As UK farming businesses deal with the increasing effects of ag-flation, the changes to the agricultural support system seem to have moved down their priority lists. England continues to press ahead with changes to its agricultural support scheme, with the phasing out of the Basic Payment Scheme by the end of 2027. The successor Environmental Land Management Scheme (ELMs) including the Sustainable Farming Incentive (SFI) has left many farmers feeling rather underwhelmed. It has also left many English farmers wondering how removing agricultural support and barriers to ‘cheap’ imports can support a sustainable farming sector.
In an interesting move by Defra, English farmers received 50% of their 2022 Basic Payment from the end of July which goes someway to highlight the importance of this support to the agricultural sector.
In contrast, there appears to be a different approach by the Scottish Government, which has a policy of ‘dynamic alignment’ with the EU. Therefore, when predicting what the future holds for Scottish farming policy, developments in Brussels will be important. The indication from Europe is that direct support, albeit with ‘green’ conditions, will remain in place. As discussed in a previous article, ‘It’s different in Scotland – part 4’, the Scottish and English farming policies have differed for many years, with Scotland still providing some coupled support payments to the sheep and beef sectors.
On 29 August 2022, the Scottish Government published its consultation paper in respect of proposals for a new Agriculture Bill. This reveals that Scotland’s future agricultural support regime will align with the new EU CAP but with more flexibility in how payments are distributed. The aims of the new Bill are to deliver high food quality production, climate mitigation and adaptation, nature restoration and wider rural development. The consultation document proposes a new four-tier system of farm support payments; Tier 1 and 2 payments being in the form of direct payments which would give Scottish farming businesses security of income, whereas Tier 3 and 4 payments would be indirect payments. Tier 4 payments are described as ‘Complementary Support’ which could provide for voluntary coupled support for beef and sheep which so many Scottish farmers have come to rely upon. The consultation paper helps outline the Scottish Government’s direction of travel for agricultural support but unfortunately lacks the level of detail which farming businesses need for planning purposes.
Recent events such as the COVID-19 pandemic and the Ukraine conflict have only helped to highlight further the fragile state of the global food supply chain. It will be interesting to see if food security moves up the agenda for UK policymakers as energy security already has.
*The views expressed are the author’s and not ICAEW’s.