24 May 2002

EXPERTVIEWSONBENEFITSOFESA AGREEMENT

How can farmers benefit from ESAs and which level should

they choose? Wendy Owen puts commonly asked questions

to Simon Britton of Andersons farm business consultants

Q Why consider joining the ESA scheme?

A The introduction of modulation means farm support is shifting away from the so-called blue box production support payments, which include area aid and livestock premiums.

There will be a move over the next decade towards green box subsidies, such as ESA agreements and the Countryside Stewardship scheme. Producers should think about spreading risk within the business so money can be drawn from both blue and green box schemes.

Q What are the benefits of the ESA scheme?

A The payments should help to support the farm business. And environmental agreements can enhance a farms value by helping to pay for stock-proof hedges and walls. There may also be a grant available within the scheme for restoring and improving buildings.

Q There are five tiers within the ESA scheme – how do you decide which one is best?

A That depends on the individual farm, its resources and location. The tiers and payments offered vary widely. The lowest

rate is for arable and grassland improvement at £20/ha (£50/acre).

This tier may mean reduced fertiliser use and possibly some stocking rate restrictions.

The highest tier, which is an agreement for herb-rich meadows and pasture land, is more restrictive and may limit grass cutting. The payment level is £250/ha (£100/acre) but it can also mean fungicides and insecticides are banned.

Also, application of any type of fertiliser – including manures – may not be permitted. But individual agreements are specifically tailored to each farm.

Q How can I be sure restrictions will not be tightened or payments will not reduce once the farm is signed up to the scheme?

A There is a risk involved and it must be taken into account. The payment structure for this type of scheme is usually reviewed every three years or so.

Q What if I decide to sell the farm?

A The ESA agreement goes with the farm. But it is not all bad news as some potential buyers would see it as an asset.

Q What does joining the scheme mean for a tenant farmer?

A Many landlords have welcomed the schemes and are receptive to the idea. Most planners also take a favourable view.

Mr Britton points out that ESA applications for this year closed on Apr 30. He expects the scheme will reopen in early 2003. He also warns that anyone applying next year may have to wait several months for the agreement to be processed.

It could take until autumn of the following year before any payments are received. This should improve though, as delays have been partly caused by DEFRA staff still having to deal with a backlog of paperwork from the foot-and-mouth crisis.

He advises that where a business is already farming extensively and the producer is interested in environmental management, a closer examination of ESA schemes is worthwhile.

"But they are probably not suitable for a small farm with a high stocking rate, which struggles to make enough forage. However, producers committed to joining the scheme should work out a financial plan so they can see how it compares with their current system." &#42