Thursday, 2 January 2020
The Government has announced its legislative programme during the State Opening of Parliament on December 19th 2019. In total, there were 30 Bills unveiled in the Queen's Speech, including both the Agriculture Bill and the Environment Bill.
Here we take a look at some of the key themes and strategies that will be feeding into both bills, which will likely see pivotal change for at least the next generation in the agricultural industry.
The main elements of the Bill are:
- A seven-year agricultural transition period in England during which Direct Payments will be phased out. Transitional schemes will enable investment in new equipment, technology and infrastructure to support change during this period.
- Introducing a new system where we pay for public goods including environmental protection, access to the countryside, and work to reduce flooding.
- Powers to improve transparency and fairness in the supply chain and provide consumers with more information about how their food is produced.
The Bill's provisions would extend and apply in the main to England only, with some provisions applying and extending to the whole of the UK. Agricultural policy is devolved to Scotland, Wales and Northern Ireland.
The key area that has been reported on in the media is the phasing out of the current direct payment system in favour of a new environmentally based payments system. Precise details are still being ironed out, with trials currently being carried out throughout the country. In the conservative manifesto, there is a pledge to maintain the same level of funding to farmers until the end of the next parliament. There will a shift onto the new payments system from 2024, following feedback from a number of pilot schemes across the country. What we currently know is that the transition period is set to begin in 2021, and is going to last 7 years. We also know the level of reduction in payments for year 1 of the transition, but no detail beyond that.
However, there are other sections of the bill, which have been less reported on, which may be equally relevant to the farming sector. One section of the bill specifically mentions introducing legal obligations that ‘promote fair contractual arrangements between farmer and first purchaser.’ This could be for instance contracts between a beef/sheep farmer and a processor, or dairy farmer and milk buyer. The aim of this section of the bill is to improve transparency within the supply chain to ensure farmers are not subject to unfair trading practices. In 2013, the Grocery Code Adjudicator (GCA) was appointed to enforce the Groceries Supply Code of Practice (the Code). It has been recognised that the GCA has indeed improved the relationship between large retailers and their direct suppliers. However, the majority are farmers do not directly supply supermarkets and therefore are not covered by the code. The aim of this part of the legislation is to rectify this, to cover further areas of the food supply chain, and thus farmers. It is foreseen that the Rural Payments Agency will carry out enforcement of any future regulations that cover ‘fair trading practices’ between farmer and first purchaser.
In tandem with this, there are also provisions for allowing the Secretary of State power to collect data from any person involved in the ‘agri-supply’ chain, apart from the end consumer. As the objective of this is to again improve transparency this could, for instance, include pricing data paid by abattoirs to producers, much like the data beef abattoirs are currently required to supply. There are also provisions to allow for the changing of marketing standards and carcass classification regulations. While there may be scope to alter the domestic payment structure in areas such as this, but it is likely there will remain some form of alignment with the European market for trade purposes. As trade with the EU makes up a large share of overall UK agricultural trade, it will be necessary to stay relatively aligned to EU regulations if this trade is to continue at or about its current level. Any divergence from these regulations may threaten trade between the UK and EU. AHDB intend to carry out analysis on the implications of a US/UK trade deal, which will take into account the differing regulatory stances of both the US and EU.
While the agriculture bill is industry specific, the environmental bill is broader, however there are some significant implications for agriculture. It is likely to come back to parliament relatively swiftly but it is unclear what the direct implications of the bill will be before it has been through the amendment stages. There are however a number of very clear strategies that feed into the bill which give a good indication for the direction the government will want to take.
For agriculture, one of the more significant strategies is the Clean Air Strategy 2019, and specifically around the reduction of ammonia emissions, of which agriculture is a major source. Within the strategies there are some clear indications of what regulations will be put in place in the next decade in order to mitigate ammonia emissions from agriculture:
- Reduce emissions from urea based fertilisers, introducing new legislation in the shortest possible timeframe
- Requirement for all solid manure and solid digestate spread to bare land (other than no-till) to be incorporated within 12 hours, introducing new legislation in the shortest possible timeframe
- Requirement to spread slurry and digestate using low-emission spread equipment (trailing shoe, trailing hose or injection) by 2025. Potential to be phased in sooner for larger producers
- Requirement for slurry and digestate stores to be covered by 2027. Potential to be phased in sooner for larger producers
- Mandatory design standards for new intensive pig, poultry and beef housing as well as dairy housing
- Extension of environmental permitting (like the current system in poultry and pigs) to dairy and intensive beef farms by 2025
Countries such as Denmark and the Netherlands have already had similar environmental restrictions placed on their business. Going forward AHDB plan to analyse the physical and financial effects for farmers through the implementation of such schemes
On top of the clean air strategy is the 25 year-environment plan, which details the vision for how land will be used in the future. Placing emphasis on enhancing the natural capital value of the land, such as restoring peatlands, increasing the use of farmland in floodplain management and increases in bio-diversity. Much of this will be implemented through the new ELMS payment system however some of it may be brought about through regulation.
Finally, another major strategy feeding into the environment bill is the waste and resource strategy. Much of this is focussed around packaging and invoking the ‘producer pays principle’ – ensuring that the primary producer pays for the full costs of disposal for packing they place on the market.