Farming News - Environmental schemes won’t replace BPS income, warns CAAV

Environmental schemes won’t replace BPS income, warns CAAV

23 Jun 2022
Frontdesk / Finance

More than half of Basic Payment (BPS) money is set to be diverted to less than 5% of English farmland for environmental recovery, so farmers shouldn’t rely on these schemes to fill the income gap.

“The new schemes will be an option, not salvation – they are not BPS methadone,” warns Jeremy Moody, secretary and adviser to the Central Association of Agricultural Valuers (CAAV).

Jeremy Moody

Defra’s policy is to phase out BPS so that farming is unsubsidised, and makes decisions on purely business grounds. The money is then being redeployed to offer new schemes to buy the environmental services Defra wants farmers and others to provide – if it suits them.   

Although many might believe that joining environmental schemes will compensate them for the loss of BPS, this does not look to be the case for the vast majority, says Mr Moody.  It’s therefore vital that they review and improve their businesses, taking good advice and using the transition period to manage change while that support is still being paid.

“A large proportion of money released from BPS will go to the relatively small areas which are participating in the higher level environmental recovery schemes. While the Sustainable Farming Incentive (SFI) is open to all, not all will take it up and many farmers will need to make changes to make up for the lost money.”

BPS gone from 2028

BPS will have gone from all farms by 2028 – delinked from farming in 2024, explains Mr Moody. “Of money released from BPS, 10% is to support productivity improvement and 90% goes to buy environmental change on the ground.

“Of the environmental portion, 30% is to go on the Sustainable Farming Incentive (SFI). Local Nature Recovery (LNR) and Landscape Recovery (LR) are to account for 60% but their main focus is changing the use of little more than 3% of England’s 9.2m hectares of farmland.

“Not all of the land in LNR or LR needs be taken out of farming but it will be joined by 10,000ha a year of woodland and peatland restoration,” he says.

Defra aims to have 60% of soil managed under environmental schemes by 2030, and for LNR and LR to create or restore 300,000ha of wildlife habitat. That means Defra is expecting a significant number of farmers not to be in any of these schemes, but running their businesses for what they can produce with or without other activities.

On the way, the revised Countryside Stewardship scheme is now to act as a bridge, with interim schemes like Farming in Protected Landscapes and the first steps of the SFI linking up to late 2024, when the new schemes will launch. They comprise:

  • SFI - environmental measures undertaken while farming
  • LNR – ‘locally tailored’ measures alongside farming including habitats, woodland creation, peatland restoration and flood management
  • LR - habitat creation over areas between 200 and 2000ha, usually with collaboration and to involve private money. 

“SFI, LNR and LR will be priced to be attractive but not to crowd out private money (such as biodiversity gain deals) and will have costs,” says Mr Moody. The current high produce prices and input costs may make that more challenging. “Farmers therefore need to be realistic about their financial prospects and plan ahead, accordingly.”

For more information visit www.caav.org.uk.