The Public Accounts Committee of which I am Deputy Chair, hold twice-weekly meetings on the value for money of Government projects, programmes, and service delivery. Last October we met to question farming and conservation representatives, Senior Defra Officials, and the Rural Payments agency to establish if the Environmental Lands Management scheme (ELMs) is being successful in reaching its objectives.
Now that we have left the EU, we have a once-in-a-lifetime opportunity to completely replace our agricultural support system with one that uses that helps reach our ambitious 25-year Environmental Plan, while increasing the productivity of the farming sector. At the centre of ELMs is the changes to the mechanism for distributing funding, previously done via direct CAP payments, to a system that will launch fully in 2024 where farmers will be for environmental and productivity improvements. The Government has stated that all the objectives of ELMs will be delivered for just over £2 billion, a target pointed out as ambitious by the PAC members during the hearing.
There are three key components to the project, the Sustainable farming Initiative (SFI) for all farmers to be paid to manage their land in an environmentally friendly way, the Local Natural Recovery for more complex collaborative projects, and the Landscape Recovery for large-scale projects such as tree planting and peatland restoration.
The main problem that we found during the pre-panel and main session examining the programme is that the details remain very sketchy. We were unable to establish during the hearings the objectives or the metrics to support that funding for ELMS (over £2 billion) would provide either value for money or help in achieving the 25-year environmental plan including net-zero by 2050.
Additionally, there are some issues for farmers who will be implementing the schemes, which due to the natural cycle of animals or plants can take 2 years or more to implement which is why timely information is vital. Because of this, the NFU are calling for the phasing out of SFI into the Local Natural Recovery and Landscape Recovery to be delayed as they feel while they understand the framework, they do not have the detail on the policy that underpins it. The Government so far is strongly opposing this delay.
The Government have trialled the first phase of the ELMs programmes with the SFI pilot which they will draw information from on before they begin the scheme properly in 2022. In December, the Government produced a policy paper on how they will expand the scheme over the next 3 years. Frustratingly, all this information is very late for farmers to implement.
What is clear, is that this scheme will require a significant amount of land taken away from agricultural use for the various Environmental schemes. Officials are very clear that ELMs will promote increased efficiency on the remaining land. They were not so clear on the amount of food that will need to be imported as a result.
The current severe spike in energy price is a result of what happens as we increasingly rely on imports. I do not think the public will thank us if in a few years down the road there is either a big increase in prices or worse a shortage of food and empty shelves. We need to get to a point where we produce over 50% of the food that we eat in this country. The officials and panel experts avoided the question of whether ELMs would result in more imported food and consequently export environmental problems.
Professor Fraser who appeared at the PAC hearing spoke about the future profitability of farms, “are they going to keep getting their profits from beef farming or sheep? That may not be the case. Their profits may come from providing environmental goods that the scheme”.
As the report makes clear, without subsidies most farms in England make an average net profit of just £22,800 a year. Therefore, there is a real fear for small and tenant farms who are operating on wafer-thin margins that many will go out of business, and the average size of farms will increase. ELMs should have a part to play in protecting small and tenant farms alongside the significant environmental aims for such a policy.
The final problem identified is the average age of farmers which is 59. I know from my own farming situation that my son who is in his 30s is much more adaptable at adopting new technology, which have two key effects of increasing productivity and innovation.
The third aim of ELM’s is a structural element to help young people who wish to enter agriculture, particularly those leaving education. Because again it tends to be a highly intensive capital business combined with low returns.
All in all, if farmers are to survive, they are going to have to produce better returns either coming from Government schemes or increased prices for the market otherwise many will simply not survive, the consequences of this will inevitably move to a more restrictive Elm’s system, leading to a rise in food prices.
More information on the Public Accounts Committee inquiry into ELM’s can be found at -
https://committees.parliament.uk/work/1472/environmental-land-management-scheme/