Andrew's insight into capped SFI, woodland establishment and technology funding
Savills Rural
Specialist advice and insights from Savills Rural across property, land and farming
In my view these are the three most significant developments over the past month for farms and estates:?
?Read on to find out my thoughts on these topics…?
?
1. What is farmland for??
It is a question that appears to answer itself but is also frequently debated. The delayed land use framework won’t provide a definitive answer, it will be ‘essentially guidance’ when it emerges this summer. At the NFU conference in February, politicians dialed up the emphasis on food production. I questioned whether the government’s “food security is national security” rhetoric signaled a genuine change in priorities or a case of politicians playing to their audience.?
Recent amendments to England’s Sustainable Farming Incentive (SFI) scheme now confirm more weight is being placed on food production and were accompanied by clear government statements that “food production remains the primary purpose of farming”. These changes are significant and the confirmation will be welcomed by many farmers, although a small proportion are focused on environmental land management.?
Last year roughly 1% of farmers entered 80% or more of their farm into SFI actions that involve taking land out of food production. Whilst the proportion of farmers was small, the wet autumn and spring, combined with current low cereal and oilseed prices could encourage more to follow this strategy. Defra’s action protects rather than enhances productive capacity - it has capped the area of a farm that can be entered into six SFI options at a total of 25% of the farm area. The six are:?
Capping these options should refocus their use on less productive areas of the farm and is arguably a better solution for most farmers and the environment than reducing payment rates to deter their use. However, some farmers may now need to change their plans. Options remain for those seeking a guaranteed income stream to help their business and rotation recover from challenging conditions - the legume fallow (NUM3) for instance has not been capped as Defra recognises it can play a valuable role in rebuilding soil fertility and cultural blackgrass control.?
?
2. Woodland creation incentives strengthened further?
Incentives to plant and manage woodland were enhanced throughout 2023 in England and have just been strengthened again. This is important because our national woodland establishment targets are ambitious, seeking to increase tree cover from 14.5% today to 16.5% in 2050. Coupled with this, woodland establishment is effectively a permanent land use change so the economic case needs to be compelling to encourage landowners to plant up land on the scale required.?
The latest changes to the England Woodland Creation Offer (EWCO) left the standard cost payments for establishment at a maximum of ￡10,200 per hectare but increased the payments available for woodland that provides additional social and environmental benefits to society. There were some new payments introduced too - a ￡3,300 per hectare ‘nature recovery premium’ and a payment of ￡1,100 per hectare to encourage EWCO applications on low-sensitivity land. The overall package is very attractive if landowners can design planting schemes with benefits such as public access or flood risk reductions and tap into these additional payments. They can also access maintenance payments for 15 years after the capital grant works are complete. If you would like to discuss woodland creation projects please contact Mark Townsend .?
Later this month Savills Rural Research will be launching its Forestry Spotlight report which includes our latest analysis of the UK forestry market, how to mitigate weather and climate risk in the context of forestry management, and an update on developments in the woodland carbon market.?
?
领英推荐
3. Farm technology grants return?
All basic payment scheme payments have now been cut by at least 50% in England and there are clear signs farmers are thinking hard about how they prepare their business for an unsupported future. As discussed above Defra’s capping of SFI options sends a clear signal that food production is intended to be a core part of this, so the question then becomes how to make that food production as sustainable and profitable as possible??
Part of the answer may lie in the Farming Equipment and Technology Fund which can reduce the cost of technology including direct drills, weed seed destroyers, tree shears, central tyre inflation systems, inline forage crop analysers, and robotic silage pushers. There are around two weeks left to apply for the fund’s productivity and slurry management grant themes as the deadline is midday on the 17th of April. Between ￡1,000 and ￡50,000 can be claimed under each of these themes and a further ￡1,000 to ￡25,000 can be claimed under the animal health and welfare theme which has a later deadline of midday on the 1st of May. There are 29 new animal health and welfare items eligible for grants including portable shearing kit and LED lighting. The fund pays farmers a percentage of the cost depending on the item.?
Whilst investing in new equipment is always tempting, it impacts cash flow and capital requirements, so the return on investment should be considered carefully. I would focus on technology that will help improve margins or where it appears the investment is likely to become a mandatory requirement in the future. The grant scheme is competitive and items are scored according to their expected impact, so this should help guide farmers towards items that will improve their business the most too. If you would like to discuss the fund please contact Georgina Sweeting .?
?
Summing up…?
It appears unlikely that the land use framework is going to provide the strategic direction needed to reconcile the competing demands our growing population and net zero ambitions are placing on our land base. The topics discussed in this issue do however highlight that land use can be steered through the government’s schemes and incentives. We have seen a course correction for the SFI, but it feels as though a clear long-term vision for food security and land use will still be required.?
Landscope is also available as a fortnightly newsletter, covering more issues shaping the future of rural estates, agriculture, and land management. Sign up to receive it directly to your inbox here.
AUTHOR: Andrew Teanby
ABOUT: Andrew is an Associate Director in the Rural Research team at Savills offering insight and advice on agricultural, environmental, rural property and land use issues across the UK. His responsibilities include rural policy analysis and market intelligence covering the UK farmland market. Outside of work, Andrew runs an arable farm in Lincolnshire.
This newsletter is for general information only and should not be considered professional advice. Savills accepts no liability or responsibility for any direct, indirect or consequential loss arising from the use of, reference to or reliance on, this newsletter or its content.