The winds of change: what the transition to ELMs means for farmers

Chief Land Use Adviser Susan Twining reflects on the transition away from CAP, towards ELMs, in light of Covid-19.

Harvest is starting, the nights are drawing in and it is only 5 months until Big Ben will herald the start of 2021. Whether New Year celebrations will involve the traditional fireworks display and street party is still to be decided, but either way 2021 is going to be a big year for the rural businesses. The relationship with the EU will formally end with or without a trade agreement, paving the way for trade agreements with other countries. New agriculture policies will be introduced across the 4 nations of the UK and while they will be similar, they will not be to the same timetable. The economic recovery from the Covid-19 pandemic will form a backdrop to these changes with government stimulus packages introduced to address the damage to the economy and expected rise in unemployment. So what will this mean for CLA members?

The ‘agricultural transition’ from the EU Common Agriculture Policy (CAP) to the domestic policies cannot happen overnight, but that doesn’t mean the changes won't have bite. In England, the Agriculture Bill is expected to get Royal Assent later this year setting the legal framework for new policies. The plan is for a seven year transition with a reduction in direct payments starting in 2021 and no direct payments after 2028. New programmes will be introduced including a new productivity growth fund in 2021 and a flagship Environmental Land Management (ELM) scheme in 2024 as set out in the Defra Farming for the Future statement in February 2020. In Wales, the plan is to publish a policy paper later this year before a Welsh Agriculture Bill is brought forward in 2021 after the Welsh elections. In the meantime, there are provisions for Wales in the UK Agriculture Bill enabling current schemes to continue.

The biggest issue for many businesses will be the profile of the cuts in direct payments. In England, there is information on how direct payments will be cut in 2021, with BPS receipts of up to £30,000 being cut by 5% and progressively higher cuts of up to 25% for receipts over £150,000. However, there is no clarity on how payments will be cut in the remaining period of transition. The CLA is lobbying for cuts to be shallow in the first phase of transition up to 2024 with no more than 25% cuts for any business before the new ELM scheme will be available to everyone. We are also investigating other ways to address the potential ‘blackhole’ of up to 50% cuts in payments before the new schemes are available.

Despite the lack of clarity, all businesses should be looking at how they will be impacted by the removal of direct payments. At a recent CLA Webinar on Business Resilience, 68% of participants did not have a plan for replacing the income lost from cuts in BPS, and with only 25% of farming enterprises profitable without direct payments, this is not something that should be ignored. Meanwhile, many diversified businesses have suffered at the hands of COVID-19 especially the tourism and leisure activities, compounding the problems. The CLA can help you understand the changes in agriculture policy and how they will affect your business and give you advice on how to take your business forward into the new world.

If you would like help, please contact your regional office or the national policy team.