Funding Farming: What Does Its Future Hold?

Following the UK’s exit from the European Union, the UK and Welsh Governments need to develop a replacement for the Common Agricultural Policy and Rural Development Programme. While Brexit offers space to alter the way farming in Britain is supported, any shift away from the current state of play will be met with some controversy or challenge – specifically, the move away from basic payments for farming land. This Basic Payment Scheme (BPS) provided a base line of support that all farms could apply for, regardless of how or what they were farming, and provided a guarantee of some funding for Wales’ farmers. Additional funds could be applied for through programmes such as Glastir, which supports sustainable land management schemes.

Prior to the election campaign, the Welsh Government had already begun to lay down a path for support to farmers on the basis of service to public goods – such as key environmental outcomes, including water pollution and biodiversity, and phasing out BPS.

There is significant opposition from both farming unions in Wales, and from Plaid Cymru and the Conservatives at the Senedd, even though the Welsh Government’s plans seem to mirror those proposed by the UK Government, reflecting quite a radical shift towards support for stewarding the land rather than for operating or owning a farm.

The UK Government has also set out a series of schemes which seek to slowly move from a system of basic payments, to a system that supports environment targets – on clean air and water, nature, environmental hazards such as flooding, and climate change. Not only do the changes shift away from the EU’s system of basic payments, but the UK Government has gestured towards making the industry more business-like and removing its ‘exceptional’ treatment. These changes mean agriculture will need to compete and justify its spending to the Treasury as much as other departments such as the Department for Education. For Wales, this may make it difficult for the Welsh Conservatives to challenge Welsh Labour’s own move away from basic payments to farmers.

In the Senedd Election campaign, two of the main three parties committed to maintaining an element of the basic payment scheme. Unsurprisingly, Plaid Cymru published an extensive list of promises for farming and agriculture, including ‘baseline payments’ for farming and maintaining its commitment under the EU’s CAP scheme. Its legislative plan included a Welsh Agriculture Bill that would, they argued, place greater emphasis on public goods such as decarbonisation and biodiversity, whilst retaining basic payments.

The Welsh Conservatives promised financial support for Welsh farmers at a level no less than that previously provided by the EU for the next five years, whilst they work with farmers to create a new support scheme for Wales. The manifesto didn’t reveal a great deal about their plans for the coming Senedd term, except that the party would have introduced an Agricultural Bill for Wales to set out how farmers and land managers will receive public money in return for public goods – although these aren’t specified – alongside support to invest in technology.

In its Senedd Election manifesto, Welsh Labour pledged to create a system of support which it claims will maximise the protective power of nature through farming and require food production in Wales to be carried out within environmental limits. Shifting from the principle of a basic payment for farming land, Welsh Labour has said that farmers will only receive public subsidy if they deliver additional environmental outcomes – such as improved soil, clean water and better biodiversity.

In summarising the responses to its ‘Brexit and Our Land’ consultation, the Welsh Labour Government noted that campaign statements from farming unions strongly opposed the replacement of the Basic Payment Scheme with a Public Goods Scheme, due to the challenges it would pose for farmers. Conversely, environmental charities supported the proposals for the opportunities posed to restore and enhance nature. The Welsh Government has said it will introduce an Agriculture Bill, which will include its scheme for sustainable farming.

The two main opposition parties were also strongly against the Welsh Government’s plans to reduce agricultural pollution by introducing a Wales-wide Nitrate Vulnerable Zone. Both parties strongly supported the farmers’ unions and demanded only a voluntary code instead, and Environment Minister Lesley Griffiths came under sustained attack following the introduction of the measures. The Welsh Government argued that it was necessary, even though there would be a cost to farmers, as voluntary measures had not reduced the number of pollution incidents in Wales, with run off into rivers following the application of slurry to fields. Both the Welsh Conservatives and Plaid Cymru promised to scrap the regulations if elected to form the government and work within a voluntary code instead. Liberal Democrat and former Education Minister Kirsty Williams abstained from the Senedd vote on Wales-wide NVZ regulations, and the party’s Senedd Election manifesto did not refer directly to the policy. However, it did support ‘targeted interventions’ by a better resourced Natural Resources Wales.

Ahead of the Senedd Elections, when polls were suggesting a multi-party government of some kind, it did seem that both the reform of BPS and the removal of the statutory NVZ measures could be a price of agreement between the two parties most likely to be in coalition discussions. Had that been the case, the Welsh Government may have been limited in the radical way it is seeking to tackle climate change, habitat management and farm diversification.

Instead, Welsh Labour secured 30 seats at the Senedd Election, but it will need to find at least that extra one support to ensure that the legislation will pass. No doubt discussions with the sole Liberal Democrat, Jane Dodds, will focus on support, or amendment of, these planned measures. Its manifesto advocated the replacement of the Basic Payment Scheme with a system based on public money for public goods, such as biodiversity, but with an assurance that farmers will not be left without financial support during the transition to a sustainable farming system. This and its manifesto commitments to restore nature echo the ambitions of Welsh Labour, so Jane Dodds may be a natural support for Mark Drakeford – and ensure he achieves that magic ‘31’.

Given the numbers involved, the Welsh Government may yet need to negotiate a new farm support regime with multiple opposition parties, and any controversial changes to create a system that moves away from mass production to sustainable land management may be watered down. Given Plaid’s position on basic payments to farmers, for example, it would be very unlikely to agree to any system that moves away from basic payments – unless it provided a replacement that effectively maintains a degree of basic payment for farmers, even if it doesn’t retain the name. We may also see an approach which is phased over a longer time period.

Prior to the Senedd Election, there was little hope that Welsh Labour would gain enough seats to achieve its ambition of a fundamentally new system for farming funding, but the results of the 6 May poll mean Welsh farmers may need to prepare for some significant changes.