The agricultural sector is facing its biggest challenge for over 100 years. The future of subsidies post Basic Payment Scheme (BPS) is a question on the mind of one and all. Increasing input costs, rising interest rates and the reduction in direct subsidy are all having an impact on business profitability. BPS payments will cease completely in 2027 but, after months of anticipation, farmers now have clarity on the details of its successor, the Sustainable Farming Incentive (SFI), and the actions, application process and payment rates which will apply. The SFI will enable those who take up a scheme to receive payments for adopting and maintaining sustainable farming practices that aim to protect and improve the environment. Whilst SFI will only partially fill the financial gap left by diminishing BPS payments, it will provide a form of additional support.
SFI 2023 was a more flexible version of the scheme than the 2022 pilot version, with the new ‘pick-and-mix’ approach allowing farmers to add flexibility to their scheme along with a greater array of rotational options. There is the potential for support to be increased over the lifetime of the scheme as more options become available in 2024 such as minimum tillage cultivations and woodland planting.
Is SFI post Basic Payment Scheme Subsidies Solution?
SFI applications can be made all year round, and unlike the previous Countryside Stewardship Scheme, where payments were made annually in arrears, one of the attractions of SFI is that payments are made automatically on a quarterly basis with a 25% upfront payment made the month following the agreement start date. This flexibility enables farmers to apply for a scheme at a time which is best suited to their individual business needs. There is an additional one-off ‘management’ payment of up to £1,000 based on £20 per hectare for the first 50 hectares entered, which is to recognise the management and administrative costs of entering into and then managing an SFI agreement. An annual declaration needs to be made to confirm compliance with scheme requirements. There is also the option to complete an ‘upgrade request’ on the 1st and 2nd anniversary of the agreement, allowing farmers to increase the area included within certain options as the scheme is further developed and understood.
There were 23 ‘actions’ available to farmers and landowners under the 2023 SFI offer, with more expected in 2024. So long as actions are completed within the first 12 months from the agreement start date, it does not matter if the actions are not implemented immediately if the agreement starts too late in the year.
Possible future subsidies post Basic Payment Scheme options
Below are some of what are expected to be the more popular options which could most easily tie in with the existing farming practises.
SAM2: Multi-species winter cover-crops
This offers a payment rate of £129/ha per annum for establishing a winter cover crop. Grazing of the cover crop is permitted, so long as there is sufficient leafy vegetation to protect the soil surface for the duration of the winter months (December – February). The cover crop must be destroyed from March onwards, unless sowing an early spring crop.
HRW2: Manage Hedgerows
This action has an annual payment rate of £10 per 100m for one side of eligible hedgerow. The HRW2 action requires fully established hedgerows to be cut incrementally or on rotation, or managed in a coppicing or laying rotation which may mean they’re left uncut. Newly planted or not fully established hedgerows must be lightly trimmed incrementally.
IMP4: No use of insecticide
This action is rotational and has payment rate of £45/ha, aimed at encouraging a more sustainable, integrated approach to pest management. In order to meet the requirements, farmers must not apply any insecticide to land entered into this option. One important word of caution is that this also applies to seed dressings, as well as sprays.
One alternative to SFI is the Countryside Stewardship (CS) scheme which is set to continue alongside SFI and offers farmers and landowners grant funding for multi-year management options and capital items. The two-tier CS scheme supports projects aimed at protecting and enhancing the natural environment.
With many of the more popular mid-tier Stewardship options having been duplicated in the SFI scheme, it is expected that the Countryside Stewardship will become more specialised and targeted at those looking to achieve higher and more focussed environmental aims beyond the benefits achievable under SFI.
Capital grants under CS offer funding for over 70 capital items aimed at achieving specific environmental benefits, including hedgerow planting (£22.97/m), stock fencing (£7.47/m) and concrete yard renewal (£33.64/m2). Successful applicants have the duration of the 3-year CS agreement term to complete the associated works and submit their claim. This does require the agreement holder to front the cost initially, however with the ability to submit multiple claims over the 3 years with a minimum value of £500, it enables the works to be completed and claimed for in sections, helping to aid cash flow.
Consideration needs to be given to both what SFI and CS have to offer as a way of bridging the financial gap from the loss of BPS. However, given that details that are available so far, both SFI and CS do seem to be worthy of serious consideration by most farmers.
Julia looks after all of our marketing communications, printed material, design, branding, publications, digital marketing and advertising. She has worked across a number of industries in marketing roles and outside of work, if usually found on a netball court or coaching from the side lines.
