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ELMS: Uncertainty for Farmers at the Wrong Time

In the current climate – both environmental and political – the uncertainty that surrounds our farmers is unenviable to say the least. A cost-of-living crisis and sky-high inflation has followed one of the hottest, driest summers since records began – with the political upheaval seen over the last month only making things more difficult.

Enter a new government and a chancellor who is asking departments across the board to make savings, trade deals to import food from New Zealand, and out of control input prices, it would be easy to forget that the much talked about ‘flagship’ Environmental Land Management Scheme (ELMS) is potentially under review. Well, according to certain sources anyway!

DEFRA itself has insisted there will be no U-turn on its commitment to the environment following speculation that subsidy structures may be subject to changes and delay.

However, with the landscape having changed considerably since the ELMS was first put to the public in 2018, would a sensible, practical review be the worst thing that the new government could undertake? Some in the industry think not.
 

What is ELMS?

Although most of out readers will be aware of what ELMS is, it is worth a quick recap.

Basically, ELMS is part of the governments future farming policy. It will see payments to farmers move away from the basic payment scheme (BPS) that we have known whilst in the EU, to payments that are focussed more on the environment.

If it was to go ahead as originally planned, ELMS is split into three tiers:

  • Sustainable Farming Incentive – encouraging environmentally sustainable farming.
  • Local Nature Recovery – locally targeted environmental outcomes
  • Landscape Recovery – landscape scale, land-use change projects

So, farmers and landowners will receive payments for entering certain schemes within these tiers, much like the countryside stewardship system.

Why Could a Review be Worthwhile?

Though many of our customers think the general idea of ELMS is positive, and good for the ongoing PR battle that the industry faces, it would be irrational not to consider everything that has happened since 2018, when the policy was first announced.

Despite some issues surrounding Brexit, 2018 was a fairly stable time for both the country and the industry. However, since then we have faced a global pandemic, 40-year high inflation, an ongoing war in Ukraine and a general cost of living crisis – all of which has had devastating impact on input costs.

At the height of the pandemic, farming was one of the only industries that had to carry on – people need food. But, due to the nature of the lockdowns, certain commodities increased in value. Flour, for example, skyrocketed due to home baking. And these prices are normally more reluctant to drop back to what they were, than they are to increase.

The ongoing war in Ukraine is perhaps the biggest factor. Due to this, fertiliser prices are worryingly high. Before the war began, you could buy fertiliser at £250 a tonne, it is now more like £800-£1000 per tonne. Red diesel has more than doubled from 55p per litre to £1.20. Wheat, an essential part of animal feed, is still at £360 per tonne, rather than £230 a tonne that it was a year ago (and even this was considered high by some). All of this has a direct impact on both food production and food security.

The question here is how will ELMS payments, based on the economy of 2018 or before, measure up to today’s economy? It would make sense to adjust them, but with spending cuts asked for and expected, that doesn’t seem particularly likely.
 

A Balanced Approach?

This isn’t a black and white issue, and every farmer across the country will rightly have their own thoughts and opinions on this.

Clearly, it is a benefit to have more land that is put into helping the environment and biodiversity. Catching carbon, boosting pollinator numbers, assisting other wildlife, preventing run off, natural flood defence and nutrient retention are all vital for the environment and for a sustainable farming future.

On the other hand, it is important for the nation’s food security that farmers have enough land, and are paid enough money, to produce home grown, British food. It would be reckless for this not to be balanced.

For example, if we are committing to environmental programmes at home that mean we have to import more of our food from abroad, surely the carbon footprint of the food we bring in will offset the benefits of the ELMS work. One argument we hear regularly is that ELMS should go further and include food production within its framework – perhaps this would be a good way to balance concern around food production and security?
 

What Next?

What happens next is anybody’s guess, but some industry bodies have had their say. The NFU have called for a delay – not a cancellation – of ELMS. The argument being that the current system is not fit for a national roll out. If a delay in the rollout allows markets to calm, prices to drop and farmers to regain confidence, then it is a valid point. The current system isn’t broken, so a period of reflection could be of value long-term.

On the other hand, there are many farms out there that have expected this to be implemented as planned and have made significant investments to ensure they receive the payments promised within various schemes. So, a delay or full review could be particularly harsh on this front.

Regardless of any position or circumstance, the advice we would have for farmers with uncertainty still looming is to enter into an existing scheme to safeguard at least some funding and security for the next five years, whether this be through countryside stewardship or a water company incentive – of which there are many.  It is also well worth looking into working with neighbouring farms and cluster groups to offset some risk, and work on a strategy moving forward.

At the end of the day, there will always be arguments and debate across the farming industry, because these issues are never black and white, and this passion is one of the things that makes British farming the best in the world. The important thing is for some level of confidence and certainly to be installed before any sweeping, industry altering legislation is put into practise. That is all we ask!