Charting the murky waters of government farming subsidies

As the reductions in the Basic Payment Scheme (BPS) starts to take effect, many farmers and landowners are looking towards government grant schemes to mitigate the impact these reductions have on farm profitability. Here, I discuss the strengths and weaknesses of some of these schemes and offer some thoughts on why the level of uptake has been lower than Defra had originally wanted.  

Countryside Stewardship Capital Grant Scheme 

Investing in infrastructure on a farm has long been an issue of contention for many farm businesses. Now, more than ever, with profit margins constantly squeezed, the significant level of capital expenditure that this can require has meant many projects have not been economically viable. In an effort to make this more affordable for farmers, the Countryside Stewardship Capital Grant Scheme was designed to contribute to the cost of certain infrastructure improvements, providing that a good level of environmental benefit is also achieved. Historically, these capital improvements were capped at a maximum of £20,000, unless they formed part of a wider Countryside Stewardship scheme. This year however, the limit was removed, allowing larger projects to receive funding. 

For certain projects such as Water Capital Grant items, only farms in high or medium priority areas were eligible, and all applications had to be endorsed by a Catchment Sensitive Farming officer. In early 2023, the RPA gave guidance suggesting that all farms could apply, irrespective of the priority areas. This was positive news. It was hoped that many projects would be eligible to receive the grant funding. However, since these applications have been submitted, it appears that this is not the case. After discussions with several Catchment Sensitive Farming officers, it seems that the priority areas still have a bearing on the success of an application. This lack of clarity and consistency in the guidance from the RPA and Natural England has, in my opinion, caused further problems in the already disjointed relationship between Defra and British farmers.   

Countryside Stewardship or SFI 

Some of the most common questions we are being asked by farmers and landowners are: “What are the main differences between the Countryside Stewardship (CS) scheme and the Sustainable Farming Incentive (SFI)?” and, “What is the best option for my farm?” These are very important questions, and there is understandably a great deal of confusion over how the schemes differ from each other, with many options and payment rates replicated across both.  

There are advantages to both Countryside Stewardship and the SFI. For example, a key benefit to a CS agreement is that it guarantees income for five years. The volatile nature of agricultural markets means that having a guaranteed income at an agreed level for a five-year period is extremely valuable to a business. This can allow for much easier budgeting and business planning. In addition, the Countryside Stewardship scheme currently has a wider range of options available, meaning schemes can be tailored much more easily to the farm’s individual requirements.   

On the flipside, the SFI offers slightly more flexibility in how management is carried out. The application process for the SFI is much quicker and easier, and record keeping is less bureaucratic. Unlike the Countryside Stewardship scheme, the SFI agreement runs for three years, which might have benefits for tenant farmers with land on short term agreements. Another benefit of the SFI over Countryside Stewardship is that the payment terms are quarterly in arrears as opposed to once annually, which can have significant advantages for your business cashflow. 

When designing an environmental scheme, be that SFI or Countryside Stewardship, my advice to farmers and landowners is largely the same. The first stage is to look at what you have and what your farming system consists of, and the second stage is to look at what the different schemes have to offer. The most effective schemes are those which do not require you to make any drastic changes to your current system as this can (but doesn't always) incur increased costs or reduce production at a level greater than the income you gain from the scheme. It is highly likely that for the soils standard of the SFI, for example, many farms will be already doing what is required, so from this perspective the payments can be accessed without increasing costs. Equally, if you have areas of a farm which are particularly unproductive or you are looking to reduce workload, it is likely that a Countryside Stewardship scheme could be for you. 

SFI uptake: Why are there fewer farms entering their land into this scheme than Defra would have liked? And what needs to change to resolve this? 

It is fair to say that everyone has their own opinion of the way in which grant schemes are administered by Defra and the RPA, but I believe the fact that the numbers of farms being enrolled into the SFI are so much lower than Defra predicted can be attributed to three main factors: economics, clarity of information and trust.

Coming off the back of the BPS era, when farmers could be getting in the region of £230/ha, it is hardly surprising that many farmers consider the new payment rates to be almost insulting. Although there is scope to access higher payments through the new actions, many feel it is very unlikely that total payments will be anywhere near the historic level. At a time when food security and market prices are extremely volatile, the call for mechanisms to ensure a stable, fair price for the food our farmers produce is a loud one. 

Secondly, and in my opinion the most prominent factor, is the lack of clear information given to farmers over the agricultural transition period. Since 2020 when the transition plan was published, there has been constant turmoil in the rules, schemes and overall guidance. The creation of the Local Nature Recovery was set to replace the current Countryside Stewardship scheme, and then scrapped; the clarification on whether SFI and Countryside Stewardship can run in conjunction with each other was unclear for a very long time, and now the disparity on who is eligible for certain capital grant schemes feels like the latest muddle in the RPA’s long history of miscommunication.  

Finally, trust. In order for farmers and landowners to want to be a part of these environmental schemes, they need to feel that the government and the departmental bodies responsible for these matters are acting with their best interests at heart. Unfortunately, many do not feel this is the case.