Horizon Blog: How does the new direction in agricultural policy vary across the devolved nations?

Since the UK left the EU a set of new agricultural policies have been developed, with some now being rolled out. In this blog AHDB Trainee Analyst, Isabelle Shohet, explores the concept of policy coherence; the extent to which the various policies come with co-benefits and trade-offs. A co-benefit is when policies create a benefit that is different from the aims of the original policies. A trade-off is when policy progress in one area creates a worse outcome in another area.

The three devolved nations of England, Scotland, and Wales have each created and are implementing new agricultural policies. These new policies move beyond the Common Agricultural Policy (CAP) of the European Union (EU), which is no longer in effect after the UK left the EU.

The Sustainable Farming Incentive (SFI) in England and the Sustainable Land Management (SLM) in Wales aim to move away from CAP in their policies. This is due to the focus on public money for public goods, with emphasis placed on the environment and reducing emissions from farming.

The Scottish Vision of Agriculture (SVA) seeks to stay closer to Europe in its objectives and methods of achieving its objectives. This is due to the focus on farmer incomes through direct payments and the continuation of coupled support in the beef and sheep sectors.

I analysed the policies of the three devolved nations to identify the potential co-benefits and trade-offs.

Potential co-benefits

The first co-benefit is improvements in British self-sufficiency regarding food production. The SFI pays for the improvements in grassland and arable soils, the SLM pays farmers to sequester carbon, and the SVA provides payments to farmers who show regenerative farming practices. These three factors combine to create a co-benefit that seeks to improve the quality and sustainability of British soils, which could improve productivity and resilience in agriculture and create sustainability for self-sufficiency.

Secondly, payments on animal health and welfare improvements in the SFI and SLM could create a co-benefit of increased productivity from livestock sectors via improved herd health as well as improved quality of food produced. This would pass on benefits to consumers in increased confidence in the quality of British food such as lamb and beef. This benefits both the domestic market and the UK’s ability to export livestock products to overseas markets by enhancing the UK’s strong reputation in this area.

Thirdly, the policy objectives in the SFI, SLM and SVA seek to reduce the carbon emissions from farming. This creates further benefits for farmers if they can sell their soil carbon on a carbon market; more information can be found here. This would allow farmers to gain income from the sale of carbon in markets and from payments under the individual policies. This income stream from managing carbon on farm will become increasingly important as the UK moves away from the CAP and direct payments are reduced. AHDB will be working in this area to enable farmers and land managers to make informed decisions regarding this important asset.

One way to measure the development of this co-benefit would be similar to the SLM. The Welsh Government has established a baseline measurement of its carbon progress. This could be applied to both Scottish and English carbon emissions to easily track improvement following the SFI and VSA. A similar system could also be applied to all three policies to establish and track the sale of soil carbon under new carbon markets.

Potential trade-offs

The differences in payment schemes for each devolved nation could create a trade-off or an imbalance in the UK’s internal market, which may increase as the devolved schemes diverge over time. Currently, it appears that the SVA will provide the most comprehensive payment scheme, with direct payments to support income and voluntary coupled support for beef and sheep farmers. More generous support to farmers in Scotland could put English and Welsh farmers at a competitive disadvantage.

Differences in agricultural policies within the UK are not new. Under the CAP there was significant scope for schemes to be tailored to local circumstances. It is also clear that the UK Government is aware of this risk. The Internal Markets Acts, introduced in 2020, aims to ensure trade and regulations are not distorted across the nations of the UK.

Work done by the Trade and Policy team at AHDB suggests that the payments from SFI will not replace direct payments. The net benefit for farmers shows a wide variation, depending on the farming practices currently being undertaken. In some circumstances, it would cost farmers to participate in certain standards within SFI.

The uneven uptake of these schemes could create uneven gains or losses in biodiversity, climate change, and nature restoration. These three elements are key to all three policies but could be inconsistently applied if payment schemes are not enticing enough to farmers.

Conclusion

The policies across England, Wales, and Scotland are still being developed. The different policies share similar goals, and I expect there to be many co-benefits, notably for food security and carbon. However, there is a potential trade-off. Policymakers will need to be alert to the risk that differences in farm payments may lead to market distortion across the nations of the UK.