Following Defra Minister George Eustice’s speech today (2^nd December) at the CLA conference, Defra have published details of the roll out of the Sustainable Farming Incentive 2022. In this members update we provide an overview of the key points and assessment of the scheme.

• The full update ‘Sustainable Farming Incentive – how the scheme will work in 2022’ is published on the Defra website.

 

Our Opinion: by Adam Lockyear on behalf of FWAG SouthWest

There is certainly no ‘big bang’ introduction to SFI 2022 and this is deliberate by Defra as they plan to roll the scheme out incrementally and ensure that the scheme works. The 2022 offer is relatively low in its level of ambition, for example only an introductory and intermediate level has been included in the initial roll out of the soil standards. This will be disappointing for many farmers who are leading the industry in delivering environmental measures on their farms and striving towards Net Zero. It is also a concern to those who are looking to SFI to replace income lost through BPS reductions. SFI however is not being designed as a replacement to BPS even though for many it will provide an important income and help their businesses to develop, it is important to look how the scheme fits into a wider assessment of the farming system and the options available and not at anyone scheme in isolation. 

By taking a whole farm approach SFI can fit alongside a range of actions to support your farm business through:

• reducing costs and maximising the natural productivity of your land
• utilising Countryside Stewardship, Farming Investment Fund and Farming in Protected Landscapes funds
• exploring other developing private markets such as water company initiatives, biodiversity net gains etc.
• accessing the Future Farming Resilience Fund can help with this process this scheme will be expanded over the next year to be accessible to all farmers.

 

SFI 2022 provides an opportunity for broad uptake of environmental measures (Defra are targeting 70% of farms and farmland to be in the scheme by 2028) and despite the payment level not offering a significant incentive at the outset we recommend that farmers take up SFI in 2022 as a way of getting familiar with the scheme and its processes ahead of further expansion.  With an advanced level of ambition to be introduced to the soils standards Defra have kept open the ability to raise the ambition levels for farmers wanting to do more over the coming years of the Agricultural Transition Plan.   

SFI has been designed to align with Countryside Stewardship, Basic Payment Scheme and private investment so there is little reason not to apply. It is encouraging that Defra are more confident about managing the risk of dual funding (avoiding paying for the same action twice) within the scheme and the opening up of private investment alongside SFI is a good sign of this developing.

There is a lot more to be done in providing evidence and comment to Defra through our stakeholder work and we continue to encourage comment and feedback from our members to help us shape our responses to policy.

 

   

 

Introduction to SFI 2022

The Sustainable Farming Incentive (SFI) is the first of Defra’s three new environmental land management schemes. The scheme will pay farmers for providing public goods such as water quality, biodiversity, animal health and welfare and climate change mitigation, alongside food production. The public goods the scheme pays for will deliver the outcomes needed to achieve the 25 Year Environment Plan, Net Zero and animal health and welfare ambitions, alongside Defra’s ambitions for a productive and competitive agriculture sector.

In addition to the SFI Defra will introduce two other environmental land management schemes: the Local Nature Recovery scheme and the Landscape Recovery scheme. These are set out in more detail in the Agricultural Transition Plan: June 2021 progress update.

• Local Nature Recovery will begin a phased rollout from 2023, this will target environmental priorities through locally targeted actions.
• Landscape Recovery will begin piloting in 2022 and will support long-term, large-scale, land use change and habitat restoration projects.

Defra are also running a pilot of the SFI, lessons from this have already influenced the roll out of SFI in 2022. Defra published an update on the pilot in October and the first agreements went live at the start of November.

 

   

 

The key points within the winter update include:

• Defra are targeting SFI uptake on 70% of farms and farmland by 2028.
• RPA will administer SFI.
• SFI is a part farm scheme therefore applicants can choose all or some parcels to be included.
• Agreements will last three years, with some flexibility to amend every 12 months to:
  • Add land
  • Increase ambition level in standards
  • Add additional standards
  • For mixed farms to rotate between grassland and arable
  • Ambition levels can only be reduced in exceptional circumstances such as loss of control of land
  • Tenants will not require landowners permission
    • Tenants with between 2 and 3 years control can enter, if the tenancy is not renewed then land can be withdrawn after 24 months without any breach occurring
    • Farmers with less than 2 years tenancy should not enter
    • Land under licence arrangement (a licensee) is also unlikely to have sufficient control to enter
• Applications will open in 2022 for at least 10 weeks and first payments will be made by the end of the year. Defra have stated the window will minimise disruption with BPS applications and allow people to make choices alongside other schemes but no dates have been published.
• In later years (most likely after 2024) Defra are looking at allowing applications at any time of the year.
• Payments will be made quarterly beginning three months after the agreement start date.
• There will be no capital payments and but farmers are encouraged to use Countryside Stewardship and other Defra grants to support capital investments.

 

   

 

Agreement monitoring is often a concern to applicants and Defra have committed to creating an approach where farmers feel confident and supported.  In particular Defra want to ensure farmers feel confident to explain any situation that arises and that Defra will support them in ‘getting back on track’. The SFI will not involve additional ‘penalties’ being applied on top of adjustments (i.e. reclaimed grants or reduced payments). In general Defra will also move to waiting for a decision on whether a breach has occurred before deciding on action compared with current schemes which withhold payments for sometimes long periods.

There is a lot of information on common land in the update, the key point is that applications on commons will have to come from a ‘single entity’ this in most cases will be the common association.

Organic farms a standard is expected in 2025 and Organic producers are encouraged to apply for Countryside Stewardship alongside SFI.

There has been a lot of focus on the interaction between private sector schemes and public funding. Under SFI 2022 farmers will be able to enter into private sector schemes (such as carbon trading, payments for natural flood management, biodiversity net gain credits or nutrient trading). This will be reviewed in 2023 as new standards and additional levels of ambition are introduced.

 

   

 

Standards for SFI 2022

There will be four standards in 2022:

• Arable and horticultural soils - Introductory (£22/ha) and Intermediate (£40/ha) levels.
• Improved grassland standard – Introductory (£28/ha) and Intermediate (£58/ha) levels.
• Moorland and Rough Grazing standard - Introductory level (£148 fixed per agreement plus £6.45/ha)
• Annual health and welfare review payment – (pigs £648/yr, sheep £436/yr, beef cattle £522/yr, dairy cattle £372/yr)

The published update includes the full information on the standards that replace the information published in the June update some key changes included below. There are a lot of statements in the guidance stating “it’s up to you precisely how to achieve this” and “we will publish guidance” so don’t expect to have clear answers although the actions themselves are clear:

 

Soil standards key changes from June 2021.

• Guidance on soils standards merged and only two levels of ambition included on 2022 roll out.
• The soil management plan is now applicable across both levels of ambition.
• Standards do not require no, low or min tillage.
• Soil Organic Matter is required not Soil Carbon
• There is no definition of improved grassland in the latest update so the assumption is it remains the same as previous.

 

Moorland and Rough grazing

• Focussed on assessing moorland soils, habitats and their condition.
• Designed to be carried out by the agreement holder using guidance and training provided by Defra.
• This standard is designed to run alongside existing HLS, CS and FiPL schemes.
• Further levels of ambition in 2025 as management actions can be funded by schemes above.

 

Annual Health and Welfare Review

• Year visit from vet or vet-led team.
• This is the first step in Defra’s Animal Health and Welfare Pathway.
• Each visit is expected to last 2-3 hours covering health and welfare of animals, biosecurity and set out achievable actions for the farm.
• Testing will initially focus on identifying priority endemic diseases or conditions in cattle (Bovine Viral Diarrhoea), pigs (Porcine Reproductive and Respiratory Syndrome virus) and sheep (anthelmintic resistance).

 

Further standards to be introduced (note details might change):

2023 (indicative): nutrient management, integrated pest management, hedgerows

2024 (indicative): agroforestry, low and no input grassland, moorland and rough grazing (all levels), water body buffering, farmland biodiversity

2025 (indicative): organic (drawing together relevant elements of other standards into one), on-farm woodland, orchards and specialist horticulture, heritage, dry stone walls