Michael Gove’s long awaited Agriculture Bill was released on 12 September 2018. The Agriculture Bill sets out the Government’s proposals for farming and land management policies and payments following the UK’s exit from the European Union. The Bill is a proposal for a new law and may be amended as it is debated in parliament, or following a potential change in government after a general election, but it does provide us with an intended framework and direction for agricultural policy. The main points of the Bill are as follows:
Basic Payment Scheme income has been guaranteed, as we know it, until 2021 so long as the current government is in power. This will be followed by a seven year transition period when payments will gradually reduce to nil. During this period payments will be delinked from the requirement to farm the land and there may also be the opportunity to take annual payments as a one off capital lump sum to support investment on farms.
Exceptional Market Conditions
Financial assistance will be made available to farmers following severe disturbance or threats in agricultural markets. This will include extreme weather conditions or outbreaks of disease if they result in an agricultural market being disrupted and therefore affect producers’ incomes.
There is an intention to strengthen transparency in the food chain, provide support for investment in new technologies which boost productivity, and to ensure a fair playing field for agricultural markets by giving the government the ability to regulate contract terms with producers.
Environmental Land Management Systems (ELMS)
The Health and Harmony Consultation Paper introduced new Environmental Land Management System’s (ELMS) to pay farmers and landowners for providing environmental benefits. From 2021 ELMs would offer multi annual agreements where payments are made in return for “public goods” such as improved air, water and soil quality, climate change mitigation, public access to the countryside and animal welfare.
It is clear that the government are willing to continue to provide funding to farmers and it is clear that public perception of this funding is becoming increasingly important. The current support budget for UK agriculture is around £3.2bn and is set on a seven year cycle. It is unknown what budget will be available once the UK leave the EU and how often this budget will be set. There will, undoubtedly, be more pressures on the budget when we leave the EU with other sectors such as housing, transport, education and health all fighting for money from the same pot.
Taking all of this into account, our best advice for businesses is to start to prepare a set of forward budgets taking into account likely diminishing direct subsidy income. This will allow consideration of ways in which productivity can be maintained going forward, with investment made now if required to strengthen businesses. Our team at YoungsRPS are on hand to help farmers and landowners across the north of England and Scotland with business planning or other specific concerns about the possible effect of changing agricultural policy.
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