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Grant Special: Using stewardship as a stepping stone to ELM

Making the most of stewardship schemes now could help you get ready for the new Environmental Land Management (ELM) scheme. Olivia Midgley reports.

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While there are still many unknowns about the future of farm support, including how payment rates will compare to current levels and what the tax implications of drawing down the lump sum exit payment will be, there are a plethora of grants available now for farmers to tap into.

 

And the message could not be clearer – do not wait until the new Environmental Land Management (ELM) scheme starts in 2025 (applications open in 2024), make use of other available funding streams between now and then.

 

Holly Story, senior environmental consultant at GSC Grays, says: “There are still a host of consultations, trials, and pilots to come that will continue to shape the new schemes and they will take time to develop.

 

“In the meantime, Basic Payment Scheme (BPS) payments are set to decline more sharply than most of us within the industry anticipated.

 

"Each business will need to react differently to the approaching changes, but we must all react decisively and react soon.

 

“We do not have the luxury of time to sit on our hands and wait for every detail to be ironed out before deciding how to respond."


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Arthey Associates director Tom Arthey says: “Some may wonder whether it is best to wait and see what a new scheme format has to offer in the coming years, but is that a gamble worth taking?

 

“The current schemes give certainty on multi-year and capital-only options, which the Government may not be in a position to match in the future.

 

“Added to that consideration is that some of those options may, in time, become a mandatory requirement of a future payment scheme anyhow. I advise my clients that it is worth getting the experience of implementing now whilst it is a paid-for option."

 

Ms Story adds: “Whether you are planning to grow and strengthen your business with capital investment, or you are looking at how to integrate more environmental work into your farming system, you can use the grant schemes available to you today and over the early transition period to help you.”

 

Countryside Stewardship

 

Countryside Stewardship (CS) will continue to run throughout the early transition period, with the final round of applications being in 2023.

 

The window for this year’s CS scheme opened in February and farmers and land managers will notice that this is on much the same basis as recent years, albeit the capital grants window has a shorter timeframe with a new deadline of April 30.

 

Those who have entered a CS scheme in recent years, or do so this year, will have those schemes honoured at the current payment rates until the end of their agreement.

 

Environmental management can be treated as an enterprise in its own right, and for many farmers it will have a key role in sustaining their business post-BPS.

 

If you are one of them but have not yet engaged with agri-environment schemes, then you could use the next few years to gain experience.

 

Stepping stone

 

Ms Story says: “Defra is encouraging farmers to use CS as a ‘stepping stone’ into ELM, though exactly what that means is currently not clear.

 

“There has been no suggestion that CS agreement holders will receive any kind of preferential treatment when it comes to ELM applications, but having an awareness of the habitats and species on your holding and knowing how to manage them sustainably will help you to adapt to the new scheme and be ready to take advantage of it in 2024.”

 

Defra has guaranteed funding for CS for the lifetime of all existing and new agreements, so entering a stewardship agreement now could provide a reliable annual income stream for the next five or 10 years.

 

Ms Story adds: “It is also a known quantity, unlike ELM which is still in development.

 

“CS agreement holders will have the opportunity to move across to the new ELM scheme if they think it would suit them better and/or if the payment rates are more attractive.

 

“This will probably be done via an annual break clause and you will have to have an offer for ELM in place before you exit your CS agreement.”

 

Bonus

 

Simon Haley, SRH Agribusiness, adds: “The bonus of going into CS from this year is that you can exit that agreement early without any penalty if ELM comes along and is more attractive.

 

“People think they will be tied up for five years so it is really important to stress that this is not the case.

 

“Think of it as a three year scheme with an option to transfer in either year four or five.

 

“It also means that if ELM is for any reason delayed in 2024 or the Rural Payments Agency has teething issues or does not get the computer system right, you are safe because you are already signed up to an agreement and you have got that security.

 

“And remember, CS does not need to be across your whole farm. It could literally be just your farmyard parcel, or a small proportion of your overall land area.

 

"The key thing is making CS work for your farm."

 

Issues


The CS schemes have been plagued with issues over the last few years, with many applicants reporting late payments.

 

Mr Haley believes this has put some farmers off applying, but with the schemes so undersubscribed they are missing out on pots of cash.

 

“Some people do not like the sound of it because they think they have to substitute production with conservation, or are waiting to see if something different comes along,” he says.

 

“My message would be that if you have any work to do in terms of infrastructure improvement at any point in 2022-2023 then you need to apply now.

 

“It could be some fencing, roofing a silage clamp or a muck midden, or some hedging.”

Extensions to stewardship agreements

Extensions to stewardship agreements

If your existing stewardship agreement is coming to an end, it is likely you will be offered the option to extend the scheme for a further 12 months.

 

The suitability for each scheme for extension is assessed individually, but if you have not had any issues with the delivery of your schemes then you are likely to be allowed to ‘rollover’ the agreement.

 

Organic schemes and woodland schemes are not eligible for extensions.

 

To date, most extensions have been offered on HLS schemes, but some early CS agreements will start to expire within the next 12-24 months and will also be eligible.

 

You are not obliged to accept an extension if you are offered one.

 

You could opt to decline the extension and apply for a new Countryside Stewardship scheme or stay out of an agreement altogether.

 

The decision needs to be considered carefully for each farm, there is no ‘right’ answer, but here are a few factors to consider.

 

Is your existing scheme working well for you and your land?

 

 

If you find the management of the scheme too onerous or you do not think it is achieving the environmental outcomes that it should, then you might want to take the chance to start afresh. You cannot make changes to your agreement before extending.

How would switching to CS affect your payments?

 

 

Often moving across from an older HLS scheme into CS results in a lower annual payment for a similar agreement. This is because the underlying ELS options no longer apply. Compare the options and payment rates before you switch.

 

Timing

 

Bear in mind there may be a gap between your existing scheme expiring and your new one starting, and this could mean a long gap between your final payment on your outgoing scheme and the first payment on your new one.

 

New applications are also time consuming and may carry additional costs if you decide to employ a consultant to help you with the application.

 

Capital works

 

You cannot add any new capital works to your agreement when you extend. You can now apply for the new Capital Grants Scheme on land that is in an ELS/HLS scheme, but only if the proposed capital works do not overlap with or contradict the requirements of your existing scheme, so check your agreement documents carefully before applying.

 

It is expected the RPA will continue to offer extensions until 2024, at which point agreement holders will be able to apply for an ELM scheme, so this could be a straightforward way to secure stewardship income through the transition period without any long term commitment.

Public money for public goods

For some farm businesses, the arrival of the new environmental land management schemes will be a welcome new source of funding, which will go some way towards mitigating the loss of direct support.

 

The three schemes - the Sustainable Farming Incentive (SFI), Local Nature Recovery and Landscape recovery - will be available nationally towards the end of 2024, by which time BPS payments will have been cut by around 50 per cent for most businesses.

 

An early version of the Sustainable Farming Incentive will also launch next year.

Four key 'pathways' to help prepare for ELM

Defra has outlined four key ‘pathways’, that they think will help farmers prepare for ELM.

 

They are:

  • extensions to Countryside Stewardship and Environmental Stewardship
  • new Countryside Stewardship agreements
  • National pilots for ELM
  • the Sustainable Farming Incentive
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