Tag Archive: Countryside Stewardship Scheme

Countryside Stewardship Scheme

The Countryside Stewardship Scheme (CSS) is now open for applications for agreements with a 1st January 2022 start date. Farmers applying in the current application window will have a guaranteed income stream, with annual payments until 2027. As BPS is set to reduce, considering a Countryside Stewardship agreement may be a welcome alternative source of income for many farmers. The last date to submit an online application is 31st July 2021.

It is important to note that options for reducing ammonia emissions and water capital options will be delivered through the Catchment Sensitive Farming (CSF) initiative, the latest date to request support and approval from your Catchment Sensitive Farming Officer for the Mid-Tier application is 18th June 2021.

As part of Defra’s efforts to improve and simplify the scheme, there have been some key changes to the Countryside Stewardship scheme this year. Countryside Stewardship land management options no longer have requirements that include prescriptive dates, sward heights and mixtures. Instead, the options have aims which the agreement holder must seek to achieve. This change gives farmers more flexibility in managing certain aspects of the options and more control over the successful management of their options. The changes made to the Countryside Stewardship may find more farmers in favour of the scheme where previously the scheme had not suited their business structure.

Countryside Stewardship is an excellent stepping stone to prepare your business for the future Environmental Land Management (ELM) scheme, which is due to be rolled out in 2025. The Government guaranteed that farmers entering new Countryside Stewardship agreements starting on 1st January 2021 or later will be given the option to end their agreement early in order to enter the ELM scheme if they wish.

2021 sees the addition of five new options for Mid-Tier, below.

  • ED1 – Educational Access
  • AQ1 – Automatic Slurry Scraper
  • AQ2 – Low Ammonia Emission Flooring for Livestock Buildings
  • TE4 – Supply and Plant a Tree
  • TE5 – Supplement for use of individual tree-shelters

The capital grant offer has been expanded to cover 67 capital items available under full Mid-Tier agreements. The capital funding available under a full Mid-Tier agreement has also changed, with a funding cap of £120,000 being introduced for 2021. This will limit the funding available in any single application.

Other changes – WD4 – Management of Wood Pasture and Parkland, has been changed to allow for use in Upland areas, with an increased payment rate for upland farmers. Eligibility for the upland option UP2 – Management of rough grazing for birds, has also been widened to encourage greater uptake and improve the upland offer.

If you think Countryside Stewardship could be for you, please get in touch with a member of the George F. White Farm team on 0333 920 2220 to discuss how to get the most out of the scheme on your farm.

Countryside Stewardship Scheme opens

Today saw the opening of the application window for Countryside Stewardship agreements. Farmers are encouraged to review the various opportunities as changes have been made to widen the range of options available and also making it easier to apply.

Amongst the 67 available options are new opportunities focused on improving water quality, air quality as well as reducing ammonia emissions. A full schedule of the changes is set out below:

  • New options to help improve air quality, reduce ammonia emissions and improve water quality.
  • An improved Countryside Stewardship capital grant offer, making 67 options available which can sit alongside a Countryside Stewardship Wildlife offer
  • New wood pasture options in the uplands, at payment rates suitable for upland applications, providing a mosaic habitat of grassland, scrub, and trees
  • The Countryside Stewardship capital offer to be available to Higher Level Stewardship (HLS) agreement holders, where the options are compatible
  • Improved woodland options, including bringing bracken control and stone wall options into woodland management and combining Woodland Creation and Woodland Maintenance grants
  • Increased number of capital items that farmers can apply for using the Rural Payments service, covering water capital, hedgerows and boundaries, and air quality
  • Expanded eligibility criteria for the upland option UP2 (management of rough grazing for birds), enabling more land managers to access this option and further improve the upland offer

In addition to the above, the level of funding has been increased to £60,000, capped at £20,000 within three of the funding groups.

Opportunities available under the Country Stewardship Scheme 2021

Capital Grants – Boundaries Trees & Orchards, Water Quality, Air Quality (deadline 30th April 2021)
A two-year capital only agreements to deliver specific environmental outcomes, including hedgerows and boundary improvements, delivery of water and air quality objectives.

Some of the options available under the Capital Grant, which are new or were previously only available under the Mid-Tier agreement, include:

  • Boundaries, Trees, and Orchards
    • planting new hedges
    • wooden field gate
    • tree surgery
  • Water Quality
    • fencing, sheep netting, and rabbit fencing
    • gateway relocation
    • pond management
  • Air Quality
    • automatic slurry scraper
    • low ammonia emission flooring for livestock buildings
    • supply and plant a tree
    • supplement for use of individual tree shelters

*Some options underwater and air quality require approval from a Catchment Sensitive Farming Officer (CSFO) and are only available if in a high priority water area.

Mid-Tier (application deadline Friday 30th July 2021)
A five-year agreement providing a mixture of revenue payment options, supplements, and capital items to achieve simple and effective environmental benefits.

Higher-Tier (application deadline Friday 30th April 2021)
A five, ten, and in some cases 20-year, agreement with a range of options, supplements, and capital items for environmentally significant sites, commons, and woodlands.

Woodland Creation and Maintenance Grant (open for applications all year)
Funding to supply plant and weed young trees over a minimum of three Ha. The woodland creation and woodland maintenance options have been brought together so that one automatically leads into the other.

Woodland Management Plan (open for applications all year)
A Capital grant to apply for a one-off payment to create a 10-year Woodland Management Plan over a minimum of three hectares. When you have achieved a grant agreement you have two years to create the Woodland Management Plan which must then be approved by the Forestry Commission.

Wildlife Offers – Arable, Lowland Grazing, Mixed Farming, Upland (application deadline Friday 30th July 2021)
Non-competitive five-year agreements for specific farm types with a set of options and minimum requirements. These have been designed to help farmers and land managers to protect wildlife and preserve the natural environment. These offers are quicker and simpler to apply for than the mid-tier and high-tier schemes, and they are not scored, meaning that you will get an agreement if you make a valid application.

In addition to the above the schemes include:

  • Expanded educational access provision to farmers in Mid-Tier agreements to let school pupils visit farms for educational experiences and for care farming visits.
  • Broadened advice surrounding the Catchment Sensitive Farming scheme; additional advice on air quality and flood mitigation, as well as on diffuse water pollution.
  • The potential to run a further round of the Facilitation Fund, to help groups of farmers work together to improve the natural environment at a landscape scale and achieve greater improvements than individual holdings could on their own.

To discuss the above in more detail, for advice or assistance with an application contact our Farm team on 0333 920 2220.

Proposed ELMS Scheme will not bridge the gap

The proposed Environmental Land Management scheme (ELM) will not bridge the gap left by the withdrawal of the Basic Payment Scheme (BPS) and farmers are sleepwalking into disaster, advisers have warned.

Simon Britton, Head of Farm Business Consultancy at George F. White, said the three-tier system recently outlined by Defra was reminiscent of the environmental stewardship triad introduced in 2005, of base-level BPS, entry-level stewardship (ELS) and higher-level stewardship (HLS). However, he believes even the higher echelons of ELM will not be a substitute for the direct payment. On a whole-farm basis, currently ELS works out at about £30/ha, with HLS ranging from £74-£124/ha, based on George F. White’s clients.

Based on these figures, the bottom tier of ELM could be about £12-£49/ha, which would not be a replacement for the £222/ha that lowland farms were broadly getting for BPS.

“ELM is not going to be a magic silver bullet,” says Simon. “Time, money and effort will need to be spent on works in order to get this money. You’ve got to be eligible for it and want to go into it and it doesn’t even start until 2025, so we’ll already be well through the transition period.”

See the tables below showing Defra’s proposed percentage reductions for BPS during the transition period and George F. White’s analysis of what the accumulative effect will be on farm businesses.

 

Transition Payments
BPS Income Bands Proposed percentage reduction in 2021
Up to £30,000 5%
£30,000 to £50,000 10%
£50,000 to £100,000 20%
£150,000+ 25%

 

Profit and Loss
Year Payment (£) Payment (£) Payment (£)
2020 30,000 70,000 160,000
2021 28,500 62,500 134,000
2022 22,800 50,000 107,200
2023 15,960 35,000 75,040
2024 11,172 24,500 52,528
2025 6,703 14,700 31,517
2026 4,022 8,820 18,910
2027 2,011 4,410 9,455
2028 0 0 0
Total value of BPS payments at current rate with no reduction 2021-2027 210,000 490,000 1,120,000
Projected BPS income 2021-2027 after assumed reductions 91,168 199,930 428,650
Difference between income at current rate and income at reduced rate -118,832 -290,070 -691,350
Table shows confirmed percentage decrease by payment rate for 2021 and then a George F. White prediction of gradual decrease to 2027. The percentage decrease is based on a tiered reduction system, similar to how income tax is applied. These figures do not include any potential agri-environment income.

The agricultural subsidy transition period is due to end in 2028, with BPS being phased out from 2021. Reduction percentages for 2021 have been announced and range from 5% for BPS claims up to £30,000, to 25% for claims of £150,000 plus.

Our table predicts how much farmers could expect to receive if the payments declined gradually for the following seven years, and the overall loss compared with receiving the full payment. This does not take into account any additional payments through the phasing in of ELM income. On this basis, a £30,000 claimant will see an accumulative reduction in support income of £118,832 over the transition period, while a £160,000 claimant will record a difference of £691,350.

Many agricultural businesses are heavily reliant on BPS support, and the latest Defra farm business survey shows that even with a five-figure annual subsidy payment an overall loss was recorded. “It doesn’t matter how you skin the cat on the way down, the accumulation is significant,” he said. “All farmers are going to need to be businessmen to get through the next 10 years.”

The average age of farmers means they have spent the majority of their working life building a business based on subsidy support.

“There is a massive amount of business planning work to come, which will include restructuring and succession. Farmers are sleepwalking into this and if we don’t manage this, this is going to be a big problem.”

If you would like to discuss the above in more detail please contact:

Simon Britton
01677 458202 / 07866 721146

The Future is GREEN

It is common knowledge that commercial forestry can be key to broadening and diversifying landowning portfolios, primarily due to the tax-free income, 100% relief from Inheritance tax and partially tax-free gains. The future of forestry and forest products is strengthening due to technical advances, political backing and increasing renewable energy demand. The environmental benefits provided by woodlands include its habitat provision, carbon sequestration and flood risk alleviation. Socially, the recreational and health benefits associated with time spent in woodland add further strength to its branches in being a key player in its provision of public good.

In addition to the above, forestry has promise as an investment. Forestry investment provides a long-term capital return, with annual returns of 13.9%. The first income is available after approximately 15 years on the most productive sites. A driver of the return is the increasing timber prices which according to Forest Research (2017) have been showing a positive trend since 2003.

Table 1 – Graph produced by Forest Research depicting increasing timber prices.

Future trade and demand for forestry products is also on a steady increase, as softwood availability in Great Britain shows a declining trend until 2050. This decline in availability could lead to a further increase in the UK importing forest products, however the value of the pound in Europe leads to the UK being seen as a less attractive market which could dampen interest. Because of the declining availability, the manufacture of wood products in the UK has been steadily increasing. Timber exports have shown growth in recent years and were worth £1.9 billion in 2017.

The Committee on Climate Change (CCC) report the agricultural area of production could decrease by 30% by 2050 and it is thought that the agricultural area will be diversified to more woodland. The governments current ambition for afforestation to reach net-zero emission by 2050 is to increase tree planting to 20,000 hectares a year.

The government incentivises woodland planting to landowners and farmers through the Countryside Stewardship Scheme (CSS), and there will be a new Environmental Land Management Scheme in the future.

Countryside stewardship grants are available in Mid-Tier applications for woodland creation, management plan grants and woodland tree health grants. These grants are available all year round, and the Woodland Creation Scheme provides a grant of up to £6,800 per ha for capital items covering both planting and protection.

In addition to the above the Woodland Carbon Fund targets large scale woodland creation. The site must be over 10 hectares in size and must achieve multi-functional targets with open space, improved public access to woodland, and improved landscape scale opportunities. Funding includes the trees, guards, fencing and gates, forest roads, and recreational infrastructure. In year 5 one of capital payments of £1,000 per hectare is available for successful establishment.

As mentioned previously, a common incentive to plant or purchase woodland is the tax benefits. Commercial forestry Business Property Relief comes into play after two years of ownership. In addition, no capital gains tax is applicable, and sales of timber are not subject to income tax where the woodland is ran commercially.

Risks

The risks associated with woodland investment are soil quality, exposure, wind damage, natural predation, pests and diseases. Therefore, forest expertise and management goes hand in hand with successful and profitable forestry.

The real opportunists in forestry as I see it in the future are upland landowners or farmers that can take advantage of strategic planting on marginal land. These farmers can increase productive output per acre and provide a broadened income stream in times when agricultural markets may be weakening.

The positive implications of forestry investments are diverse and exceed the traditional objectives which typically drive investment. However, in all investments there are risks, and with a living investment some of these risks are related to the natural environment. The outputs of a living investment in forestry can be limited or reduced due to wind damage, fire damage and pest damage from squirrels and deer species. There are also the unknown future effects such as climate change and the spread of disease which could have devastating effect.

As an industry we are already seeing policy focusing on environmental benefits and how these transpire in to “public good.” It would seem that forestry is a multifaceted land use with significant potential in the future.

If you would like to discuss the opportunites relating to commercial forestry please contact a member of our Farm team within your regional office:

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