Keeping the country farming

Published on 23rd March 2020

Free market forces fail where a multitude of independent producers, like farmers, have to sell their produce to a small number of buyers. The market power of those buyers is too dominant.

That is why the UK farming sector has needed Government support over many decades and why support must continue post-Brexit.
The form of support has changed over the years –from direct produce payments, to intervention, to area payments and recently, as the political environment has greened, toward environmental payments.

Basic Payment Scheme (BPS)

Britain is leaving the EU’s Common Agricultural Policy and area-based direct payments (now the BPS) are to be phased out by 2028, with the first reduction taking effect in 2021. The first cut will take 5% off the first £30,000 of any BPS claim and a larger percentage off bigger claims.

Agricultural Policy for England

The new Agriculture Bill commits Government to making 5- to 7-year plans for English agriculture, to consider food security and to encourage the production of food in an environmentally sustainable way.

Over the last several years, many farmers have taken advantage of the Countryside Stewardship Scheme. As BPS is reduced, money available for rural and environmental management schemes should increase. Government has guaranteed to maintain its current farming budget throughout the current Parliament.

One new initiative is the Woodland Carbon Guarantee Scheme, which encourages woodland planting with a long-term option to sell the captured CO2 to Government for an inflation-linked, guaranteed price. A Woodland Carbon Guarantee contract can be negotiated alongside existing grants for new woodlands.

The new national agricultural policy will create winners and losers. It has been suggested that the phasing out of BPS may reduce Farm Business Tenancy (FBT) rents because existing levels assume that tenants will receive BPS. Whether there will be a similar impact on capital land values remains to be seen.

For 2020, make sure you get your BPS application in by 15 May.