Written evidence submitted by Agricultural Industries Confederation (AIC) (ELM0005)

January 2021

The AIC

The AIC (Agricultural Industries Confederation) is the trade association which represents the UK Agri-supply industry which has a farmgate value of over £8 billion.

We represent a wide range of members who supply farmers with the key inputs and advice they require to produce crops and livestock products. Our industry is therefore an integral part of the agri-food supply chain. The key sectors in which our members operate are shown below.

Background - AIC’s role in ELMS and our Test and Trial

The AIC are currently running an Environmental Land Management (ELM) scheme Test and Trial project. In the project, we are helping Defra understand how the provision of advice by accredited farm advisers are well placed to support the delivery and outcomes of ELM, and the 25 year environment plan.

The project is already highlighting how the established, trusted relationship between professional advisers and their farming clients adds value when delivering combined objectives for the environment (such as public goods) alongside those needed for a productive farm business. This is being seen at both at a basic level – offering a good nutrient management or feed plans, which have multiple benefits in terms of emission reductions and soil and animal health, as well as at a higher level, with interventions around farm stewardship and land management, that ultimately help inform the best outcomes for both.

The importance of planning, setting long-term on-farm goals, and ensuring the buy-in of all decision makers to a farming business is central to the success of ELMs and any interim schemes. The link between all professional advisers in industry and through the public sector is key to joining-up ambitions and delivery. Signposting between Catchment Sensitive Farming and the private sector is a strong working example. The development of a Land Management Plan is seen as a critical element to identifying and delivering public goods at a farm level.  However, it takes training, time and resource to produce good farming or land management plans. With no clear funding proposals to incentivise farmers to undertake such activities, even at basic level could be a hurdle to scheme uptake and achieving best outcomes.

Response to call for evidence questions

1. Is the Government’s timeframe for the national pilot, full roll-out of ELM and phasing out direct payments by 2027 feasible?

The outlined timetable is feasible, however Defra needs to be flexible where unforeseen events, such as Covid-19, are placing pressures on the timeframes for the development of components of the agricultural transition. 

We would question the need to launch phase 1 of the national pilot in quarter one of this year, particularly when Test and Trials continue to feed information into scheme development and a further two phases of the pilot are planned. We are concerned that first impressions of a scheme developed to meet a deadline rather than the industry will set a detrimental precedent around expectations of the scheme and thereby have an impact upon future uptake.

In setting and working to deadlines around the development of the scheme, it is important to recognise that farm businesses need sufficient lead in time to any National Pilot, Sustainable Farming Incentive (SFI) or ELM scheme component in order to be able to plan for them effectively. In the past, we have seen the problem of late offers sent out for Countryside Stewardship Schemes (CSS), and farm businesses being unable to factor it into their farm business and planning for the year ahead.

Notwithstanding the above, the most important consideration is to ensure that farm businesses do not face a funding gap in transitioning from direct payments to ELM (and other schemes) - the phase out of one scheme must move seamlessly into the rollout of the other.

2. Will the Sustainable Farming Incentive be a viable support measure for farmers before the full roll-out of ELM? Is further support required during the transition period?

It is very difficult to be able to state whether or not the SFI will be a viable support measure for farmers. This is because industry has seen very little details of the SFI: what it will fund and how it will be administered. Given that the SFI is a precursor to, and then a component part of, the ELM scheme, it is concerning that farm businesses do not have sufficient information on this with which to plan.

We know that core elements of the SFI should, according to Defra, be introduced from 2022. If this is the case, then we need to have clarity on SFI before farm businesses are putting together farming plans for the 2021/2022 harvest year, so that SFI can be factored in. Failure to do so will mean that it may not be until the end of 2022 and into 2023 before the SFI is applied on farms.

Farm businesses and their advisers and agronomists will understandably not want to head into a new SFI scheme without adequate time to digest and work through the new proposals. When CSS was introduced for the first time, there was a slow uptake from farm businesses as they tried to understand the requirements and how it differed from its ELS/HLS predecessor schemes. It would be naïve to assume that the same would not happen again with SFI.

Outside of the SFI, but still part of the agricultural transition, there are a number of additional schemes identified such as slurry management, new entrants, a farming investment fund and an animal health and welfare pathway. These are very ambitious and should be welcomed, however they would appear to be capital focussed and would not necessarily provide “support” in the same way that SFI should. Information needs to be provided to industry so that it can:

1.      Understand how these different funding components feature alongside the SFI and ELM scheme and;

2.      be used by farmers and their on farm advisers and suppliers to process their functions in the best interests of their farm.

3. How effectively has Defra engaged with land managers and other stakeholders on the design of ELM, including on the transitional arrangements?

The AIC would state that overall engagement and accessibility from Defra has been very positive and we have been consistent members of two stakeholder engagement groups. We have also taken the opportunity to be part of the Test and Trials programme, where we are demonstrating the importance and value of professional advice in delivering environmental actions and outcomes alongside productive farm businesses.

It is clear that Defra has absorbed a considerable amount of information on farm business and land management practices and the supply of public goods. Whilst this is has no doubt been beneficial, on a number of occasions this has felt like one way traffic.  Particularly early in the co-design process, there was little indication from Defra on:

• how the information being fed into the process was being used,
• where the aspects being discussed sat within the wider design of the scheme and;
• what decision around scheme design have been made and are no longer up for discussion.

Within the stakeholder groups we have attended, we would have benefited from a high-level structure of the various aspects of the scheme, an idea of the timeframes that input could be provided and to have established a set of guiding principles around the co-design process.

With regard to more recent engagement, in particular the drafting of Standards for the National Pilot, we are concerned that tight timelines have not enabled in depth enough engagement with other teams or departments within Defra itself. The AIC believes that in order to work with modern, commercial farming businesses, the ELM scheme needs to take account of the priorities and policy objectives of other Defra teams, such as those working in Agri Climate (with work programmes fertiliser and feed) nutrient management, water, air and soil quality and in pesticides including the Chemicals Regulation Division (CRD). Each of these teams are looking at metrics on improving farm performance, many of which will also work together in delivering significant public goods. Consistency in the stated goals and terminology used in these teams and the objectives and content of the Standards being prepared for the National Pilot will be essential in creating the necessary alignment between policy developments, incentives, future training (CPD) requirements and market pull Key Performance Indicators.

Through increased accessibility to Defra throughout the design process, we are aware that there has been a very broad range of public goods that environmental groups, commentators and non-farming audiences have aspired to feature in new schemes. However, it is farmers and land managers that need to implement them within the framework of the businesses they are running and the food they are producing. We would therefore caution that if scheme options are not compatible or financially viable within commercial farming businesses, they will not be taken up by land managers, which in turn will place pressure on the government’s delivery of the net zero carbon target and the goals of the 25 year environment plan.

4. How can ELM be made an attractive business choice for farmers and land managers while effectively delivering its policy goals?

Attractiveness to business is a key element of the ELM scheme. Simply put, if the schemes are not economically worthwhile for businesses, they will not be taken up, and the scheme will simply not work. This also includes the risk of disproportionate enforcement measures, which Defra must confront, given the legacy of previous schemes in this area. As previously outlined, options and schemes under the transition and ELM need to be flexible and work alongside farm business needs, adequately rewarding businesses for providing public goods that add to costs and time resources.

One of the main opportunities we now have is to help identify the attractiveness of ELM to businesses through advice. In the past, advice for the provision of environmental outcomes and maximising environmental schemes has not been explicitly valued. This is why we have launched our Test and Trial that takes a closer look at the value of the advisory network to making sure a scheme works best towards stated policy goals. Ultimately, that advice (and or farmer knowledge) – level of CPD on farm has to be valued and paid for, as part of economically viable business and delivery of best actions and outcomes.

We recommend that Government works with the nationally recognised training and certification bodies (BASIS, FAR, LANTRA and City and Guilds for example) to make sure the training for both farmers and their advisers is practical and appropriate and offered in modular format to cater for varying levels of knowledge.

Concerned that Government would expect advice or CPD to be given for free (and not factored into payments for outcomes) under the ELM, AIC raised this very issue with Ministers in December 2020, and in correspondence Minister Victoria Prentis stated to us:

“The overwhelming findings so far from the test and trials indicate that farmers and land managers value advice to help them identify and plan how they deliver environmental benefits on their land. Several tests have reported that advisers are critical for broadening the range of potential environmental benefits they deliver because they are able to identify opportunities that farmers working independently are not likely to consider. Our findings also suggest that farmers would like to be able to choose their adviser. When making this choice, farmers cite that trust is an important consideration along with local knowledge.”

AIC would therefore amplify this message and urge the Committee to hold Government to account on a means to reflect the value of CPD and advice in ELM standards. It must also be noted that whilst many advisers such as agronomists are land based, there are also a number of schemes under the transition that would benefit from advice given from other suitably trained and qualified farm advisers. For example, the animal health and welfare pathway, the slurry management scheme, the farm resilience fund and the farming investment fund would all benefit from valuing the provision of advice from livestock nutritionists, crop nutritionists, agronomists, land/business managers, wildlife advisers etc.

5. How can the Government ensure that ELM agreements achieve their intended environmental outcomes, reduce bureaucratic burdens on farmers and deliver value for money?

The best way in which we can maximise the value of ELM agreements is by ensuring that farm CPD and professional advice is factored into an application process and throughout the delivery of an agreement. This is why we are carrying out our Test and Trial, as a way of formalising and measuring the value of on-farm competence, enhanced knowledge and advice. The importance of planning, setting long-term on-farm goals, and ensuring the buy-in of all decision makers to a farming business is central to the success of ELM. We cannot overstate the training, time and resource to produce good farming or land management plans, and to ensure they are measured and met through the lifetime of an agreement.

As stated above, in order to secure buy in from farmers and land managers, deliver value for money to Government and enhance the delivery of public goods, ELM must be flexible. This flexibility is not only confined to the types of options being offered and how they are funded, but also to the overall timescales of the whole transition period. As we have seen in the past year, and under previous rollouts of environmental and direct support schemes, it is not uncommon for timings to slip. Ensuring that flexibility to the timescales can be accommodated will ensure that one scheme moves seamlessly into the rollout of the other.

As ever, the challenge for Defra will be to balance the priorities of accessibility to farmers and land managers with genuine beneficial outcomes for public goods. This is far from straightforward. In the past, schemes such as Entry Level Stewardship were criticised for being too easy to meet the requirements or achieve an arbitrary points target. On the other hand, schemes such as the early phases of CSS that are either too complicated or simply do not adequately reward farmers for specific options, will not be taken up.

Farm businesses and their advisers will be able to work out if a scheme and its options are worthwhile – this was seen under CSS where a number of options required prescriptive requirements in exchange for paltry payment rates. This is why the feedback loop between Defra and businesses needs to remain in place so that both parties can arrive at an agreement on optimal rates of payment and prescriptions.

6. What lessons should be learned from the successes and failures of previous schemes paying for environmental outcomes?

There are a number of successes and failures that we can take from previous schemes, and it is important to learn from them, however we must not become too fixated by them to the extent it stifles innovation in approach. Now that the UK is outside of the EU, there is an opportunity to look at ELM and the transition as a blank canvas and create a policy that is entirely made bespoke to the multiplicity of farm enterprises and land types throughout England. Previous schemes, overseen by rigid EU based enforcement frameworks, often hindered this, leading to many businesses types unable to access direct payment schemes and environmental schemes as well – most notably intensive farming businesses, farms of short-term tenures and contractors, who all deliver towards the production of food and public goods. We should therefore note the constraints and mistakes made in the past, but recognise that in designing a new scheme, there are likely to be teething issues regardless. This is why building flexibility into ELM and other schemes is vital.

It is helpful to reflect on the successes of previous schemes. Despite there being a number of problems with CSS for example, the bespoke approach to choosing options was very welcome. Instead of meeting arbitrary thresholds or points targets, CSS did allow farm businesses to opt into the scheme as much, or as little, as they liked. The real benefit of the scheme is that if farmers or land managers wished to devote significant areas of land or assets for a scheme, they can. Similarly, if a business only wanted to place a limited area into a scheme, or where they had relatively few natural assets, then they could still gain entry to that scheme and receive a reward commensurate with the level of uptake to it. This therefore allowed CSS to work with a farming business, allowing farms and their professional advisers to look at the options on offer, and work through a cropping/whole farm business and land management plan that can accommodate it. The fact that options were offered with unique payment rates, by the hectare or the metre, meant that it was easy for farm businesses to assess the financial reward against the extent of the commitment. With direct payments being eventually phased out, this approach will be extremely important once again.

Finally, one of the benefits of BPS and CSS as coexisting schemes lay in data. We cannot underestimate the importance of rigorous data collection at a national level for both ELM options and outcomes, but also for cropping choices and areas. BPS allowed authorities to collect data on crop plantings at a national level and is a very helpful guide in determining what we as a country are growing, and how this reflects trends and changes in land use changes over time. This is especially pressing given that the Government now has a duty under the Agriculture Act to report on self-sufficiency of food every three years. It also means that the whole supply chain, including farmers and processors can understand trends in agriculture and make informed decisions based upon them. Meanwhile, rigorous data collection on ELM should equally be applied – not only so that we can gauge level of uptake to ELM, but also what options are being favoured, which are not, and how they are delivering towards Defra’s long term goals under the 25 Environment Plan. If we cannot measure agricultural activity or public goods provision, we will not know if policy is working or failing. Data must be at the heart of policy making from the very start.

ENDS.

Author: Ed Barker, Head of Policy and External Affairs

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