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LAMMA 2021

LAMMA 2021

Defra’s Environmental Land Management Scheme – Everything you need to know

Defra has today published two important new documents on the Environmental Land Management Scheme and future farming policy. Abi Kay explores what they say.   

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Defra’s Environmental Land Management Scheme – Everything you need to know

The Government has released very little detail about what the new Environmental Land Management (ELM) scheme will look like since the Health and Harmony consultation was published in 2018.


But today, it has published two important documents.


The first is a future farming policy update, which confirmed cuts to direct payments will begin in 2021 as planned, despite calls for a delay of a year from industry bodies.


From next year, farmers in England will see their payments reduced by different amounts, depending on their claim size (see table below).


The reductions work in a similar way to tax calculations, with a claim worth £40,000 seeing a 5 per cent reduction on the first £30,000 and a 10 per cent reduction on the next £10,000.


Direct payment band Reduction percentage
Up to £30,000 5 per cent
£30,000 - £50,000 10 per cent
£50,000 - £150,000 20 per cent
£150,000 or more 25 per cent

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During transition, farmers will be able to take payments ‘delinked’ from the land, potentially as early as 2022.


Payments will be made based on a reference period throughout the agricultural transition period – currently due to end in 2027 – and there will be no restrictions on how the money is spent.


Defra is also planning to offer, subject to affordability, the option of taking a one-off lump sum payment to replace all direct support over the agricultural transition.


A future consultation on this will look at whether a maximum payment amount should be set, who will be eligible, how applications will be prioritised to manage affordability if necessary and when and how farmers can apply.


The second paper published by Defra is a ‘discussion document’ on ELM, which shows Ministers are intending to introduce a single scheme with three tiers.


Tier 1


The first tier is designed to be accessible to as many farmers as possible and would pay for good management of nutrients, pests, livestock and soil, as well as field margins, field cover and efficient water use and storage.


Farmers entering tier 1 would, in the short to medium-term, be paid for taking certain actions as opposed to delivering outcomes, but the Government has said it does not want to be too prescriptive and will set up a ‘proportionate’ system of compliance to monitor agreements, focusing first on assistance rather than enforcement tools such as penalties.


Concerns have been raised about the proposal to base tier 1 payments on income foregone and costs incurred.


Farmers would be paid for actions above the regulatory baseline – to be consulted on later – but some of the actions paid for on day one may later become regulatory requirements, and no longer attract funding.


One area this could potentially apply to is nutrient management, as the Committee on Climate Change has recommended making the whole of the UK a Nitrate Vulnerable Zone – a recommendation which Defra will ‘probably consider’.


Tier 2


The objective of tier 2 is to pay for locally-targeted environmental outcomes, taking account of which environmental improvements an area needs as well as which actions can be most successful.


It is anticipated that participation in this tier will require specialist knowledge and support.


Examples of things which could be paid for in this tier include:

  • Tree, shrub and/or hedge planting
  • Habitat creation, restoration or management, including woodland, wetlands, freshwater, peatland, heathland, species-rich grassland, coastal habitat or urban green spaces
  • Flood mitigation
  • Species management
  • Rights of way, navigation and recreation infrastructure
  • Education infrastructure, events and services
  • Geodiversity assets and heritage asset management.

The Government is looking at different ways to encourage collaboration under tier 2, and payments are expected to be more results-based than those under tier 1.


Tier 3


The objective of tier 3 is to deliver land use change at a landscape scale, delivering environmental outcomes and making a contribution to meeting legal commitments around nature recovery and net zero emissions.


While under tier 1 and tier 2, farmers can enter into agreements with the Government, in tier 3, Defra is looking at different application models.


One possible procurement approach would see individual or group applications from land managers to deliver specific projects, with a degree of competition in the procurement process.


The department would like as many farmers as possible to have the opportunity to participate in tier 3 projects, which could include:

  • Forest and woodland creation/restoration/improvement
  • Peatland restoration
  • Creation/restoration of coastal habitats such as wetlands and salt marsh



A range of grants for small and large investments will be provided to farmers to help improve productivity and enhance the environment, with a new scheme opening in 2021.


The initial list of items for which grants will be available will be published when applications open and updated to reflect changing needs.


Suggested items eligible for grants include:

  • Precision slurry equipment
  • Variable rate nutrient or pesticide applicators
  • Efficient irrigation systems
  • Energy-efficient lighting
  • Robotic milking systems
  • Automated or robotic planting, weeding or harvesting equipment
  • Automated produce sorting and packing equipment
  • Food processing equipment



The Government is in the process of developing a new ‘innovation R&D package’ consisting of three strands to encourage farmers and other agri-food businesses to take advantage of cutting edge science.


The first strand will set up state-funded R&D syndicates, allowing farming organisations to work with scientists to develop innovative approaches tackling specific productivity challenges.


Strand two will establish practical, farm-focused projects to encourage adoption of new approaches and technology.


Themed collaborative R&D is the focus of strand three, which will explore strategic, high-priority societal challenges with the potential to transform agricultural productivity over a longer time scale.


Themes include adaptation to climate change and clean growth, integrated farm management, sustainable protein and balanced nutrition and genetics and genomics.

Areas where further clarity is needed

  • What the future ELM budget is, and how money will be allocated between the three tiers of the new scheme. This is expected to come after the upcoming Spending Review.
  • How socio-economic rural development schemes will be funded under the Shared Prosperity Fund.
  • How advice for entering the ELM scheme will be funded and whether it will be available more cheaply to smaller farmers. Last year, a top Defra official said the department was looking at how to ensure the cost of advice does not stop farmers from accessing the scheme.
  • How the Animal Health and Welfare Pathway will tie into the ELM scheme. The pathway has three aims: to increase baseline regulatory requirements, develop reforms to improve consumer understanding and transparency and to pay for animal welfare enhancements which are not rewarded by the market.
  • How future policy intends to increase abattoir provision.
  • How cross-border farms will be affected by diverging policy in England, Wales and Scotland.
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