standard will have 3 levels of ambition (introductory, intermediate, and advanced) but not all of those levels will be available from the first year. The requirements of each standard are detailed below.
Arable & Horticultural Soils
Introductory – £22/hectare
- test soil organic matter
- undertake a soil assessment and produce a soil management plan
- 70% winter cover to protect soil:
- at least 70% of land in the standard must have green cover over the winter months (Dec-Feb)
- this can include any kind of green cover, including autumn sown crops and weedy stubbles
- addition of organic matter:
- add organic matter to 1/3 of the land in the standard each year
- this can include any kind of organic matter, including sown green cover crops
Intermediate level – £40 per hectare
- test soil organic matter
- undertake a soil assessment and produce a soil management plan
- 70% winter cover to protect soil:
- at least 70% of land in the standard must have green cover over the winter months (Dec-Feb)
- this must include land with multi-species green cover – covering at least 20% of total land in this level of the standard
- addition of organic matter:
- add organic matter to 1/3 of the land in the standard each year
- this will include multi-species green cover grown under the cover crop requirement above, plus the rest made up of other ways to add organic matter as per the introductory level
Advanced level will be phased in from 2023.
Improved Grassland Soils Standard
Introductory level – £28 per hectare
- test soil organic matter
- undertake a soil assessment and produce a soil management plan
- 95% green cover to protect soil (no more than 5% bare ground over winter)
Intermediate level – £58 per hectare
- test soil organic matter
- undertake a soil assessment and produce a soil management plan
- 95% green cover to protect soil (no more than 5% bare ground over winter – bare ground includes land damaged by poaching)
- Establish or maintain herbal leys to improve soil health on at least 15% of land in the standard Advanced
Advanced level will be phased in from 2023.
There are greater details about the above available on this link:
There is an overall emphasis on farmers deciding on how each standard is achieved on each farm, how this will work in practise is not quite clear, but it seems various guidance will be available on how DEFRA deem it possible to achieve X or Y outcome.
Annual Health & Welfare Review
From 2022, the SFI will fund a yearly visit from a vet or vet-led team to conduct an Annual Health and Welfare Review. This part of the scheme is designed to:
- help reduce endemic diseases and conditions within livestock
- promote responsible use of veterinary medicines
- improve welfare and increase farm productivity
- build on the strong relationships that exist between farmers and vet
It will be available to keepers of cattle, pigs and/or sheep with a minimum number of each species. It will focus on key diagnostic testing for common diseases in each species, antibiotic usage, and discussion about general health and welfare.
The payment rates for the Annual Health and Welfare Review have been refined based on the priority testing required in collaboration with farmers and vets. The rates (per review) will be:
- pigs – £684
- sheep – £436
- beef cattle – £522
- dairy cattle – £372
These are the following standards expected from 2023 onwards.
2023 (indicative)
- nutrient management
- integrated pest management
- hedgerows
2024 (indicative)
- agroforestry
- low and no input grassland
- moorland and rough grazing (all levels)
- water body buffering
- farmland biodiversity
2025 (indicative)
- organic
- on-farm woodland
- orchards and specialist horticulture
- heritage
- dry stone walls
This is a summary of the SFI as of 6th December 2021, this is a constantly evolving scheme it will be wholly different to what has come before.
If you would like to discuss your business and how the loss of BPS and introduction of SFI might affect you please contact Ellie Watkins on 07495 006808 or ellie.watkins@ruraladvisor.co.uk for a confidential conversation.