Agri-blog for February Newsletter

February 20, 2021

The way farm businesses become, or remain profitable, is likely to change significantly in the next few years.  Brexit means that payments based on area farmed under the EU’s Basic Payment Scheme (BPS) will be phased out over the next 7 years.

Farmers will receive payments for providing public goods under a new ELMs Environmental Land Management Scheme helping Government meet its commitment to be net zero carbon by 2050.  Public Goods can be described as goods that benefit the community and which don’t have a recognised market value such as flood mitigation through management of streams and flood plains, or managing soils and planting specifically to increase the storage of carbon and its removal from the atmosphere.  Managing land to provide habitats for vulnerable plants and animals to increase biodiversity would be another example.

Defra is taking a “co-design” approach to ELMS and has over 70 “test and trial” projects running throughout England.  Cornwall is a big part of this with five trials and Cornwall Council has been selected as one of five areas to pilot a Nature Recovery Network which aims to benefit people and wildlife by increasing and joining up wildlife-rich sites.

Defra’s Farm Business Survey for England 2019/20 shows the potential risk to farm businesses of these changes, particularly in the grazing beef and sheep sectors that predominate in Cornwall.  Lowland grazing livestock in England shows an annual farm business income of just £9,400 on average but it is the make up of this that is most worrying.  The contribution of the beef and sheep trading part of the business is negative and it is predominantly the Basic Payment Scheme payments that puts the business in any profit at all.

As these payments are phased out it seems unlikely that payment for the provision of public goods will be enough to give many farmers the income to remain at even a low level of profit.

This is important across the country but particularly so in Cornwall and the Isles of Scilly where agricultural activity covers an estimated 80% of our land mass and the agri-food sector accounts for almost 33,000 or 14% of all jobs and £1.4 billion, or 15.5%, of GVA, as well as linking so strongly with our tourism and hospitality sectors through our strong food and drink culture and reputation for quality.

While recognizing that Government trade policy and attitude to UK food production will be critical, if farm businesses are to survive and thrive farms must seize the opportunities and adapt.  Large improvements in farm productivity will be needed along with good business management and a willingness to look at new ways of doing things, new markets and new business models.  New entrants must be encouraged into the sector.

Although ELMs is likely to offer some support to farmers to adapt their businesses to the new opportunities in environmental management, the LEP and the Cornwall and Isles of Scilly Local Nature Partnership (LNP) recognise that this is only part of the issue.

Farmers cannot be expected to make decisions about environmental land management in isolation of their main farm enterprise, investment, succession planning, diversification or perhaps even leaving the industry.

That’s why we’re working with the LNP and many others to explore whether it would be feasible to pilot a farm advisory service to help farmers make decisions not just about ELMS, but more widely by developing whole farm plans.

We want thriving businesses that contribute to sustainable food production with improved biodiversity and net carbon zero impact. That should be a huge opportunity for Cornwall and the Isles of Scilly but we must help our industries adapt so that they can remain profitable while being expected to improve the environment on which they and other sectors like tourism also depend.

The LEP has convened a broad group which includes the Local Nature Partnership, National Farmers Union, Prince’s Countryside Fund, Farm Cornwall, Cornwall Council and our Universities and others to look in detail at what support can be put in place to help our farming community respond to the biggest change in land use policy for more than 50 years.

Clare Parnell is a farmer in North Cornwall and agri-food specialist. She is a LEP main Board member and chairs the LEP’s Rural Group.