ELMS – More Options, Improved Payments and Speed-up of Roll Out

Posted by Knight Frank Newcastle on 21st February 2023 -

Following a review of the Environmental Land Management schemes (ELMS), the number of options available will increase and brought forward as well as some better payments. Just 1,900 farmers signed up and received payments in the first year of the Sustainable Farming Incentive (SFI). Criticism around the low level of payments and limited menu of options failed to incentivise more land managers to apply to the scheme. In contrast, the Countryside Stewardship (CS) has 94% more agreements than in January 2020. An enhanced CS program, Countryside Stewardship Plus (CS+), will replace the previous ELM scheme, Local Nature Recovery.

Outline of the ELM schemes

Defra has promised to increase funding and roll out of ELMS during the transition of the phasing out of annual Basic Payments.

ELMS will now consist of the following:

• The Sustainable Farming Incentive (SFI), which will pay farmers to adopt and maintain sustainable farming practices that can protect and enhance the natural environment alongside food production and also support farm productivity (including by improving animal health and welfare, optimising the use of inputs and making better use of natural resources)
• Countryside Stewardship which will pay for more targeted actions relating to specific locations, features and habitats. There will be an extra incentive through CS Plus for land managers to join up across local areas to deliver bigger and better results
• Landscape Recovery will pay for bespoke, longer-term, larger-scale projects that promise to enhance the natural environment

Sustainable Farming Incentive

Defra has responded to recommendations from farming organisations to improve the accessibility of SFI for tenant farmers.

SFI agreements last for three years. But tenants on shorter tenancy agreements (including licences that operate like tenancies) can enter land into the scheme if they have management control. However, they can leave the SFI agreement within three years, without penalty, if they unexpectedly lose management control. In addition, tenants will not need landlord consent to enter an SFI agreement.

In an acceleration of roll out, the SFI will have three further standards made available than initially planned for 2023. The standards being introduced in 2023 will now be:

• hedgerows standard
• integrated pest management standard
• nutrient management standard
• arable and horticultural land standard
• improved grassland standard
• low input grassland standard

Standards that have been available since 2022 include the following:

• arable and horticultural soils
• improved grassland
• moorland

The new standards will include payments to cover adviser visits. Integrated pest management (IPM) assessment and production of an IPM plan will pay £989 per year. A completed assessment and review report under the nutrient management standard will pay £589 annually.

It is also evident that the new SFI payments incentivise lower input farming systems. No-till and direct drilling could receive a payment in the range of £50 to £125 per hectare from summer 2023. There is also a £45 per hectare payment if no insecticide is used as a part of SFI.

Some CS arable and grassland options have been replicated under the SFI framework, with some appealing payment rates. For instance, farmers can receive £732/ha under the SFI to establish and maintain winter bird food mixes for farmland birds.

Confirmed from an earlier announcement was the 'SFI management payment'. This is intended to pay for the management and administrative costs in the SFI. The scheme will pay £20 per hectare per year up to the first 50 hectares entered into SFI actions. So could provide a maximum payment of £1,000 per year.

As much as these payment amounts are, the net amount after implementation costs should be considered when planning schemes' applications.

Countryside Stewardship and Countryside Stewardship Plus

As the adoption of CS has been so successful, it seemed sensible for Defra to keep and develop the scheme.

Countryside Stewardship Plus (CS+) will replace Local Nature Recovery. But it will still be possible to have SFI, CS and CS+ agreements as long as the actions under each agreement do not duplicate payment for the same action and are compatible.

This year CS changes include improving the application process and broadening the scope of the offer. These include:

• expanding the capital offer to include specific items to help farmers and land managers prepare for habitat creation and restoration (such as feasibility studies, implementation plans or specific capital works), including existing HLS and CS agreement holders. This includes expanding the eligibility of capital on SSSIs for existing agreement holders
• further expanding the Catchment Sensitive Farming (CSF) offer, with eligibility now covering all catchments
• allowing Higher Level Stewardship (HLS, CS's predecessor scheme) agreement holders to take up CS revenue agreements alongside their HLS so farmers can increase their income from schemes by doing more on more of their land.
• bringing some Higher Tier options into Mid Tier to support wider take-up of biodiversity-friendly options, and increasing options available in the Wildlife Offers and Wild Pollinator and Farm Wildlife Packages
• giving farmers and land managers three years to complete capital works activity and submit claims – we will do this automatically for any new applications we receive after 1 January 2023, and anyone with an existing agreement can request an extension if they wish
• introducing an annual declaration in place of the current burdensome revenue claim process (for all CS agreements)

The application windows for the Higher-Tier will open in February and the Mid-Tier in March.

Landscape Recovery

Landscape Recovery is a program that funds, through competitive application rounds, large-scale, long-term projects that enhance the natural environment and deliver significant benefits. The first round was held in 2022 and resulted in funding for 22 projects covering over 40,000 hectares. These projects involve groups of land managers and farmers working together to restore rivers and protect and provide habitat for various species.

Applications for future rounds will open in spring 2023, focusing on net zero, protected sites and habitat creation, including the creation and enhancement of woodland, peatland, nature reserves, and protected sites such as ancient woodlands, wetlands, and salt marshes. Up to 25 projects will be funded, depending on the quality of applications.

Do the changes go far enough?

There has been a cautiously optimistic welcome to the ELMS changes. It certainly moves the schemes in the right direction and provides some of that clarity and detail that many have been asking for. The improved accessibility for tenants, a greater choice of actions and the ability to stack them will help land managers maximise revenue from these schemes. A parity of payment rates for similar actions under SFI and CS will be appreciated and could encourage greater uptake.

Applications to the SFI and CS schemes are still done via separate systems and may hinder their smooth uptake. Although Defra plans to merge the two, this will be crucial to reduce the administrative burden and friction associated with cross-scheme applications.

Tom Heathcote, Head of Agri consultancy for Knight Frank, says, "the ELMS changes provide farmers and land owners greater opportunities to maximise environmental payments while mitigating some of the loss of Basic Payment during the transition period. It also provides a financial incentive for those looking to change their production to a less intensive system."

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