Written evidence submitted by Tenant Farmers Association (ELM0049)
House of Commons Environment Food and Rural Affairs Select Committee
Environmental Land Management and The Agricultural Transition
1. Introduction
1.1 The Tenant Farmers Association (TFA) is the only organisation dedicated to representing the interests of those who do not own the land they use for agriculture, whether through tenancies or other means, in England and Wales. Its membership comprises farms of all types and sizes but active, family farms predominate. The TFA welcomes the opportunity of contributing to this important Inquiry on the proposed Environmental Land Management scheme (ELM) and the wider agricultural transition announced by DEFRA.
1.2 In moving from a policy which relied predominantly on a direct payment system coupled with a smaller agri-environment package to a new framework where agri-environment schemes will now play the dominant role, the TFA’s principal concern is to ensure that new schemes can be accessed by farm tenants and others who do not own the land they use for agriculture, including those using rights on common land. Farm tenants and others not operating as owner occupier farmers, have had difficulty in gaining access to agri-environment schemes in the past. We have also had situations where landlords have been able to benefit from payments under agri-environment schemes whilst passing the requirements of those schemes on to their tenants. Whilst the transition plan published by DEFRA refers to issues for tenant farmers, the TFA does not believe that, as yet,the needs and concerns of the tenanted sector of agriculture have been sufficiently considered. With the Government targeting a high level of uptake for the ELM Scheme and the other elements set out within the transition plan, from a public policy perspective it will be important that farm tenants are not disenfranchised from participating in these schemes.
1.3 It will also be important to move carefully to ensure that the current level of countryside management, environmental concern and animal welfare considerations are not jeopardised in the way in which the Government changes the policy landscape. Whilst it is appreciated that direct payments have been a blunt tool, for the vast majority of farmers they are providing the basis upon which profitable businesses can continue to operate whilst delivering wider public benefits and so that consumers do not have to pay the full cost of this management at the point of purchase.
1.4 The remainder of this evidence is structured around the six questions posed by the Committee in its call for evidence.
2. Question 1 - Is the Government’s timeframe for the national pilot, full roll-out of ELM and phasing out direct payments by 2027 feasible?
2.1 The TFA has been critical of DEFRA for the time it is taken to provide the information set out in the Agriculture Transition Plan. The original consultation which led to the production of this plan (Health and Harmony) was launched three years ago and that consultation itself benefited from at least 18 months of discussion prior to its launch in the wake of the EU referendum result of June 2016. So, the current plan has been almost 5 years in the making.
2.2 However, the TFA is not opposed to the direction of travel proposed by the Government. Following the outcome of the 2016 EU referendum, the TFA refreshed its policy produced in April 2016 to inform the debate on the referendum (see Annex 1 for the full paper [Annex not published] ) to argue for the following priorities for a replacement to the current BPS and agri-environment schemes:
Maintenance of the current UK budget of approximately £3 billion allocated to agricultural support through the CAP but spent by England and the Devolved Administrations according to new priorities as follows each attracting an equal share of funding:
(i) A new agri-environment scheme which sets out a menu of costed options that farmers can choose from to deliver on their farms and judged on the basis of outcomes, as opposed to the means of achieving those outcomes, to include specific options for hill and upland farmers focusing on ruminant livestock production.
(ii) A Farm Business Development Scheme to provide annual grants of up to £25,000 per farm per year to assist with the implementation of approved five-year plans for farm development covering investment in fixed equipment, cost reduction initiatives, processing capacity, diversification, marketing, cooperative initiatives, producer organisations, climate change adaptation, environmental improvement etc.
(iii) A package of near market research & development, technology transfer, promotion, market development, brand development and other supply chain initiatives focused on supporting British produced food.
2.3 Therefore, the TFA would argue that the level of detail provided within the Agricultural Transition Plan is not where it should be for a policy which is now being implemented. In the foreword to the plan, the DEFRA Secretary of State speaks of charting an orderly course towards a new policy. However, as we are now at the point of delivery that course should have been charted many months ago.
2.4 Where the plan has given a greater level of certainty is around the extent to which Basic Payment Scheme payments will be reduced with all recipients now looking at losing at least 50% of their payments by 2024. Whilst there is much within the plan which seeks to assure farmers of continuing support, there is not nearly enough detail given to enable farmers to plan a way ahead. The pain that farmers will experience in terms of the reduction of payments is quite clear, the gain in been able to recoup what they will lose through new schemes remains unclear.
2.5 It is the case that the Government has been delayed, initially by the political impasse over the route to Brexit prior to the December 2019 General Election and since then by the necessary response required to the outbreak of the coronavirus pandemic. Whilst there are therefore legitimate reasons for the fact that the amount of information currently available is limited, the TFA believes that it is irresponsible to be pressing ahead with such a major policy change without being fully ready. The TFA has previously called for a one-year delay in the transition plan to give time to build this clarity, but this has been rejected by DEFRA. The argument has been that the imperative is to make best use of the funding commitment provided by the Government until the end of the Parliament to show that real change has begun. However, the TFA is concerned that we run the risk of launching a half-baked policy which will not meet the Government’s objectives and causes fundamental questions to be asked about whether the funding should continue beyond the end of the current funding period.
2.6 In response, the Government appears to be trying to manage this policy deficit by reducing its aspirations for the new scheme which is disappointing. For example, the pilot for the Environmental Management Scheme due to launch this spring was originally envisaged to cover around 10,000 individuals. This was scaled back in the early part of 2020 to 6000 individuals and by the time of the launch of the agriculture transition plan was reduced to 5500 individuals. However now, the aspiration is to have only 1000 individuals in the pilot. Whilst we understand that the RPA is ready to run the pilot, DEFRA has yet to provide the details of the scheme to the RPA. We therefore appear to be in the unusual position of having the admin ready for a scheme the parameters for which are yet to be determined. It is also of concern that the 1000 individuals who will be invited to take part in the pilot following a round of expressions of interest will have to be individuals who are not currently involved in any agri-environment schemes. The TFA believes that it would be of greater assistance to DEFRA to have individuals in the pilot who are already committed to agri-environment as a concept. These individuals will be better placed to provide feedback to DEFRA on the nature of the new scheme in comparison to individuals who have, hitherto, be less inclined to want to be involved in such schemes. Even at this late stage, we would encourage DEFRA to think again about who can participate in the pilot.
2.7 The easy bit of the transition is the phasing out of direct payments. There is no reason to doubt that the Government is in a position to meet its deadline of removing direct payments altogether by the end of the transition period. The more difficult aspect of the plan is building the new policy framework for which, at this stage, we have doubts about the Government’s capacity to achieve this.
2.8 Alongside plans for ELM the agricultural transition plan also contains a range of connected initiatives which are at best sketched out as ideas rather than as considered policies. Whilst each of these initiatives could have their merits, much more detail is required about how these will operate and how they will fit with the core component of the new framework which will be ELM. These initiatives include:
(i) Farming in protected landscapes.
(ii) The lump sum exit scheme.
(iii) The animal health and welfare pathway.
(iv) The farming investment fund.
(v) New entrants support scheme.
(vi) Slurry investment scheme.
(vii) The innovation research and development scheme.
(viii) Farm resilience.
(ix) Skills training and benchmarking.
2.9 All of these areas have previously been addressed in other policy documents and announcements including “Health and Harmony” but as yet, appear to be little further developed. Consultations are anticipated on a number of these initiatives but with the transition period having already started, these policy areas will have to be worked up somewhat on the hoof as the transition period unfolds. It is unfortunate, to say the least, that plans for these initiatives are not in more final form at this stage of the policy process.
3. Question 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?
3.1 The Sustainable Farming Incentive (SFI) has followed an interesting path of development. Originally it appeared from left field as a response from DEFRA to the concerns being expressed about the potential gap that could be created between the start of rolling back direct payments and the beginning of the new ELM. This occurred during the House of Commons and House of Lords debates on Section 1 of what is now the Agriculture Act 2020. Very quickly, however, it has morphed into the first of three components within ELM. Full details about the scheme are awaited but early indications suggest that it will operate much like the previous Entry-Level Scheme (ELS) on a broad and shallow basis. However, ELS operated based on income foregone in the context that most participants were also in receipt of the direct payment through BPS. As we move away from BPS, SFI will need to deliver much more than income foregone both to be attractive for farmers to take up and to ensure that its objectives are met. At this stage, there is no clarity that this will be the case.
3.2 In terms of access to the scheme for farm tenants, it should not be a requirement for tenants to need their landlords’ consent. However, in addition, consideration will need to be given to how tenants, who might be restricted by the terms of their tenancy agreements, can gain access to schemes if their landlords refuse consent on an unreasonable basis. The Agriculture Act 2020 sets out a possible solution for tenants occupying under Agricultural Holdings Act 1986 agreements, but there is no solution for tenants on Farm Business Tenancy agreements.
3.4 In addition, doubt has been cast over the extent to which graziers on common land will be able to take advantage of the new SFI. Access to SFI for individual graziers on common land will be important particularly where they have fallen out of agreements under the Higher Level Stewardship scheme or Countryside Stewardship.
3.5 In addition to SFI, the TFA believes it must be a priority to roll-out, at least as a pilot, a scheme to encourage improvements in productivity and long-term farm business resilience. Although there is currently discussion with DEFRA about a new productivity grant scheme, it lacks the necessary scope or innovation to be truly effective. Previously, EU rules restricted the way in which such schemes were developed. In the absence of those restrictions, the TFA believes that the Government should take a much more holistic approach. Rather than providing funding on the basis of grants for individual items of equipment, farms should be encouraged to apply for funding to assist in the implementation of whole farm business plans.
3.6 Using the old-fashioned method of grant aiding specific pieces of equipment or technology often leads to situations where equipment is acquired without any proper thought for how it fits within the operation of the farm business. We also see price inflation for equipment that attracts grant and an overconcentration in efforts to supply grant aided equipment to the detriment of other pieces of much-needed equipment. Those farm businesses which have already invested well in fixed equipment through shrewd farm business management may also suffer through a list-based approach. However, these farm businesses are likely to be those which will have the greatest impact on farming resilience, food security and environmental benefits. A plan led approach which allows individuals to consider their holdings on a bespoke basis against which grant aid could be supplied would avoid these problems.
4. Question 3 - How effectively has Defra engaged with land managers and other stakeholders on the design of ELM, including on the transitional arrangements?
4.1 There has been a fair amount of dialogue conducted by DEFRA since the outcome of the EU referendum in June 2016. It has occurred through many and varied conduits at both Ministerial and Official level. However, there is a real danger in conflating activity with progress. As noted elsewhere in this evidence, despite the apparent level of engagement we are still a long way off from understanding how the post BPS schemes will operate.
4.2 DEFRA has been extraordinarily keen to promote codesign coupled with an “allcomers welcome” approach. The TFA feels that this has created an overly complex web of information and an unfulfillable expectation amongst those with whom it has attempted to engage that their particular and often esoteric interests can and will be covered in new schemes. Of course, it is important for civil servants to engage properly with those for whom schemes are to be designed but the process needs to be manageable, reasonable and achievable.
4.3 To that end, the TFA would question the effectiveness of the engagement thus far. That is not to criticise the passion, enthusiasm or determination to engage but this has not led to beneficial outcomes. At some stage, in every process of consultation, decisions need to be made. It seems that officials are either reluctant to make decisions or feel unable to do so given the complexity of the issues they are facing.
5. Question 4 - How can ELM be made an attractive business choice for farmers and land managers while effectively delivering its policy goals?
5.1 The issues highlighted for SFI in answer to question 2 above, are also relevant here. The greater the reliance upon income foregone, the more restrictions on tenants and complications for common land graziers, the less relevant ELM will be to farm businesses. However, the TFA would reiterate its view that there needs to be a greater degree of people-to-people engagement with the new schemes than has hitherto been the usual practice with Government schemes. BPS has operated reasonably effectively remotely but Stewardship, less so. Whilst individuals should be free to access advice from any quarter, ELM needs trained facilitators or advocates to drive uptake and resolve problems at a local level. Whilst it has been suggested that the SFI component should be accessible on a no advice basis, the TFA believes that this is missing a major opportunity to engage with the farming community. As with Environmentally Sensitive Areas of old, farmers encouraged to enter into lower tier provisions by enthusiastic and skilled project officers were often tempted into higher tiers by the interplay of their relationship with those project officers. Natural England would seem to be the obvious place to find such individuals.
5.2 It will be essential to ensure that those farm businesses which are already operating to high levels of environmental management, animal welfare concern and climate friendly farming are not locked out of access to SFI and the higher components of ELM. These businesses must be rewarded for the public benefits they are already producing particularly as the BPS payments fall away.
5.3 However, the TFA is also concerned about how ELM might impact the tenanted sector of agriculture more generally and specifically the 15% of land let under short-term Farm Business Tenancies (FBT). At this point, it is instructive to recall that the average length of term on an FBT is now just over three years and nearly 90% of all FBTs are let for five years or less. The concern is that landlords with agricultural tenants may wish to resume land to enter it into the higher components of ELM - Local Nature Recovery (LNR) and Landscape Recovery (LR). Whilst this can be achieved by agreement, the TFA wants to avoid situations where tenants are forced to give up land or to leave their holdings so that their landlords can use the land to enter new schemes. We are already seeing situations where landlords are using the threat of taking land back for tree planting as leverage to require tenants to pay higher levels of rent for their continued occupation of land.
5.4 Whilst there are certain safeguards available to tenants occupying under the auspices of the Agricultural Holdings Act 1986, no such provisions apply in respect of FBTs. It is easy to see how landlords, incentivised by the availability of grant aid through ELM, will be tempted to take land out of the tenanted sector so that they can be rewarded via the new schemes. This would not sit well with wider Government objectives for the support of the continued development of the landlord tenant system in agriculture and the promotion of longer-term agreements. To avoid this, the TFA argues that landlords should not have access to SFI at all and should only have access to LNR or LR where they have the consent of either an existing tenant or a tenant who had been in occupation at any time in the 12 months prior to the application for the grant being sought. This would implement the same procedure already successfully applying within the Class Q Permitted Development Regulations which allows for the conversion of farm buildings into residential use. There is also a precedent within previous schemes to encourage woodland planting. In 2003, the Woodland Grant Scheme was launched with a provision which prevented a landlord from claiming grant aid in circumstances where they had resumed land from a tenant who had contested a landlord’s notice to quit. However, some 18 years further on, and with more short-term farm business tenancies in place, a provision closer to that applying for class Q permitted development is required.
5.5 Giving farm tenants greater rights in this respect should encourage landlords to be more willing to discuss LNR or LR schemes with their tenants rather than seeking to impose them. Without such rights being afforded to tenants, we fear that many will face eviction with consequential damage to their farm businesses, homes and family life.
6. Question 5 - How can the Government ensure that ELM agreements achieve their intended environmental outcomes, reduce bureaucratic burdens on farmers and deliver value for money?
6.1 As noted above, the TFA believes that the mechanisms used in Environmentally Sensitive Areas should be looked at again for the development of the new scheme. The tiered approach coupled with local advice, information and support through active project officers who would be advocates on behalf the scheme is the best way to take this forward. Project officers should be given sufficient autonomy to be flexible against the achievement of a list of agreed outcomes for their areas.
6.2 In terms of policy evaluation, rather than attempting to hold a large database of everybody who is participating, it would be more sensible to have regular ex-post evaluations carried out by universities or other research institutions as was the case with all new Government policies in the past. Again, the TFA would point back to the evaluation reports carried out in the 1980s and 1990s into schemes such as ESA’s, The Farm Diversification Grant Scheme, five-year set-aside and Countryside Premium. These assessments provided a good basis for assessing value for money and outcomes rather than having to have large IT projects which Government struggles to operate efficiently.
6.3 Specific attention needs to be given to the needs of hill and upland areas of England based on utilising grazing livestock systems to achieve wider public benefits. By their very nature, hill and upland areas are physically, socially and economically remote. Agriculture continues to be, and should continue to be, the mainstay of economic and environmental management for these areas despite the severe natural handicaps encountered by farmers who operate in hill areas.
6.4 These areas are also extremely important in the wider agricultural industry as they represent the beginning of the livestock production chain. It is the crop of lambs and calves from our breeding flocks and herds in hill areas that are finished further down the hill on lowland units before entering livestock markets and abattoirs on their way to supermarket shelves and food service outlets. This system of integrated production has operated in the UK for centuries and the impact of the loss of breeding flocks and herds in hill areas experienced over recent years should not be underestimated in terms of the impact on the wider economy, rural social structures and the rural environment.
6.5 Farming in hill areas provides the most reliable and coherent basis upon which the management of our most beautiful and yet fragile landscapes and ecology will be achieved. The knowledge contained within the farming community in hill areas is invaluable and must be the primary source for new policy development.
7. Question 6 - What lessons should be learned from the successes and failures of previous schemes paying for environmental outcomes?
7.1 Fundamentally, the more engagement there is between those running the scheme and those participating in the scheme, the better they operate. Schemes such as Environmentally Sensitive Areas which used project officers, Catchment Sensitive Farming initiatives which involve significant local dialogue and the previous Higher Level Stewardship and Entry Level Stewardship schemes which had significant input from Natural England advisers, have all proved very effective. More recently, Countryside Stewardship suffered significantly from the remote nature of the scheme from day one. Various attempts have been made to improve the “customer experience” but to limited effect.
7.2 DEFRA should be encouraged to look at the success of the schemes listed above for new arrangements under ELM. Given the major opportunity that exists to do something very differently to what we have done before now that we are outside of the European Union requirements, DEFRA should use these freedoms innovatively. It is disappointing that we have seen a narrowing of the aspiration whilst at the same time a failure to adequately explain a complex web of schemes which will have their own interactions. People focused schemes require people to facilitate, advocate and evaluate those schemes. We do not want to get to a situation at the end of the current Parliament where serious questions are asked about the extent to which the expenditure on these schemes have delivered value for money. Complex and ambitious schemes cannot be administered remotely. Proper engagement, scheme by scheme, at farm level will be essential to ensure that every pound spent delivers the intended benefits.
Tenant Farmers Association
06 March 2021
GWD/0503