Environmental Land Management Scheme: Food Production

Our environmental policy should be joined up with agricultural policy that encourages sustainable food production here at home. Alongside sustainability, we need to help the agricultural sector’s competitiveness and resilience in the macroeconomic, trade and regulatory context. At the heart of ELMS are the changes to the mechanism for distributing funding—that was previously done via direct common agricultural policy payments—to a system that will launch fully in 2024, where farmers will be encouraged towards environmental and productivity improvements.

The Government have stated that all the objectives of ELMS will be delivered for just £2 billion. During our hearing last October, the Public Accounts Committee pointed out that that was a highly ambitious target. As we all know, there are three key elements to the project: the sustainable farming initiative for all farmers to be paid to manage their land in even more environmentally friendly ways; local nature recovery, for more complex and collaborative projects; and landscape recovery, for large-scale projects such as afforestation, rewilding and re-wetted peat.

However, there are clear structural and timetabling issues in ELMS implementation, because details are still not as comprehensive as we would expect by this stage in the scheme. It is not apparent what the aims, objectives or metrics are for supporting more than £2 billion of public funding, whether the schemes will provide good value for money, or how they will help in achieving the Government’s 25-year environmental plan and net zero by 2050. Some farmers are concerned about the practicality of implementing schemes on time. Because of the natural cycle of animals and plants, such schemes can take two years or more to implement, and that is why timely information from DEFRA is so vital.

The Government trialled the first phase of the ELMS programmes with the SFI pilot last year, from which they will draw information before they begin the scheme properly this year. In December, the Government produced a policy paper on how they will expand the scheme over the next few years, but that information is too late for farmers to change their plans. What is clear is that the scheme will require a huge amount of land. For example, the Committee on Climate Change has a target for 30,000 to 50,000 hectares of forestry to be planted every year between 2024 and 2050—an enormous amount of land.

The Government have a crucial role to play. Food security should be at the heart of Government policy, and there needs to be an annual system of reporting to Parliament to ensure that we do not allow our domestic food production to diminish. UK farmers are best placed to implement many of these environmental schemes, while at the same time maintaining the countryside to the high standard that the public have come to accept. I do not think the public are going to welcome the look of countryside that is going to waste growing brambles and shrubs. It feels highly counterintuitive to have such high environmental standards here that food production becomes unprofitable enough that we need to import more.

Not only does physically importing food produce greenhouse gases, but by relying on farmers from the rest of the world to produce food for us in the UK, we are simply exporting our environmental problems and responsibility to other countries with lower plant and animal standards. The public place real value on high standards of animal welfare, environmental protection and the climate ambition of British farmers. We cannot guarantee or enforce those high standards on farmers from other countries around the world. It would be morally unjustifiable for a UK farmer to be put at a competitive disadvantage by imported food with lower standards—a point made by the hon. Member for Bristol East.

The innovation I have seen from UK farmers throughout my lifetime, working towards ambitious environmental goals, has been incredible. The NFU has been working with its stakeholders to outline the policy mechanism for agriculture to reach net zero by 2040, which is a critical goal. I believe that the best way to reach our environmental targets is by supporting British farmers, not by making food production an unsustainable economic model.

The second of the key issues in the report from the National Audit Office—a highly respected institution—on which the Public Accounts Committee inquiry majored is that, without subsidies, most farms in England make an average profit of just £22,800 a year, after labour costs and investment, and a third of all farms would not make any profit at all. That makes the sector pretty financially vulnerable. For small and tenanted farms operating on wafer-thin margins, there is a real fear that many will go out of business. The consequence would simply be that the average size of farms would increase and the environmental benefits they provide would be lost. ELMS should provide advice and funding to help those small farmers diversify.

The future farming programme for England, which will replace the direct payments with a new scheme based on public money for public goods, will see small farms have their direct payments reduced from December 2021, and 50% will be lost by 2025. There is a real concern that some of the ELMS options will be completely unprofitable, given the amounts available, and too complicated; and that many farmers will simply not take them up, especially if they do not have the administrative capacity to negotiate the complicated bureaucracy. That could mean that only large institutional landowners, such as the National Trust or the Royal Society for the Protection of Birds, benefit from these Government schemes. It would be quite wrong if such landowners received a bigger and bigger share of the agricultural subsidy cake when they provide less and less food each year. ELMS should have a part to play in protecting small, tenanted farms and upland farmers—I class small farms as less than 100 acres—alongside their significant environmental aims.

The final problem I would like to take up with the Minister is the average age of farmers, which is currently 59. My own farming situation has been discussed here; my farm is in north Norfolk, in the constituency of my hon. Friend the Member for North Norfolk (Duncan Baker). I am delighted to see him here today and I have issued an invitation to him to come and visit my farm. I know from my own farming situation that my son, who is in his thirties, is much more adaptable than I am to new technology, which would have two key effects of increasing productivity and innovation. ELMS should have a structural element to help young people who wish to enter agriculture, particularly those who are leaving education, because agriculture tends to be a highly risky, capital-intensive business, combined with very low returns.

DEFRA is providing money to councils, landowners and county farm estates via the new entrant support scheme, to support young people joining the sector with access to land, infrastructure and support for successful and innovative businesses. My own farming business, to which I have referred, provides an opportunity for three different businesses to get on to the farming ladder. Chris is my long-term farming contractor; Ben runs a successful outdoor pig-breeding business; and we are currently discussing an arrangement with a lady who has a rotating ewe flock of sheep, to graze our increasingly over-wintered green cover crops. Existing farmers could do more to help young people into agricultural employment and business.

All in all, if farmers are to survive, they must produce better returns, either from increased productivity, Government subsidies or increased prices from the market. Otherwise, many will simply not survive. The consequence will be that the average farm size increases, employment in agriculture falls and social cohesion in rural areas is lost. The Government are formulating a new policy on ELMS, and we need to see much more detail before it is launched in 2024. I appreciate that a lot more was published at the beginning of the year, but I still do not get the full sense of where the Government’s aims for ELMS really are.

As I have said, we cannot become over-reliant on other countries to fulfil our food needs. We have the means to produce food here in more sustainable and smarter ways, but to do that we must support farmers across the country, and not make the industry so unprofitable that only the largest farms survive. The Government should be much more ambitious with their aim of producing food in the UK. Well over 60% of the food we eat should be produced by UK farmers. That would well and truly put the “F” back in DEFRA.

On top of that, one of the key aims of the environmental land management scheme is to reduce carbon impacts. Yet having supply chains that span the world and relying on food from Australia, Brazil, New Zealand, Canada and America, rather than farms in England, seems an odd way to reduce our carbon impact. The carbon in that maritime shipping is not yet counted, but it will be. What is the point of investing and locking ourselves into an import system whereby the carbon intensity of that food—and, therefore, the future cost—is not counted now, but will be hugely costly down the line?

There is often a sense that the Government’s strategy of larger farms and fewer farmers—in particular, fewer small and tenant farmers—is because of lack of interest, or because Ministers have not quite thought it through. However, in my view, that is not right. It is a deliberate strategy. Hon. Members present from every party need to make it clear that that deliberate strategy is not right. It has the potential to devastate UK farming. Ministers should think again about that high-level strategy.

The hon. Member for The Cotswolds raised one issue with the scheme: the funding. Since we left the European Union, the Treasury has taken large chunks out of the farm support budget. As of December, farms that previously received £150,000 a year in direct support have seen their support cut by a quarter, while those receiving between £50,000 and £150,000 have seen it cut by 20%. I suspect that will continue. Farmers cannot see what ELMS will do to replace it, so they cannot invest in that method of farming to ensure they receive that subsidy in the future. That matters. The hon. Member for The Cotswolds very effectively described it as the effect on the sustainability of farm businesses, and he is right. It has the ability to undermine small farming in England in a way that no Government have done since medieval times.

It also undermines the character and spirit of our farming. I worry about the impact on the mental health of our farmers, in particular. We know that farming is a tough business. New figures from the Royal Agricultural Benevolent Institution show that 47% of farmers are experiencing some kind of anxiety at the moment, while some 36% are probably or possibly depressed. We must consider the mental health of our farmers in these policy changes. The uncertainty that is created around this area is not just for policy wonks, but applies to farm businesses up and down the country, with people worried about how they will pay the bills; how they will make rent, if they are a tenant farmer; and how to ensure that their business will be there to pass on to their children. As parliamentarians, we need to take that much more seriously.

I would like to see funding addressed, but it is not the only hole in the ELMS proposals. The scope of the schemes is not ambitious enough. Of particular concern are tenant farmers, whom I would like the Minister to pay a bit more attention to in the proposals she is looking at. I am not certain what role they will be able to play in all the schemes, and that is a problem Ministers should address early. In many cases, tenant farmers are more at risk because they do not own the freehold on their land and are subject to rent charges. They are at risk from absent landlords who might see the benefits of getting more support by using their land for forestry or rewilding schemes and using that to grow the rental income on those lands, putting further pressure on tenant farmers.

Finally, I want to turn to food production. We need to be much clearer that Britain should grow more of its food in Britain. This is not just an argument about jobs in rural areas—although it is about that—or supporting our rural communities, and the fact that smaller farms are more likely than larger farmers to employ people in the local area. It is about our national security. The 1945 Labour Government classed food security as part of national security. A lot has changed in the intervening period, but the privatisation of thinking about food to supermarkets, in particular, that we have seen over the past few decades has done a disservice to our food security. We need to support an agenda to buy, make and sell more in Britain, but that means growing more in Britain. It is not about an outdated “dig for Britain” nostalgia, but protecting our supply chains and jobs and, importantly, taking the risk out of a future economy that will be much more reliant on the carbon intensity of production. If we get rid of our lower carbon production farmers, to rely on imported food produced with lower standards but often with greater carbon intensity, we need to build into that a massive allowance for the increased carbon cost, which will have a pound, shilling and pence effect in the future—at the moment it does not, but it will do.

Prices are good at the moment; costs are high. There will be a lot of farmers out there who will try to maintain production, and who may even try to enhance their production, which is perhaps not the way the Government want farming to go. That is why the level of payment must be got right.

It is very laudable to plant forest, but it is also very good to have all that carbon held and sequestered in permanent pasture. Our hill farming, our permanent pasture farming and our small family farms are doing an excellent job. Let us be clear: it will be at least 20 years after a tree has been planted that it gets anywhere near holding the carbon that permanent pasture holds. It also is great to rewet peat. All those things can be done, but let us have some food security. Let us make sure that the food we eat comes mainly from Britain. Lots of people struggle to buy food, and these policies will reduce food production: make no mistake about it. That is where we will find that food prices may rise even higher, which would be wrong, not only for farming, food production and food security, but for the people of this country.

Let us look at the landscape. We want some good forests, but do people go to the forest a great deal? No, they do not. They like to enjoy the British countryside. They like to see copses in the fields and enhanced hedgerows. They want agriculture to take perhaps a slightly more organic route, but still produce very good food. We may actually need more land, not less, to do that.

Today gives me an opportunity to say that what we are doing is not wrong, but we need to take a raincheck. We need to get DEFRA out there, talking to the farmers more. I say quite bluntly to the Minister that there are a lot of staff in DEFRA, but I am not convinced I know what they are all doing. We know the proverb, “One boy’s a boy; two boys be half a boy, and three boys be no boy at all.” I do wonder sometimes. I am not criticising any particular individual—all I am saying is that having more staff in a Department does not necessarily make it more efficient.

Let us go back, not to fundamentals, but we have the right policies, wrongly implemented, with farmers not knowing where they are going and losing a lot of money. Should we not look again at the overall cake and say, perhaps, we need more for farming, more for competitive and environmental farming, covering slurry stores and the like? Do we need to slightly tweak the amount that is going to large forests so that we do not, as my hon. Friend the Member for The Cotswolds said, just hand it over to big institutional landowners? If not, the family farms, which are the core of this country’s food production and environment, will be the losers.

We value our farmers and it is important that we do so. They are often wrongly blamed for climate change. Seventy per cent. of England’s land is agricultural, but only 10% of our climate emissions come from agriculture. Let us remember that our farmers are our friends and allies in tackling the climate catastrophe, and not blame them for it.

My fear is that the Government’s policies seem set to eject farmers from the countryside, partly by accident and partly by design. By accident? The transition from basic payments to ELMS feels like it is being thoroughly botched. In December, we saw the first loss of the basic payment scheme—BPS—to farmers. Farmers will have lost between 5% and 25% of their basic payment in December, and virtually none of them has access to an alternative scheme. ELMS may be available by 2024, but it probably will not be fully available until 2028.

We have seen a poor take-up of the sustainable farming incentive, or SFI. As the hon. Member for Tiverton and Honiton (Neil Parish), Chair of the Select Committee, indicated, that is largely because the SFI is unattractive. Therefore, we have not got people into the scheme and, consequently, what will they do? They will either go bust or go backwards. They will decide to do things that are not environmentally positive because they cannot get into the SFI scheme, so they will think, “Why bother? Let’s just pile ’em high instead and go farming”, as people sometimes say. The reality is that if we do not get people into those schemes, they will either be lost to farming altogether or they will certainly be lost when it comes to trying to deal with the environmental challenges ahead of us.

In total, 85% of the profitability of the average livestock farm is basic payment. If any of us were in a situation where we were progressively losing massive chunks of our income, year on year, with no alternative to replace it for up to seven years, we would go bust or we would think of something else to do.

That is the situation that the Government are creating and it is why I call upon them to peg basic payment at its current level. I know that the Minister will need to have a word with the Treasury to achieve that, but the Treasury should care about farming and food security. We need to peg BPS at its current level until ELMS is available to everybody.

Farmers are leaving farming and they will continue to leave, which will reduce our capacity as a country to feed ourselves and undermine the Government’s stated environmental objectives. Without farmers, who will deliver those environmental goods?

As I have said, I feel that the SFI is an accidental mistake. I wonder whether it is perhaps down to the fact that hill farmers and small family farmers in particular do not have time to leave the farm and take part in consultation exercises. So is DEFRA just listening to the big boys? That is my worry, because it is easy to listen to them; they have staff who can leave the farm and talk to Ministers. I do not say that Ministers are being deliberately biased; it is just natural that many smaller farmers, including many of my farmers, simply do not have time to leave the farm to lobby Ministers or make their voices heard in other ways. I pay tribute to the NFU and the Tenant Farmers Association, which are doing their best to make farmers’ case known. The Government’s policies on the transition are pushing farmers out of farming and reducing our capacity to produce food—partly by accident, but partly by design. It almost looks as though some aspects of ELMS will deliberately kill farming and our rural communities.

I have been in many Westminster Hall debates, and when we were in the EU, I would have a go at Ministers of different parties about the fact that money went to the landlord and not the farmer, and the Minister’s response would be, “Well, we’d do something about this, but it’s all the EU’s fault.” Now it is down to us. We could do something about it, but the Government are designing schemes that will incentivise big landlords—some institutions and some private individuals—to kick out tenant farmers, turn the house into a second home, and let the place go to seed. They then brag at their Hampstead dinner parties about doing good for the environment, but they are actually killing rural communities, ejecting tenant farmers and destroying the landscape.

What matters is not just food production, but the heritage of our environment and our landscape. I am proud to represent the lakes and the dales. The Lake district became a world heritage site relatively recently. It will lose that status if farms become wilderness and are not carefully managed.

I ask the Government to think very carefully, and not botch the transition by making the same mistakes the EU did in handing wads of cash to wealthy landowners, who kick out the tenant farmers who are the backbone of our farming economy. The Government’s plans are morally unjust, and would destroy our rural communities, remove the Government’s key partners in the delivery of environmental schemes, wreck our landscape and our landscape heritage, and cut food production. It is no surprise, then, that many people in the countryside think that this Government take them for granted. I would love Ministers to react and prove me wrong.