The future of agricultural support

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We have known for some time that the Basic Payment Scheme (BPS) is being phased out between 2021 and 2027 and new schemes are to be introduced. Frustratingly, there has been a lack of detail of how quickly BPS will be reduced and how the new schemes will operate.

DEFRA finally published their Agricultural Transition Plan for England on 30 November which answers some of these questions. It is worth noting that the Government has committed to maintaining total spending on agriculture until the end of 2024, so money taken off BPS payments will be available under the new schemes described below. However, you will have to plan for the reductions now as they are impending, like it or not.

Basic Payment Scheme reductions

DEFRA has announced figures for 2021 to 2024 showing cuts of between 5% and 25% in 2021 increasing to between 50% and 70% by 2024.

Payment Band	BPS cut on that band
	2021	2022	2023	2024
Up to £30,000	5%	20%	35%	50%
£30,000 to £50,000	10%	25%	40%	55%
£50,000 to £150,000	20%	35%	50%	65%
Over £150,000	25%	40%	55%	70%

These cuts will be calculated in a similar way to Income Tax bands. For example in 2021 a farmer due to receive £50,000 will have 5% deducted from the first £30,000 and 10% deducted from the next £20,000.

Whilst smaller farmers will face smaller cuts in early years, everybody will see their BPS claims reduce by at least 50% by 2024.

Payment before cuts	2021 payment	% cut	2022 payment	% cut	2023 payment	% cut	2024 payment	% cut
£15,000	£14,250	5%	£12,000	20%	£9,750	35%	£7,500	50%
£30,000	£28,500	5%	£24,000	20%	£19,500	35%	£15,000	50%
£50,000	£46,500	7%	£39,000	22%	£31,500	37%	£24,000	52%
£80,000	£70,500	12%	£58,500	27%	£46,500	42%	£34,500	57%
£120,000	£102,500	15%	£84,500	30%	£66,500	45%	£48,500	60%

New schemes and other announcements

• DEFRA will consult in early 2021 on a BPS lump sum exit scheme. This is intended to assist farmers with retirement plans. We do not know how any lump sums will be taxed at this stage.
• From 2024 the remaining BPS receipts will be delinked, meaning it will not be necessary to occupy land to receive payment.
• The Environmental Land Management scheme (ELMS) will not be fully launched until 2024, and will consist of the following parts
  
  • Sustainable Farming Incentive
  • Local Nature Recovery
  • Landscape Recovery.
• The Sustainable Farming Incentive part of ELMS will be available from 2022, and is described as being easy to access and available to all BPS applicants. Details are expected to be available in the first half of 2021 which should let us know how much of the lost BPS can be recouped.
• Existing agri-environmental schemes will continue until 2024 when they will be able to transition into ELMS. The funding available for Countryside Stewardship Schemes will be increased from 2022, and the application/administration process is intended to be simplified.
• There are a number of new schemes under development, including:
  
  • Farming Investment Fund, which consists of two productivity schemes due to open in Autumn 2021 – the Farming Equipment and Technology Fund, and Farm Transformation Fund. Examples of qualifying equipment provided by DEFRA include precision agricultural equipment, robotic or automated technology, and items to improve animal health.
  • Slurry Investment Scheme – this will pay part of the cost of covering existing stores and increasing capacity. Details are due to be published in 2021 with funding available from late 2022.
  • New Entrant Support Scheme – this is due to open in 2022 and appears to be more about encouraging landowners to create opportunities than providing financial support to new entrants themselves.
  • Farming in protected landscapes support – aimed at upland areas in National Parks and Areas of Outstanding Natural Beauty and will provide advice and grant funding

I am also of the view that, as the market and new system develops, there will be private funds coming into the farming and land sector over coming years for carbon offsetting or carbon storage and sustainability.

My main piece of advice is that none of the new funding will come to you and land in the bank - businesses will have to put the effort in and apply for the schemes that suit their businesses. However, don’t jump in too early as I fear outside organisations are trying to grab carbon storage etc while it is cheap and also farming businesses may need that carbon storage themselves.

If you are determined there will be options out there but you will need an open mind to the opportunities to produce quality food and generate funds from sustainability.