An update on changes to farm subsidies
Michael Gove’s flagship programme for the redistribution of public money to the rural economy has hit some teething troubles. Known as Environmental Land Management (ELM), the underlying concept is of rewarding land managers (whether farmers or not) for the public goods they provide that are not currently rewarded by the marketplace. This concept has been taken up by DEFRA as the direction of travel for the UK post-Brexit. It clearly makes sense to try to find a way to reward land managers for good environmental practice, but the public goods concept is proving tricky to turn into practice.
DEFRA developed a timetable for a transition away from the direct CAP style payments, with an annual decrease in the money allotted. Whilst the ELM programme was being tested and piloted, payments would be made to land managers adopting the new ELM concept. DEFRA is anticipating that there will be more participants than in the existing CAP schemes. However, to achieve almost universal uptake of agri-environmental schemes, most experts believe the payments will need to be significant, and the scheme easy to enter and to fulfil. Although certain political commitments to keeping existing levels of funding within the rural economy have been made, nothing is enshrined in statute, and nothing is guaranteed after the next general election. The Agriculture Bill, which is the first in the UK since 1947, has been kept deliberately skeletal in nature, and non-committal in detail, no doubt owing to the uncertainty facing UK agriculture in a post-EU trading environment.
How to frame public goods payments?
It would seem as though it is up to DEFRA to orchestrate making the case to the Treasury for continuation of public funding through the ELM programme. A large new team has been assembled, and a convoluted stakeholder engagement entered into. A consensus seems to have emerged that the ELM will involve a contract between the land manager acting as a service provider, providing public goods to the state (DEFRA). As such, the payments will have to be quantified as outcomes, which must have a value. This is in complete contrast to the WTO principle of environmental payments only being permitted if made as a compensation to land managers for reducing output (called ‘income foregone’). The catch here is that this ‘public goods service provider’ method of payment is internationally untested, and there are concerns that it will face intense scrutiny in the WTO from competitor nations, not least the USA.
Moreover, it throws up the practical problem of how to place value on things that have never been valued before. DEFRA has identified six categories of public goods, including clean air, clean water, hazard reduction, beauty and landscape preservation, and biodiversity. A contract has been awarded to consultants to work on payment methodology. A framework plan was drawn up, setting out timeframes, and presented to Michael Gove a few weeks ago. Proposals submitted by land managers (including Soil Association) setting out how they would demonstrate delivery of public goods were also all set to get the green light to build the evidence base.
The current situation
The tests and trials were suspended before they were due to start.
The DEFRA ELMs teams are being reorganised, with the whole programme put under review;
Michael Gove stood for, and failed to win, Tory party leadership, with unforeseeable political consequences.
The good news
This might sound like all bad news, but it actually presents an opportunity for the organic sector.
We are now in the position of being asked to re-engage with DEFRA at a fundamental level about their entire strategy for supporting environmentally friendly agriculture. This gives us the chance to push for recognition by DEFRA of the multiple ‘good’ outcomes delivered by a ‘system’ of farming, not just individual outcomes. We have to re-present the evidence base at a scientific level. But we also have the opportunity to assess what we have on-farm, and to re-engage with politicians and other NGOs , to present the case for organics at all levels.
We will be communicating our strategy around this over the coming months, and hope to engage you with on farm evidence gathering.