Land And Farming Bulletin - Spring 2014

THE FUNDING FLOW - CAP 'PILLAR 2' POLICY REFORM

The Common Agricultural Policy is comprised of two pillars through which the funding passes. The vast majority flows through the first pillar, such as the direct aid, but an important minority flows through the second, the rural development fund. Defra has published more clarification on how policies in this pillar are going to change for the current 2014 to 2020 period.

Defra has decided that 12% of the first pillar funds will be transferred to the second pillar. It is Defra's intention to increase this to 15% in 2018, following a review of the demand for agri-environmental schemes. This will leave approximately £3.65bn for Rural Development for England for 2014 to 2019. Of this, 87% will be for agri-environmental schemes, 5% for a growth programme, 4% for competitiveness initiatives and the remaining 4% for the local LEADER programme.

New environmental land management scheme

The new scheme will aim to develop landscapes that are important for rural tourism, protect resources for farmland birds and pollinators, and tackle water pollution. It will encompass the upland and lowland, organic and conventional, as well as woodland and farmland alike, with a single multi-year agreement per holding.

With the new scheme, the environmental stewardship and English woodland grant scheme will be combined. Once the scheme has opened, the application can be made at any time of the year, although all start dates will be as of 1 January. However, the capital schemes like the farming and forestry improvement scheme and the rural economy grant might continue to be provided on an ongoing basis, although they will not have processing batch dates in favour of tight application deadlines.

There will be a tier of new environmental land management schemes (NELMS) focusing on 'priority' sites. This will look very much like the present higher-level stewardship (HLS) and would effectively be by invitation-only on the land with the most environmental potential. Most farmers with HLS schemes or the previous classic schemes will be invited to resubmit an application for the follow-on scheme, although success is not guaranteed.

There will also be a universal capital grant scheme paying up to £5,000 to fund activities such as hedgerow restoration and stone wall repairs. This would be open to all, even those not in a management agreement.

A 'mid-tier' was originally planned to focus on landscape-scale agreements. This was groups of land managers coming together to offer large areas of land into a scheme. This was thought to offer better environmental outcomes than isolated 'pockets' of land. However, this is now less of a priority over individual farms with high-quality environmental opportunities. Defra is still looking at ways to reward collaborative applications, but this is no longer the pre-requisite that once seemed likely. Instead, the industry is likely to be guided towards a more focused agri-environmental approach. This will be through only offering mid-tier agreements in certain priority areas with a limited choice of options.

The key point is that the concept of 'broad and shallow' environmental support for low levels of activity by anybody is no longer going to be available once the entry-level scheme (ELS) expires. This means there will be substantially more land in England that is not covered by environmental scheme income other than for the obligations of greening.

The last farming and forestry improvement grant scheme window has recently closed, with a £10m budget that many believed wouldn't be available at all. But Defra has recently pointed out that this is actually a successful scheme and will be incorporated into NELMS.

Energy crops scheme

The energy crops scheme that has subsidised the initial planting and set-up cost of biomass crops has been and will remain closed. The scheme supported less than a thousand hectares in 2012 and Defra considers that food production should remain the primary goal for farming, while biomass should not undermine British food security.

Competitiveness

About £150m of the Pillar 2 funds are being allocated to spend on raising competitiveness within the farm sector over the seven years from 2014 to 2020. It is too early to know how this will be spent, but the messages coming from Defra suggest there will be some capital funding, along the lines of the farming and forestry improvement scheme. It is likely not to have short application windows but be processed in batches...