Farming businesses have taken another blow to their finances after Defra yesterday confirmed it had closed applications to the government’s Sustainable Farming Incentive – effectively cutting off any subsidy support for thousands of farming businesses.
The SFI schemes are a key part of the government’s Environmental Land Management schemes, designed to replace Common Agriculture Policy farming subsidies and support farming businesses for so-called ‘public goods’.
Defra’s sudden closure of the scheme, “without warning” was described by the NFU as “another shattering blow” to farmers already having to deal with controversial changes to Inheritance Tax liabilities.
After Chancellor Rachel Reeves’ October budget announcement that the previous Basic Payment Scheme (BPS) would be significantly phased down over the coming months, the SFI had been seen a key source of additional income by many businesses that continue to struggle financially.
Defra this week hailed the “record numbers” to have applied for the SFI – with more than 50,000 farm businesses having signed up to the schemes, representing “more than half of all farmed land” in England.
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The largest of these schemes, SFI24, “now has more than 37,000 multi-year live agreements and is not only delivering sustainable food production and nature’s recovery for today and the years ahead, but it is also putting money back into farmers’ pockets”, it added.
“However, this government inherited an uncapped scheme, despite a finite farming budget,” it added. “The highest-ever level of participation in SFI means the maximum limit has now been reached.”
Defra a ‘failing department’
The announcement was met with outrage from the farming sector, with NFU president Tom Bradshaw slamming Defra as having “no understanding of the industry and a complete lack of compassion or care”.
The NFU now saw Defra as a “failing department”, he suggested, in some of the union’s strongest criticism of the Labour government to date.
“We have had major concerns for years about whether there was the capability within Defra to deliver the agricultural transition post-Brexit,” he said. “We have warned time and time again that large parts of the SFI were poorly designed and that the department was consistently failing to deliver it.”
Yesterday evening’s “terrible news was delivered with only 30 minutes warning to us before ministers briefed the press, leaving us unable to inform our members”, Bradshaw added.
“There has been no consultation, no communication; there has been a total lack of the ‘partnership and co-design’ Defra loves to talk about. It is another example of the growing disregard for agriculture within the department,” he said. “The chaos has got worse and worse and farmers are paying the price. Bad decisions, misdirection, promises broken, no transparency and yet more financial disaster for farming.”
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Bradshaw said the Chancellor’s “dramatic acceleration” of the end of the BPS had been “on the promise they would all be able to access the new ones, which paid them for doing environmental work”.
‘Haves and have-nots’
However, the “door has now been slammed shut for thousands of farmers, creating haves and have-nots based purely on timing”.
Defra had said “the money is spent”, but because it had “refused to be transparent we don’t know where it’s been spent, or whether it’s all been spent within this year”, Bradshaw added.
The government department said “now is the right time for a reset: supporting farmers, delivering for nature and targeting public funds fairly and effectively towards our priorities for food, farming and nature”.
Responding to Defra’s announcement, AHDB economics and analysis director David Eudall described it as a “shock to the industry”.
Many farmers will have been planning to enter SFI schemes “as a way of managing financial risk across their businesses”, he added.
“With the closure of the scheme overnight, this now adds to what was an already challenging financial situation. Many farmers in England are continuing to see a challenging marketplace with volatile commodity prices for outputs and higher-priced inputs. Ultimately, farmers in England are now in a more uncertain situation.”
Bradshaw said many farmers would now face an “awful dilemma whether to turn their backs on environmental work and just farm as hard as they can to survive”.
This was “a loss to both farming and the environment and cannot be what was intended”.
It comes as the NFU was poised to release its latest annual farm confidence survey, which revealed farming confidence in England and Wales had plummeted to its lowest level ever.
Short-term confidence (one-year outlook) has decreased 10 points since last year from –25 to –35 on the NFU’s confidence index. Mid-term confidence (three-year outlook) has decreased 16 points from –22 to –38.
Ministers had said last year’s statistics were “already a scandal and a disaster”, Bradshaw said. Given the latest news on SFI, “rock bottom” confidence would now be “gone entirely”, he warned. The full analysis will be published this week by the farming union.
Defra said future SFI schemes would be “better targeted”.
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