The Welsh Government’s Sustainable Farming Scheme consultation

The final stage of the Welsh Government’s consultation regarding the Sustainable Farming Scheme (SFS) is due to close on 07 March 2023. The latest proposal has described:

• How farmers will be rewarded for responding to the climate and nature emergencies, as well as producing food in a sustainable way
• How the scheme meets the objectives of Sustainable Land Management (SLM)
• What support is available

The Sustainable Farming Scheme scope

The proposal involves a three-layer structure:

• Universal Actions – required of all participants of the SFS
• Optional Actions – offer a choice to prioritise or undertake the actions most important and appropriate to your particular circumstances
• Collaborative Actions – offer the chance to work with others to deliver change on a larger scale.

The consultation details 17 Universal Actions (UAs) and scheme rules, two of which are directly regarding land management. As some UA’s are not applicable for all farms, flexibility has been built into the SFS to account for this (e.g. animal health actions are not applicable to arable farms).

The 17 UA’s:

• UA1: Key performance indicator benchmarking
• UA2: Continuous professional development
• UA3: Soil health planning
• UA4: Multispecies cover crop
• UA5: Integrated Pest Management
• UA6: Managing heavily modified peatland
• UA7: Habitat maintenance
• UA8: Create temporary habitat on improved land
• UA9: Designated Site Management Plans
• UA10: Ponds and scrapes
• UA11: Hedgerow management
• UA12: Woodland maintenance
• UA13: Create new woodland and agro-forestry
• UA14: Maintenance and enhancement of historic environment
• UA15: The Animal Health Improvement Cycle
• UA16: Good animal welfare
• UA17: Good farm biosecurity

Land management scheme rules:

• At least 10% of each farm is managed as habitat
• At least 10% under tree cover as woodland or individual trees by the end of 2029

Specific considerations for tenant farmers, cross border farm businesses, certified organic farms, new entrants to farming, and common land have been made with regard to the UA’s.

The Sustainable Farming Scheme process

Transition Period

The proposal outlines a ‘Transition Period’ between 2025 and 2029, during which the three-layer structure will be introduced.

In 2025, the Universal Actions Layer will be introduced which farmers will need to abide with to receive the universal baseline payment while the Optional and Collaborative Actions Layers will be introduced over the course of the Transition Period. Some existing schemes are expected to continue during the Transition Period.

Farmers in the SFS Universal Layer will gain priority to the Optional and Collaborative Actions.

Eligibility

To be eligible for the Universal and Optional layers are the scheme, the farmer must meet the three criteria below:

• Undertake agricultural or ancillary activities on agriculture land.
• Have at least three hectares of eligible agricultural land in Wales or be able to demonstrate more than 550 standard labour hours
• Have exclusive occupation and management control of the land for at least 10 months of the calendar year.

In cases where two or more farmers have a share farming agreement, only one farmer can claim SFS.

To apply for the Universal Baseline Payment, farmers will need to complete the Single Application Form (SAF) on an annual basis with the proposed application window opening in March and closing on 15 May.

Enforcement

The Welsh Government will be conducting spot checks using a combination of physical inspection and earth observation (e.g. remote sensing and aerial photography) where applicable. Rural Payment Wales will select and inspect a percentage of scheme applications each year to confirm the scheme rules, including the regulatory baseline requirements, are being met.

The declared and validated farm details from the SAF will be used to calculate the Universal Baseline Payment. An advanced payment is to occur from October and then, once all validation and checks have been completed from December onwards, a balance payment will subsequently occur.

Maintaining compliance with the scheme eligibility criteria, scheme rules, regulatory baseline and all the applicable Scheme Actions are a condition of payment. There will be a set of verifiable standards and a sanctions matrix clearly setting out consequences of non-compliance and guidance will be available to help farmers correct minor problems allowing time to put right any issues where possible.

Advice, guidance and learning regarding the SFS is expected to be offered via the current Farming Connect approach.

Payment Methodology

Under the scheme, farmers can claim Basic Payment Scheme (BPS) or SFS during the Transition Period, but not both.

Universal Baseline Payment: The proposal is for the SFS to provide an annual Universal Baseline Payment to farmers for carrying out a set of UA’s, which can be delivered by farms across Wales and go above and beyond what is required by legislation. Payments will support the actions you undertake to deliver against the SLM objectives set out in the Agriculture Act as part of sustainable food production.

The Universal Baseline Payment will be area based and made up from four payment categories:

• Maintenance of existing woodland: Payment value for each hectare of existing woodland that is managed
• Woodland creation: Payment value for each additional hectare of newly created woodland, once created
• Habitat maintenance: Payment value for each hectare of semi natural habitat managed, and/or each additional hectare of temporary habitat up to the required 10%, once created
• Actions: Payment value per hectare covering all other UA’s on the total eligible area

Payment rates per hectare will vary for each of four payment categories in recognition of the different costs incurred and income forgone from the completion of the associated Actions.

In addition to the Universal payment, a stability payment could be available to support farmers who make the transition from BPS as well as provide additional financial support in advance of the Optional and Collaborative Actions becoming available. This would provide continuity to BPS applicants who previously claimed for common land, the inclusion of SSSI areas and organic status.

The final payment rates will be confirmed in 2024 once the final scheme design has been agreed and budget confirmed.

Basic Payment Scheme

From 2025, farmers will have the option of choosing either SFS or BPS. If a farmer chooses to participate in the SFS, they will have no option to revert back to BPS.

The BPS will be phased out during the Transition Period. The BPS Entitlement Value, Redistributive Payment and the Young Farmer Payment will be phased out incrementally over a 5-year period with a 20% taper in equal steps, the first 20% reduction applying to the BPS in 2025 with the final BPS claim in 2028. There will be no BPS application or payment available in 2029.

For BPS entitlements, the Welsh Government propose:

• Farmers who choose to participate in SFS will surrender their entitlements
• To close the National Reserve
• To restrict the transfer of BPS entitlements to those who transfer and / or lease entitlements with the land and farmers currently leasing in entitlements for land they currently claim under BPS. BPS entitlement transfers in cases of inheritance and succession will also be permitted.
• To remove the two-year entitlement usage rule.

For further information regarding the SFS consultation, please visit NFU Cymru or the Welsh Government’s SFS consultation page.