Written evidence submitted by Agrovista UK Ltd (ELM0004)
Agrovista UK Ltd is one of the leading Agrochemical distributors in the UK. Like many farm businesses, over the last 15 years, Agrovista has diversified its business with different offers to the agricultural, horticultural, and fruit sectors. Research and Development, Technical Innovation, Seed, Amenity and Farm Consultancy are now an integral part of the business and a significant contributor to the business turnover.
Agrovista UK Ltd has its own Rural Consultancy department with a network of advisors around the UK who provide advice on BPS, Stewardship, environmental regulation, business planning, budgeting and benchmarking. They have a dedicated ELM manager who is tasked with the integration of ELM within the core business and through the network of 150 on-farm advisors. He has over 15 years’ experience of providing on-farm advice to farmers and landowners on policy, subsidies and business planning, along with a vast experience of practical on-farm management experience. This report is being put together by him in conjunction with the Head of Rural Consultancy.
There is a concern from clients that the rate at which the current support mechanism, BPS, is being reduced, with no detail of what it is being replaced with. The fact that BPS income in 2024 will be half of that received in 2020, and the first full ELM agreements will not be starting till the end of 2024 leaves farmers and landowners with a considerable period of uncertainty.
The announcement on the 30th November 2020 of the Agricultural Transition plan did reveal that Tier 1 ELM would start in 2022 in what has been dubbed the Sustainable Farming Incentive, SFI. However, details of what actually has to be done through this and what payment will be made is still not known. In fact, with around 42% of farm businesses only being in profit by the value of, or less than, their total BPS payment, there is considerable concern as to how they are going to survive with reduced levels of support.
BPS is a receipt into the business with very little cost to the business in order to claim it. There is also very little restriction on land use and requires land to be productively managed in order for it to be claimed. Entry into CSS and in-time ELM will likely require land to be taken out of production in order to claim a payment on it. However, by doing this, it is then no longer available to farm and can then lead to other wider productivity and sustainability issues within the farm business.
Whilst there is a need to Pilot the new ELM scheme, farmers should not be left in limbo whist the detail is being refined. Test and trials are still under way and ELM pilots are due to start whilst the results from these are still not known. When CSS was introduced in 2015, initial uptake in 2015/2016 was very poor because of hesitation and fear of the unknown. So far, we have seen nothing that demonstrates that the same won’t happen with the ELMS role out. This means that realistically the majority of farming businesses will not be entering into a complete ELM till 2025 or 2026 at the earliest. Depending on administration and payments farmers could be looking at a 6-7-year window from when their payments first started to reduce to them starting to get funding from the new ELM. Although CSS is available for applications up until 2023, experience shows that their design does not always allow an agreement to fit into every business situation.
It is currently too early to say what impact SFI will have as we still do not know what it is worth or what is required to be completed under the four initial categories. With this meant to be being available from 2022 the industry needs to know what payments are going to be made, how they are to be administered and what needs to be done in order to qualify.
As stated, there is often a lead time for new schemes to be adopted by the industry as the requirement and implications of the scheme are understood and worked into each individual business to see how it can work.
We know that there are other areas of support going to be available during the initial transition period. Therefore, the amount of available money for the SFI will be less than what is being modulated from the BPS and is therefore going to affect a significant number of farmers.
The other areas of support are capital based looking at; slurry management, new entrants, farming investment and animal health. These all require additional contributions from businesses that are going to be affected by reduced cashflows as a result of reduced BPS income. Those being targeted for this investment are the ones most likely to need financial support and are therefore unlikely to be able to participate in the schemes designed to help them. Experience of the three rounds of the CPGS has shown that often having been granted an agreement, minor discrepancies or difficulties and the inability to modify when circumstances change, results in the claim being withdrawn and the farmer left out of pocket and likely to be unwilling to try again.
We are of the impression that stakeholders have been well communicated with the design of ELM. We did start to represent our side of the industry in 2018, though this dissipated quite early on and had no further communication.
We have been able to get involved with a few Test and Trials, though this has mainly been through our involvement and representation from the AIC.
We know that land managers have been consulted with regards the design of ELM, though we have not had the opportunity to get involved with any of these discussion with any of our significant client base.
Ease of delivery, design, implementation and re-numeration will be essential for farmers and land managers to take up ELM. The use of Trusted Advisors is essential to ensure that ELM works for the farm business as well as delivering on the goals of ELM.
Experience of ES and CSS agreements has shown that the best agreements that work for the farmers as well as delivering the best environmental outcomes are those that have been designed with an experienced and trusted advisor of the business. It is crucial that the advisor understands all elements of the farm business in order to put together the best environmental scheme that’s implementation is achievable and so able to be delivered effectively.
The scheme will need to be attractive to the farm business and economically worthwhile, otherwise it is not going to be considered by farmers and land managers.
A separate fund from the current budget should be made available to facilitate payment for advice from a Trusted Advisor to help design and then manage the agreement. This should be seen as a priority to ensure that the outcomes from ELM are as intended by ensuring options are best chosen on-farm and that they are then managed correctly throughout the lifetime of the agreement.
Charitable or free advice always comes with an agenda whereas funded advice from industry has a much better chance of achieving the desired balance between profitable, sustainable farming, food production and the desired outcomes of ELM and Public Goods. If ELMS is to be attractive to farmers that are profitable without BPS, then funded advice is essential.
Payments for training and on-going management advice, throughout the lifetime of the agreement should also be made available to farmers and land managers on how to manage their agreements. This will allow explanation of why options need managing in a specific way and to ensure options are correctly managed and implemented.
Flexibility within a scheme also needs to be factored in. Farms change throughout the lifetime of an agreement and in current CSS agreements these changes can’t be accommodated, and the agreement then becomes a burden to manage as opposed to complementing the business.
Environmental schemes over the last 15 years have had their successes and failures and elements of each should be considered within ELM. It should also be remembered that ELM will be the sole support mechanism for farmers and landowners and is a scheme that the Government have complete control over without regulation and guidance from the EU. It is therefore an opportunity to not necessarily continue with the status quo but to be innovative in the approach to how ELM should work.
ELS was a great mechanism for getting a big proportion of farm businesses, around 80%, involved with some kind of environmental management. However, the environmental outcomes of a lot of these agreements was fairly dubious and so the positive environmental results were relatively few. HLS allowed the enhancement of ELS options as it required the production of a more detailed Farm Environment Plan. This received an additional payment for its production that in most cases was carried out by a Trusted Advisor who was able to identify environmental features and the best options for their management. The production of Land Management Plans, LMP, to be used as part of and ELM agreement should follow this methodology as it allows somebody with the relevant experience to identify features and their management that would complement the farm business that may get over-looked by the farmer themselves.
The CSS Mid-Tier agreements allows for flexibility for environmental management whereby the farmer can decide which options they want to use that complement their farming system. Again, the best agreements are likely to be those who have received external advice. However, there is a distinct lack of flexibility once an agreement is made and is up and running. One key rule for ELM is that flexibility must be allowed in order that environmental outcomes can be made throughout the agreement. Farming businesses are going to have to go through a significant change as it is in order to adapt and survive without BPS. Being constrained by ELM is not going to benefit anyone and therefore the ability to remove options, without penalty that are not working should be allowed.