The Agriculture Bill - What we know so far

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The Government published the second version of the Agriculture Bill on 15 January 2020. The first version failed to become law due to the General Election. Whilst there are still a lot of unknowns, we now have more guidance on how agricultural policy will develop in the coming years. The bill is expected to become law in Summer 2020. All sources suggest that the bill will be passed in Parliament with little change from its current form.

The first Agriculture Bill last year received a lot of criticism for its failure to mention food production as a priority. This has been addressed in the new bill with an obligation to “have regard to the need to encourage the production of food by producers in England and its production by them in an environmentally sustainable way.” So there is potentially an improvement in that but I don’t think we should get carried away.

The key point I want to get over is that direct payments, i.e. the Basic Payment Scheme will still come to an end by 2027. There will be no extension to this. A second key point to note is that this Bill does not cover Scotland, with the Scottish government yet to announce what will happen in Scotland. Scottish politicians have previously stated that direct payments will continue in Scotland.

When Michael Gove was minister in charge of DEFRA, he coined the phrase “public money for public goods”, and this principle continues in the new Bill. Guidance is provided on the different categories of public goods:

• Managing land or water in a way that protects or improves the environment
• Supporting public access
• Managing land or water to restore or enhance cultural heritage or natural heritage
• Preventing, reducing or protection from environmental hazards
• Protecting or improving the health or welfare of livestock and plants
• Soil health
• Livestock and plant genetics

There is a lot of work still to do before these principles can be converted into schemes to deliver financial assistance to farmers for providing the above public goods. In addition there is a commitment to continue the existing Rural Development Programme in an attempt to improve farming productivity.

A further change included in the new Bill is the requirement for the government to prepare and publish “multi-annual financial assistance plans”, setting out strategic plans for at least five years. The first such plan has to be in place by 1^st January 2021 and will cover a seven year period. Additionally an annual statement will have to be published each year setting out the amounts paid out under each scheme.

The phasing out of Basic Payments will take place as previously announced:

• The 2020 claims will remain largely as in previous years.
• Reductions in 2021 are expected to be based on the size of the claim, with for example a claim of £35,000 being reduced by £2,000 and a £85,000 claim reduced by £10,500.
• Reductions in later years are more uncertain. These are likely to depend on the implementation and uptake of the new environmental schemes to provide public goods.
• From 20222 onwards, BPS payments may be delinked from the requirement to farm any land, and the Government are to investigate whether these payments could be taken as a lump sum. There is no certainty that the lump sum option will be introduced, nor the level of discount that will be applied if it does happen. Similarly we have no idea how the lump sum would be taxed.
• The Government will also have power to simplify administrative procedures for BPS between 2021 and 2027, and specifically will have the power to amend or remove greening requirements such as the three-crop rule.

Other provisions:

• The Bill gives power to provide financial assistance or other interventions in the event of “exceptional adverse market conditions”. The guidance states that adverse weather or disease outbreak will not be covered by this provision unless it leads to market disruption.
• Fertiliser regulations – this gives powers in relation to any product that releases ammonia.
• Powers to amend legislation relating to identification and traceability of animals.
• Changes to agricultural tenancy legislation. The principle of these changes is that land should be in the hands of those with the skills and ambition to farm it productively.

My conclusion is that all farm businesses need to prepare for the reduction in the basic payment scheme and plan how to address this, I am confident that whilst there will be challenges there will be good opportunities for those that are ready for them.