Analysis: What Defra’s ELM update means for farmers

Six years in the making, it is finally here.

Defra has given farmers in England much-needed clarity on how it plans to support them to deliver environmental outcomes which underpin sustainable food production in its new post-Brexit farm payment scheme.

The government’s bespoke Environmental Land Management (ELM) schemes have been designed to replace the EU’s Common Agricultural Policy (CAP) and pay farmers public money to deliver nature-friendly farming practices, such as managing crops without insecticides and protecting hedgerows to nurture wildlife.

The main aim of ELM is to support the UK government’s wider climate and environmental objectives, including its newly released 25-year Environment Plan, halting nature’s decline by 2030 and reaching net-zero carbon emissions by 2050.

See also: Farmers Weekly Know How section for the latest news and features on ELM

The ELM programme comprises three separate but related schemes: the Sustainable Farming Incentive (SFI), an enhanced Countryside Stewardship (CS) scheme, and Landscape Recovery (LR).

Together, the three schemes represent the biggest overhaul of farming policy in England for 40 years.

The government has committed to maintain the annual farming budget of £2.4bn for the life of this parliament, meaning savings as the Basic Payment Scheme is tapered down will be reinvested back into the sector.

Farmers and land managers will no longer be paid based on the area they farm.

Many will have to work harder for their money and there will be higher costs through income forgone and/or capital costs incurred in undertaking land management actions.

Defra has published a 101-page prospectus with options and payment rates to guide farmers in their choices and help them plan ahead for the next two years.

Sustainable Farming Incentive

Defra has accelerated the rollout of the SFI with six new standards being introduced this year (See “Summary of SFI 2023 standards”).

This is on top of the three existing standards that were introduced in 2022 to improve soil health and moorlands. Applications for the 2023 offer will be available this summer.

The SFI framework allows for shorter, three-year agreements and quarterly payments as well as a simpler, online application process.

There have been complaints within industry about the low rates for existing SFI options – typically £22/ha to £44/ha. But many of the new standards pay more and can be applied across the farm.

Defra will pay farmers £989/year for an integrated pest management (IPM) assessment and to produce an IPM plan, and £589/year for a nutrient management assessment and review report.

These actions will also help farmers to slash their use of inputs and reduce costs while also potentially maintaining or even improving yields.

Agroecological and regenerative farmers have also praised Defra for offering £45/ha for no use of insecticides and £55/ha for using a companion crop.

But there is no inclusion (yet) of an organic standard, which has frustrated the Organic Farmers & Growers lobby group.

Farmers in Countryside Stewardship (CS) will note that many of the new actions offered in the SFI mirror those already available under CS, and there is parity for payments.

Some of the SFI actions can be “stacked on top of current CS actions as long as they are not double-funded, but these will need to be compatible”, Defra says.

Defra will evolve the scheme over time and introduce new options and ambitions. The full offer will be in place by 2025.

Countryside Stewardship 

Countryside Stewardship is being expanded and enhanced under ELM.

There are currently 250 actions available in the scheme which will either continue, or be adjusted and continue, so that farmers can take care of nature alongside food production.

An additional 30 actions will be available under the enhanced scheme by the end of 2024.

The new actions range from taking care of soils to managing arable crops and grasslands so that they are good for nature, looking after hedgerows and managing crop nutrients.

Further actions include work alongside existing watercourses, and creating new woodlands or restoring existing ones.

Almost all the 280 actions (275 in total) have prices attached to them in the prospectus, allowing farmers to see what they must do to get paid and plan ahead.

Defra is working to establish the payment rates for the five outstanding actions by the summer.

Landscape Recovery

Defra has published details of the second round of its Landscape Recovery scheme, which sees groups of farmers working together on longer-term, larger-scale projects to restore and enhance nature in the countryside.

Last year, 22 projects were launched in the first round and almost all include food production alongside enhancing nature. Farmers are working to restore about 700km of rivers in these projects.

Round two will focus on net zero, biodiversity and protected sites, with funding available for up to 25 projects. Applications will open this spring.

Tenant and upland farmers

The Tenant Farmers Association (TFA) said it was “great news” that a broad range of farmers and farm types will now be able to participate in the schemes.

Tenant farmers do not need their landlord’s consent to take part in the SFI. If they carry out the actions, payments will go to them.

But TFA chairman George Dunn said more detail was needed from government on how it intended to partner with hill farmers operating in some of the most economically fragile and remote areas.

Julia Aglionby, executive director of the Foundation for Common Land, said overall she was not sure how Defra would spend the budget, or how livestock farmers would be able to turn a living wage from the offer on the table.

The offering from Defra provided little new for the lowland or upland grassland farmer who was already in CS, she said.

The new SFI low-input grassland standard was simply the CS options GS2 (lowland) and GS5 (upland) rebadged, so there was no ability to stack CS and SFI, she added.

NFU Uplands forum chairman Thomas Binns said most hill farmers had been using CS schemes to bolster income and deliver public goods for years.

It would be a “disaster” for upland farmers if the grassland option under the SFI could not be accessed by those already in CS, he said, and more clarity from Defra was needed.

The future

Ministers say they will retain a flexible approach over how they distribute the budget across all three schemes according to demand and the best ways to achieve environmental outcomes.

Defra has completed tests and trials with farmers on ways to pay more for achieving outstanding results.

But “payment by results” is proving difficult to measure in a fair and consistent way, and more work is needed over the next year before this can be introduced.   

Defra insists its ELM schemes offer “something for everyone”. In the coming weeks, it will publish a podcast and a blog post discussing the standards in more detail, including the rationale behind them.

This will also cover the SFI Management Payment (£20/ha for the first 50ha in the scheme), which recognises the cost of planning for and participating in the SFI.