The House of Commons EFRA Committee have issued a report "Environmental Land Management and the Agricultural Transition" which highlights key issues farmers face over the next few years.

The precise impact which Defra’s decision to remove direct payments will have on farmers is still not clear. The NFU’s Tom Bradshaw told the EFRA Committee that, if the agricultural transition does not deliver profitable farming, then “we will end up with a lot of members potentially going out of business”. George Dunn said that the TFA was having “tearful conversations” with members saying that “they cannot really see a future for their farm”.

Defra has been developing a new approach for England, following the UK’s departure from the CAP. From 2021 to 2027, Defra intends to phase out direct payments, which have been the primary element of farm support, across a seven-year “agricultural transition”. At the same time, the Department will pilot and roll out components of a new environmental scheme, collectively referred to as ELM's.

Defra’s plan is the biggest change to English agricultural policy in decades, and is also central to delivering on the Government’s environmental ambitions. The transition plan involves multiple schemes and initiatives, but EFRA's inquiry focussed on the removal of direct payments, and the roll-out of the new ELM schemes. 

The EFRA report states that "The scale of environmental, social and economic change facing English farming cannot be understated. This includes the global challenge of climate change and the need to operate in new trading conditions, but it also includes the Government’s decision to fundamentally change the basis of agricultural policy. The agricultural transition must work for farmers and make a significant contribution to achieving the Government’s environmental objectives."

Key Findings and recommendations

• Considerable uncertainty remains about how the 7-year agricultural transition will affect English farming, and there is a risk that farmers will resort to less environmentally sustainable methods to make up for lost income, leave the sector, or go out of business entirely. Defra should publish an impact assessment detailing how the transition from direct payments to ELM will impact the viability of farm businesses, broken down by sector and by region.
• Defra has put insufficient emphasis and care into managing the process of transition itself, risking a haphazard process leading to unintended consequences. Ministers’ absolute determination to press ahead with the timescale for phasing out direct payments and introducing ELM, even when confronted with significant disruption across Government and the economy, suggests an unwillingness to adapt to unforeseen circumstances. Defra must do more to give us confidence that it will take account of changing circumstances as the agricultural transition proceeds.
• Delays in communication about the new policy have already impacted farmers’ ability to plan for the significant changes ahead. It is essential that every farmer and land manager is made aware of what is coming. If a clear strategy to communicate Defra’s plans to the full range of farmers and land managers is not in place, the agricultural transition risks falling at the first hurdle. The Department should develop a clear engagement strategy and, to build confidence and foster buy-in, this should include demonstrating how the views of farmers and land managers have fed into the design of ELM.
• Defra is already in the process of delivering its multi-billion pound ELM programme without having published any measurable objectives. We understand that the process of developing objectives is underway, but we are already nearly a year into the agricultural transition and Defra has not explained in detail how it will show that the money being taken away from farm payments is being spent effectively. This should happen as soon as possible, and definitely before the Sustainable Farming Incentive opens for applications in 2022.
• Those farming the uplands, and tenanted and common land, will face particular challenges during the agricultural transition, and Defra must not squander the considerable potential of this land to deliver public goods. A substantial proportion of farmed land in England is tenanted, and common land accounts for a significant percentage of land delivering important public goods such as biodiversity and public access. Upland livestock farmers, meanwhile, have often been among the most dependent on direct payments, but there is evidence that existing agri-environment schemes have reduced income stability for upland livestock farmers in less favoured areas.
• It is important that the Sustainable Farming Incentive does not repeat the failures of previous agri-environment schemes that achieved high uptake but failed to drive significant environmental delivery. A degree of simplicity may be necessary in order to achieve high uptake, and we acknowledge that an approach based on specific actions and parcels of land will work for many farmers. However, Defra should not miss opportunities to also support a more ambitious whole-farm approach to delivering public goods. Alongside the parcel-based actions within the SFI, Defra should set out a plan to support public goods delivery at the whole-farm level.
• We share the concerns of many that the existing approach to calculating payments based on “income foregone” will be unattractive to farmers and ineffective for the environment. Payments for environmental actions need to fairly and fully represent the management costs associated with delivering them. Defra should explain how it will set payment rates for ELM to ensure that participating in these schemes is an attractive option for farmers as BPS is withdrawn.
• Peer-to-peer learning should form an important element of the agricultural transition. Seeing others turn to more sustainable practices, and succeed, will play a valuable role in giving many farmers the confidence to engage with ELM. Defra should fund and facilitate knowledge exchange and peer-to-peer learning among farmers to drive scheme uptake and effective delivery of public goods.

Full Report Findings: https://committees.parliament.uk/publications/7663/documents/79987/default/