Defra committee suggests changes to farm policy

The House of Commons Defra Committee has some sensible and politically feasible suggestions in relation to recent Government farming policy.  Full report is accessible here: https://committees.parliament.uk/work/8722/the-future-of-farming/publications/

'Closing the Sustainable Farming Incentive 2024 (SFI24) without notice affected confidence in the Environmental Land Management Schemes (ELMS). This must be repaired to secure their future success. An alternative funding mechanism should be put in place to fill the gap in funding for those who missed out on the SFI24, and the Government should set out details of the next iteration of SFI as a priority. 

 We support the Government’s objective of reforming agricultural property relief (APR) and business property relief (BPR) to close the loophole that has encouraged wealthy investors to buy agricultural land to avoid inheritance tax. We are concerned, however, that no consultation, impact assessment or affordability assessment was conducted before the announcement of the reforms. 

The lack of proper evaluation of the impact of these changes 1 means that the scale and nature of its impact on family farms, land values, tenant farmers, food security and farmers in the devolved administrations is disputed and unclear. This comes with a considerable risk of negative unintended consequences. 

 Alternatives to the Government’s approach have been proposed, which may achieve the same policy outcomes while protecting vulnerable farmers. We are not in a position to assess the merits of each alternative but there is sufficient time for the Government to do so. Stakeholder concerns about the Budget’s taxation proposals have made it difficult for Government to articulate and deliver its wider vision. 

A pause in the implementation of the reforms would allow for better tax policy to be developed and the Government to convey a positive long-term vision. The Government should delay announcing its final APR and BPR reforms until October 2026, to come into effect in April 2027. This would also provide farmers with more time to seek appropriate professional advice.'

Farmers are unfortunately notoriously poor at succession planning and they need more time to adjust.

This time farmers have a justified grievance

Under the CAP farmers received a 'basic payment' with larger scale farmers getting more.  How this was spent was only loosely constrained so in practice it could be used for consumption as well as investment in the farm business.

Michael Gove came up with the idea of 'public money for public goods'.  In other words, farmers should be subsidised to farm more sustainably and benefit the environment.   (Note that we are talking just about England, policy in the devolved regions is different).

It took far too long to get the Sustainable Farming Incentive up and running and now it has been closed without the required six weeks notice because the money (£1.8 billion) has run out.   Uptake covers just 50 per cent of funding against a 70 per cent target.

Defra is not a 'protected' department and the Government is short of money as it tries to ramp up defence expenditure.  Nevertheless, some calculations suggest there could be headroom of £400m in the Defra budget.  Perhaps some extra money could be found, certainly wildlife groups hope so.   For a fuller critique: https://www.thetimes.com/article/510e633d-69f1-40fc-bba8-78ef0ce8d9c4

I think that farmers are increasingly realising that the Treasury is not going to back down on the changes to inheritance tax.   Some farmers are talking of going 'full French', but any government that surrenders to direct action risks its authority.

Personally I would have looked at reducing or eliminating the capital gains tax rollover relief for farmland sold for development, but that might be seen at odds with housing policy.

Farmers will still pay half the prevailing rate of inheritance tax and get 10 years back to pay the bill free of interest, a privilege the rest of us don't get.

'Back to the future' risk on food security

It could be 'back to the future' as farm organisations use the war in Ukraine to bang the food security drum.  There are, of course, real issues here, given the importance of Russia and Ukraine in wheat production, but there is a risk of reverting to old fashioned blunt instrument subsidies and downgrading the sustainability agenda.

In particular one could create a false dichotomy between food security and sustainability: https://www.foodnavigator.com/Article/2022/03/07/Ukraine-war-detonates-EU-food-security-debate-but-will-sustainability-be-collateral-damage#

Farmers may hope for a halt in the phasing out of the basic payment, but the Government faces heavy expenditure pressures with a likelihood of increased defence spending and more support required for household and industrial energy bills.   Rather than providing a general subsidy that is not tied to outcomes, it would be better to spend more on boosting productivity through capital investment and new technology.

I will write more about this issue in the coming days.

Farmers need biopesticides

In a recent article in Farmers Weekly Sean Smith the CEO of biopesticide developer and supplier Eden Research states: 'The British farming community has expressed serious concerns about the clampdown on conventional pesticides, viewing the bans as a threat to productivity. Pesticides are often a critical input and without them, commercial yields can be significantly affected.'

'This is why alternatives to conventional chemistry are essential, along with more integrated approaches to pest and disease control. As things stand, however, the banning or restricting of existing, traditional pesticides is happening at a much swifter rate than the approval of alternative chemicals and new biopesticides, which are pest control formulations derived from natural materials, such as minerals, bacteria, plants, or animals.'

'Farmers are therefore facing a declining choice of crop protection products, with few alternatives approved and ready. This imbalance is making growing conditions more challenging. To counter this, there is a need for regulators, such as the UK’s Chemicals Regulation Directorate, to facilitate quicker approvals for new alternatives.'

'Despite the regulatory lag, sustainable alternatives are becoming available and being applied to all facets of farming. Allowing new sustainable biopesticides to enter the market will help make headway towards greener farming practices, meeting the ethical expectations of UK consumers.'

This is a topic I have worked on with plant scientists for over a decade and I have recently completed a book chapter with Roma Gwyn of Biorationale looking at global developments and in particular the regulatory framework within the EU and whether it inhibits or facilitates adoption of biological alternatives.

Our conclusion is that the agenda for more effective forms of regulation will only be fulfilled with sufficient political support. There is greater interest in biological technologies than in the past and an increased recognition of the contribution they can make to environmentally sustainable solutions to plant protection. This reflects a number of factors, including greater effectiveness on the part of the industry representative body, the IBMA, including a willingness to build coalitions with environmental groups.

It also reflects the greater involvement of major agrochemical companies in the sector as market opportunities improve. However, public knowledge and understanding of biological technologies remains limited and this means that there is no substantial constituency of public support for their greater use. This in turn influences the priority that political decision-makers give towards improving the responsiveness and speed of regulation that allows new products to enter the market.