The Government announced last week a level of detail for the new Sustainable Farming Incentive (SFI) due to be launched in 2022. SFI is the first component of the new Environmental Land Management (ELM) Scheme, which will be rolled out in full in late 2024. SFI 2022 will not include those things that farmers can currently be paid for through Countryside Stewardship. However, it provides an opportunity for farmers to apply for additional payments that will help compensate for the reductions in Basic Payment (BPS) previously announced.  

The Scheme will be open to all farmers currently claiming BPS and they will be able to apply for SFI on land already in other agreements, provided they are not being paid twice for the same thing. 

SFI 2022 will include 4 elements: 

• Arable soils standard 
• Improved grassland soil standard 
• Moorland & rough grazing standard 
• Animal Health & Welfare Review 

Each “standard” groups together actions that are appropriate for that land into a package. Within the soil standards there will be three levels of ambition – introductory, intermediate or advanced. The Moorland standard will only have an introductory level.  

Indicative payment rates per hectare for the standards are as follows: 

In order to access these payments, farmers will need to do the following: 

Details of the Moorland & Rough Grazing standard are still being developed, but they are likely to include an audit of natural assets and a management plan to improve their condition. 

Regrettably, there is no soil standard for semi-improved or unimproved grassland as yet. This seems a significant omission by DEFRA. There is much lowland and upland semi-improved and unimproved grassland across the country, which is vital in terms of carbon storage and delivering other environmental outcomes. DEFRA’s argument is that farmers can be paid for effectively managing such grassland through Countryside Stewardship. However, with “low input grassland management” in the uplands paying just £16 per ha, it is insufficient to cover the cost of the paperwork, let alone offset any losses in Basic Payment. The lack of SFI payment for such grassland creates a perverse incentive for farmers to improve it, which would likely reduce or eliminate any existing environmental interest. 

The Animal Health & Welfare Review will pay for an annual visit from a vet, to include testing for diseases and conditions, advice on animal health, review of medicine use and the agreement of actions to improve welfare. The full cost of vet time and diagnostic testing will be covered, probably for three years. 

The Government have also announced four principles they will adopt for setting payment rates within ELM. These are: 

1. Aim to encourage wide participation 
2. Based on the environmental outcomes being delivered 
3. Linked to the value of existing natural assets; those already managing them effectively won’t be disadvantaged 
4. Part of a growing market that will include both public and private funding for delivering environmental outcomes 

This means the Government is moving away from the historic method of calculating environmental scheme payment rates, which were based on “income foregone plus costs”, giving them more flexibility in effectively rewarding farmers for the environmental gains they deliver. Agriculture Minister George Eustice suggested that payment rates could be 30% higher than the current Countryside Stewardship Scheme, although they will need to be much higher than that to come anywhere near making up for the shortfall in BPS. 

In addition, DEFRA have indicated they will be looking at adjusting the payment rates in Countryside Stewardship, to encourage greater participation over the last couple of years of the Scheme. The Government have also recognised that paying environmental scheme income annually in arrears is not helpful in terms of cashflow and are investigating ways to pay farmers more frequently. 

With regard to the rollout of ELMS in upland areas, the Government is still looking at whether they need a different approach to payment rates. This will be critical to many upland farmers, who have long been disadvantaged by poor payment rates in Countryside Stewardship, despite delivering a wide range of public goods for the nation. 

DEFRA are aiming to encourage wide participation in SFI and subsequent elements of ELM, such that 70% of farmers enter into the Scheme by 2028, in comparison with less than a third now. All farmers should seek to take advantage of ELM as it develops at a level appropriate for their land. Professional advice will be key in ensuring farmers get the right agreements for their business. 

H&H Land & Estates have a well-regarded reputation and specialised understanding of the property sector across the North of England and the Scottish Borders. The leading agency have a well-established client base across offices in Carlisle, Cockermouth, Durham, Kendal, Keswick and Penrith. For more information on any of the above grants, please contact David via: david.morley@hhlandestates.co.uk