With the process of reduction, and eventual elimination, of direct payments underway, the Agriculture and Horticulture Development Board (AHDB) has been put together a ‘very simplistic picture’ of what this means for farmers and growers, and how it stacks up again the gap left by the removal of direct payments.
The ADHB stressed that at this time, there are still a number of unknowns such as the costs involved, and the SFI is still being developed and learnings from the pilot process and feedback will be factored into this. As a result, payment rates are subject to change.
How do things look on a per hectare basis?
There are eight environmental standards in the SFI and more than one standard can be applied to the same area of land.
For illustrative purposes, AHDB created Figure 1, which shows the payment rates (£/ha) for the Improved grassland standard, Improved grassland soils standard and hedgerow standard.
For this example, it is assumed that £16 per hectare which would equate to one side of a hectare 100m x 100m land parcel. The larger the perimeter of your fields, the higher the payment opportunity.
From 2021, greening requirements have been removed but minimum standards on the environment, animal and plant health must still be met. The greening payment will be added to the main BPS payment.
Key points from Figure 1:
- Under the Introductory level, even if three of the standards shown were applied, the total payment rate per hectare would only equate to 21% of the Direct Payment and greening value.
- To receive payments that are closer to the Direct Payment value per hectare, a farmer/grower would need to target the Advanced level objectives (55% of the value of Direct Payments and greening payments).
- The combined payment rates for Advanced level measures shown still fall short of the Direct Payment value per hectare.
- The graph does not show the costs involved in implementing changes to achieve the standards.
There is an additional payment of £3 per tree for in field tree planting under the Introductory level.
If only the Improved grassland standard was applied (Introductory level) at a payment rate of £27/ha, around 45 trees would need to be planted per hectare to make up the Direct Payment value.
Under the Advanced level, there is a higher additional payment rate of £127/ha available for carrying out actions such as increasing botanical diversity and reducing the risk of flooding.
The overall picture
For the examples below, AHDB has considered a 100ha farm where different proportions are allocated to the SFI. The same exercise illustrated in the graphs above has been applied except this has been extended to a whole farm level where different proportions of the overall farm land is considered.
The higher of the proportion of farm land that is entered into the SFI, the higher the rate of payments, with the Advanced level yielding payments that are closest to the Direct Payments and greening value.
The Advanced level payments still fall short of the corresponding Direct Payment and greening value and associated costs have not been taken into account,
A flat rate payment of £5,000 a year for learning activities will be available and while this will help to make up some of the shortfall from the loss of Direct Payments, the total payment will still be less than what farmers have received from Direct Payments and greening combined.
The AHDB said: “While there are still a number of unknowns and payment rates have not been finalised, this very basic analysis shows that, based on current information, most farmers will not be able to completely offset the loss of Direct Payments with participation in the SFI. This is not that surprising given that the new schemes were never intended to be a like for like replacement of the Basic Payment Scheme.”
AHDB added that now is a good time to look at your business in detail and plan for the changes ahead using its Business Impact Calculator, and Resilience Checklist to help provide insight as to the areas of business which need fortifying and the Business Planning pages can help further with this.