High prices are masking the long-term impact of BPS removal

Current high prices for most agricultural commodities are creating a false sense of security that is shielding farmers from the reality of impending cuts to their basic payments, it has been claimed.

Presenting evidence to a cross-party Environment, Food and Rural Affairs committee hearing on the future Environmental Land Management (ELM) scheme, NFU vice-president Tom Bradshaw said farmers could be looking at a 50% loss of subsidy income by 2024.

And given the costs of delivering environmental improvements, this would likely put an even bigger dent in farm profits.

See also: Payment rates revealed for new Sustainable Farming Incentive pilot

But Mr Bradshaw told the committee that while the process of applying for BPS 2021 had made some realise cuts were on the way, many were riding a “wave of optimism”.

“Red meat prices are as high as they’ve ever been, depending on which dairy contract you are on you could be quite profitable, and cereal prices are through the roof,” he said.

“It’s creating this false wave of optimism, so the focus isn’t on what is coming next.”

This view was countered by Country Land and Business Association president Mark Bridgeman, who believed there was some clarity about the pain the removal of the Basic Payment Scheme (BPS) would bring, with the Sustainable Farming Incentive (SFI)  only making up about half of what gets taken away.

Frustration

But there was a frustrating lack of detail, which made planning almost impossible. 

“Many farm businesses don’t know which way to turn,” said Mr Bridgeman.

“Is it to become more intensive, is it to lift sheep numbers, is it to take on another 50 acres from a neighbour, or is it to go in the opposite direction?”

Tenant Farmers’ Association chief executive George Dunn agreed that his members were “underwhelmed” by the lack of detail on what the new polices would look like, and were concerned that landowners could restrict their ability to join new schemes.

This lack of detail was demonstrated by the delays to the anticipated Defra consultations on the planned “lump sum scheme” for taking future BPS payments early, and the “delinking” of payments from agricultural production, which were due six weeks ago.

This made planning very difficult, said Mr Bradshaw.

“We know that cropping plans are currently being made for the 2022 harvest, but we don’t know what the eligibility will be for the new SFI for 2022.

“We were always promised that cuts wouldn’t be made until there was a way of claiming that money back. But cuts are taking place for 2021.

“Yes, there will be a productivity grants scheme available later on this year, but many people are looking at the ELM scheme as a way of recouping the BPS cuts, and at the moment there is no clarity around how they will be able to do that.”