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Details are finally emerging of ways the government will pay farmers to look after the environment, says Honor Eldridge. How to make the Sustainable Farming Incentive work for you

Sun rays over fields in summertime in rural Cambridgeshire, England

Brexit created a unique opportunity for the government to reform farm support. Now outside the confines of the Common Agricultural Policy, the UK has seized the opportunity to create a new system that will require farmers to do more in return for their money.

The government’s new approach will pay farmers to deliver clean air, clean water and other ecosystem services. Known as “public money for public goods”, it will reward farmers for looking after the environment and tackling the climate crisis.

It represents a profound shift in policy – and analysts have spent many years discussing how it might work. While Defra’s vision for the new Environmental Land Management (ELM) scheme is clear, the details are still only trickling out.

Does it stack up?

A further glimpse of what it will involve emerged last month when Defra published details of its pilot Sustainable Farming Incentive (SFI). In time, this will form the entry level of the ELM scheme and reward farmers for basic environmental improvements.

The pilot SFI outlines nine initial standards, each containing three levels – introductory, intermediate, and advanced – including payments. The intermediate level of the improved grasslands standard, for example, will pay £62/ha.

This allows farmers to start seeing how the new system stacks up financially against the current system of basic payments and countryside stewardship. But remember, it is a pilot scheme and revisions are likely before final terms are unveiled next year.

Defra officially launched the SFI pilot in February 2021. It received more than 2000 expressions of interest, indicating the level of interest among growers and livestock producers. Those farmers are now being invited to join the pilot itself.

Measures of success 

The success of the SFI will be dependent on funding. The government has committed to ring-fencing the money from the basic payment scheme until the end of this Parliament. But there is no guarantee as to what happens afterwards.

This is less than positive. Every farmer knows a successful business needs long-term planning. And we simply don’t have that certainty yet because we don’t know at what level government funding will be set.

There are other challenges too. Defra is actively considering the possibility of lowering the minimum area requirement criteria for farmers wanting to join the scheme – opening it up to a wider number of applicants.

While the total amount of funding has been ring-fenced, this obviously does not equate to ring-fencing the amount that individual farmers receive. And more farmers in the scheme means less money available per farm. 

However, ELM is not the only funding route available to farmers. The government is keen to incorporate funding from the private sector too. This means private companies will also support public good delivery by funding agricultural projects.

Some companies have already adopted this “private money for public goods” approach. They include water companies who pay farmers to limit fertiliser applications, thereby reducing the risk of leaching into watercourses.

Woodland creation

Private funding could also be available through woodland creation as a carbon offsetting mechanism. Or through biodiversity net gain, which requires any new construction to deliver additional biodiversity to offset any losses at the development site. 

Overall, the idea is that this combination of  public and private money will create a similar funding level to the amount of money previously available to farmers through the Common Agricultural Policy.

It is clear that the future of funding for the farming sector will be considerably more complicated than it was in the past. A standardised cookie-cutter application will not be viable going forward.

This means each farmer will need to investigate all the different funding options, consider their land, and review the specifics of their business.

Only after that, will they be able to identify the best option.

And this option will likely look very different to your neighbour.

Advisers and specialists have a role to play by helping to dispassionately assess the data and identify the best route that secures the most funding. 

They can also guide clients through this process and maximise their profitability.

The SFI will be an exciting shift where UK agriculture will begin to move towards a more sustainable future. But it will be challenging, and it will require farmers to be resourceful and willing to try new and innovative methods.

Honor Eldridge is an environmental consultant for Wilson Wraight. For details, call 01284 334483 or visit www.wilsonwraight.co.uk