Environmental Land Management schemes explained

We are only one month in, but 2023 has already been a busy year for announcements relating to the agricultural transition in England.

At the Oxford Farming Conference, Farming Minister Mark Spencer announced more funding through Countryside Stewardship (CS) and the Sustainable Farming Incentive (SFI). Further clarification was provided on the increased capital grant payment rates, and now we have a publication with details of the Environmental Land Management (ELM) schemes for 2023.

Here the CLA highlights the key details from Defra’s prospectus, ‘Environmental Land Management update: How government will pay for land-based environment and climate goods and services’, which outlines a comprehensive list of land management options available through ELM in 2023 and the future. Also included are details on the plans for the evolution of CS and the Landscape Recovery Scheme.

You can read the prospectus in full here.

The announcements in 2023 have resulted in the SFI expanding from the three existing standards to a total of nine, along with a £20/ ha management payment capped at £1,000/ annum, announced by Farming Minister Mark Spencer at the Oxford Farming Conference. The management payment does not apply to the moorland SFI standard, which already includes an additional payment of £265 per agreement. More standards are expected to be announced in 2024.

The bulk of the prospectus covers the six new standards, which will be open to applications from the summer. This is in addition to the three standards that were launched in June 2022. The six new standards are:

• Hedgerows
• Integrated Pest Management
• Nutrient Management
• Arable and Horticultural Land
• Improved Grassland
• Low Input Grassland

The three existing standards are:

• Arable and Horticultural Soils
• Improved Grassland Soils
• Moorland

The six new standards will also pay for a package of actions that deliver public goods. However, unlike the three existing standards, where there was a choice of introductory, intermediate and advanced actions, the six new standards offer a range of between two and four actions, which can be selected in any combination. Details of the new standards, the actions required and the payment rates are in the table at the bottom of the page.

Between them, the six new standards comprise 19 different actions, though there is a good deal of overlap with what land managers can already be paid for through Countryside Stewardship. There are seven entirely new actions, with four contained in the Integrated Pest Management and Nutrient Management standards, two in the Hedgerow standards and one in the Arable and Horticultural Land Standard.

In its first six months, the SFI suffered from low levels of take up. The fast tracking of new SFI standards, simplification and publication of the payment rates is something that the CLA has been continually pushing for, and the introduction of the six standards is welcomed. It will allow farming businesses to make informed choices about which actions are right for their business.

Duplicating similar actions from CS into the SFI should have beneficial results in terms of increasing the area of land managed under agri-environment schemes with a choice of routes to enter. Tenant farmers nearing the end of their tenancies and those wishing to enter into shorter, flexible three year SFI agreements rather than five year Countryside Stewardship agreements should welcome the changes. The fast processing of SFI agreements, rolling application window and quarterly payments should also encourage SFI applications.

In terms of what might be considered entirely new actions in SFI 2023, the majority are directed towards arable and productive grassland farming through the Integrated Pest Management and Nutrient Management standards. New income-generating opportunities presented to those already in stewardship are more limited given the duplication between the SFI 2023 offer and existing agri-environment scheme options, and the understanding that Defra will not pay twice for the same or similar actions in both schemes. The absence of a new offer for those farming above the moorland line, which builds on the existing introductory level of the Moorland Standard, is a particular concern.

Defra and the Rural Payments Agency (RPA) will spend the coming months finalising the details of the six new standards, before the application window opens in the summer. Those that have already entered the SFI should have the opportunity to add the new standards to their existing agreement, but the timings of this are still to be confirmed.

One effect of the 2023 announcement is that the line between the SFI and CS is becoming increasingly blurred. This is intentional, as Defra’s long term goal is a single menu of land management options that can be selected, though the move towards this is likely to be gradual.

The prospectus confirms that Defra is planning to build on the Countryside Stewardship scheme rather than pursuing the previous plan for a new scheme called Local Nature Recovery. There may be a ‘CS plus’ option introduced in the future that will apply top up payments for land managers who were willing to collaborate to deliver CS schemes.

On top of the revised revenue and capital payment rates announced at the Oxford Farming Conference, Defra is determined to build on and improve the existing Countryside Stewardship offer. For applications submitted in 2023 to start on 1 January 2024, these improvements will include:

• An ability to submit a Countryside Stewardship agreement alongside an existing Higher Level Stewardship agreement,
• Bringing some Higher Tier options into Mid Tier
• Giving agreement holders three years rather than two years to complete capital works
• Introduce an annual declaration in place of the current revenue claim process

In time, Defra also hopes to introduce an online application process, create additional revenue options and implement some of the improvements introduced in the SFI, such as having the ability to add new options over the course of the agreement.

The decision to build on the existing Countryside Stewardship Scheme rather than create a new scheme is something the CLA has been pushing over the last year. Existing agri-environment schemes have built up a solid reputation, assisted by the RPA’s improved administration of the scheme in recent years. We look forward to working with members, Defra and the RPA to refine the scheme in the coming months.

Defra also announced that a second round of applications for the Landscape Recovery scheme will open in the Spring. Landscape Recovery projects are larger scale, often involve farmer clusters and include long term land use change. For the second round, successful projects will be expected to deliver on one of three themes; net zero, habitat creation and protected sites, with Defra hoping to fund up to 25 projects. More information will be provided in the coming weeks, with a third round expected in 2024.

The CLA welcomes the launch of the next round of projects and has been working with existing Landscape Recovery development projects to build our understanding of the scheme and its progression so far. We are eager to support members in their involvement with existing and future projects.

The announcements that we have seen so far this year for England have been very positive. We have seen funding boosts for both the SFI and CS, and the menu of options available to land managers has grown at a faster rate than planned. We know that future funding boosts to ELM will be reliant on further cuts to the Basic Payment Scheme (BPS), with another round of payment cuts being applied in 2023.

We are used to broad BPS payments paid to farmers on a per hectare basis in exchange for adherence to cross compliance rules.

We are now starting to see how ELM will redistribute those payments across all land types to ensure that they are managed sustainably and also deliver public goods. This means that the opportunities presented to those managing different areas of land will be different. At this stage, there is more on offer through the SFI to those farming productive farmland than for those farming less productive areas, who are encouraged to consider CS.

There is an issue in that the extent to which land managers can be rewarded with public money is restricted through the income forgone plus costs model, meaning less productive areas of land receive lower payments than more productive areas. Defra is aware of this and is working on how additional payments can be awarded, with more information on this promised in due course. The role of environmental markets may also have a role to play here in time.

Although no scheme application windows have opened as a result of the prospectus, it does provide a helpful means of determining what options might be available to you and should help businesses plan for the future. If you have not already done so, 2023 is a year where you should look closely at the menu of options available through CS and the SFI and consider whether the actions and payments work for your business.

The six new SFI standards are due to open to applications in the summer of 2023, and the rolling window remains open should members wish to apply to the three existing standards. The CS application window is due to open for Higher Tier applications in February and for Mid Tier applications in March for agreements starting on 1 January 2024.

For those already in ambitious agri-environment schemes, the contents of the prospectus is less likely to generate excitement, though there could still be new options to explore. The ability for Higher Level Stewardship agreement holders to be able to apply for a new CS agreement could open up more opportunities. Those in existing CS agreements will benefit from the revised revenue payment rates. The revised capital grants are also worth reconsidering and stand-alone applications for this equipment opened for applications on 5 January. The England Woodland Creation Offer has also benefitted from increased payment rates, which has increased the appeal of the scheme.

The CLA is running a programme of events in the coming months, which will bring members up to speed with the agricultural transition and the options available to them. This includes a webinar with Defra’s Janet Hughes on 6 February and a series of roadshows across England in March and April. For more information and to find out the dates and venues of events taking place near you, please visit the events page (cla.org.uk/events).

As always, members are free to contact the CLA directly for free advice, and can also access a range of guidance notes on a range of topics, including the agricultural transition schemes and environmental collaboration.