THE MINISTER for Environment, Energy and Rural Affairs, Lesley Griffiths, last week confirmed what the Welsh Government calls ‘Sustainable Farming’ will remain at the heart of future Welsh agriculture support.
The Welsh Government published its response to last year’s Sustainable Farming and our Land consultation on Wednesday, July 8.
The consultation proposed future funding should support and reward farmers who operate sustainable farming systems and protect and enhance the environment.
Responses to the consultation broadly backed the Welsh Government’s aims but with important caveats to the support expressed.
A significant proportion of the responses came from outside Wales. Those responses came particularly from individuals pursuing an anti-farming agenda, or as part of coordinated campaigns from groups lobbying the Welsh Government.
Over half the respondents (1,900 out of 3,300) came from members of the RSPB.
PLANS LACK SUBSTANCE
Responses from individual farmers cited within the Consultation Report reflect widely-held concerns that the Welsh Government’s plans are thin on detail. Those responses also highlight worries that Welsh farmers will be driven into an uncompetitive position due to new and burdensome regulation.
Despite those concerns, Lesley Griffiths confirmed a future agricultural support scheme will continue to be developed around the Sustainable Land Management framework.
During an update to the Senedd, the Minister also set out the next stages in the development of future support, including:
• Undertaking a range of economic analysis to understand the impact of moving from an entitlement based income support scheme to a voluntary scheme which rewards the production of outcomes. This will be published next summer and no decision on a future scheme will be made without consideration of this analysis;
• A transition period to enable farmers to adjust their existing business model to accommodate any changes required by the proposed scheme; and
• Publishing a White Paper before the end of this Senedd term, which will pave the way for the introduction of an Agriculture (Wales) Bill during the sixth Senedd term.
The Minister said: “Our proposals in Sustainable Farming and our Land provide an important income stream for farmers, recognising the important work they do in delivering environmental outcomes and rewarding them for it.
“We are also looking to reinforce the long term competitiveness of the sector through enhanced business advice and support, helping support farmers in the new economic realities following the UK’s departure from the EU.”
WG PRESSES AHEAD REGARDLESS
Lesley Griffiths continued: “Following consideration of the responses to the consultation, we will continue to develop a future system of agricultural support around the Sustainable Land Management approach.
“This approach will allow us to respond to the climate emergency, will help to reverse biodiversity decline, will ensure high standards of animal health and welfare, and protect our natural resources. Food produced using this approach will be sustainable, ensuring a food supply for future generations.
“Over the coming months, we will continue to engage with the sector and industry representatives on the ongoing development of these proposals for the White Paper, paving the way for an Agriculture Bill. This Bill will set out a support framework which can accommodate the development of agriculture and forestry within Wales for the next fifteen to twenty years. The Bill will enable farmers to be financially supported and ensure a coherent and fair system of regulation can be applied to the agricultural sector.”
A FURTHER CONSULTATION
To ensure farmers are supported following the UK exit from the EU, the Minister also confirmed plans to launch a FURTHER consultation this summer seeking views on the retention and simplification of rules around agricultural support for farmers and the rural economy. This support would bridge the gap between the current EU funding and any new scheme based on sustainable land management.
The Minister added: “It has been a difficult few months globally and Welsh farmers have not been exempt from recent circumstances. I am proud of the resilience they have shown in responding to those difficulties.
“Farmers, foresters and other land managers play a vital part in the economic, environmental, and social well-being of Wales. We will continue to support them to adapt to economic changes as well as the impact of climate change.”
GOVERNMENT FAILING RURAL COMMUNITIES
The Welsh Conservatives’ Shadow Minister for Rural Affairs, Andrew RT Davies responded: “It’s all very well for Lesley Griffiths to stand up and make promises of support to our vitally important farming sector. However, those promises will only materialise if they are driven by a minister who has a finger on the pulse during this COVID-19 pandemic. That has not been the case.
“Time and time again, the Welsh Government has failed our rural communities. Just last week, the Wales Audit Office published a damning report into this government’s handling of the Rural Development Grants Scheme.
“What rural communities desperately need the Welsh Government to do is set out clearly what any support it offers aims to achieve. That should include incentives for food security and for unleashing Wales’ environmental and food-producing revolution.”
CUT BUREAUCRACY SAYS FUW
FUW President Glyn Roberts said: “The proposal to adopt the United Nations’ Sustainable Land Management (SLM) principle as the objective and framework for a future policy fails to encompass wider Welsh goals and objectives, including those defined in the Wellbeing of Future Generations Act 2015, and therefore falls short of being a holistic policy.
“While we welcome some of the conclusions reached in the Welsh Government’s response to the consultation, we remain convinced that families, jobs and communities should be at the heart of planning a new policy – alongside sustainable food production and the SLM principles.”
Mr Roberts said that a scheme which focuses only on the provision of Public Goods and environmental outcomes would fail to take proper account of prosperity, jobs, culture and other issues inherent to the Wellbeing Goals and other Welsh objectives, risking severe adverse impacts.
“We, therefore, welcome the Welsh Government’s commitment to undertake a range of economic analyses to understand the impact of moving from an entitlement based income support scheme to a voluntary scheme which rewards the production of outcomes.
“This work needs to be thorough and look at impacts for individual businesses, sectors and regions of Wales as well as the implications for the tens of thousands of businesses which rely on agriculture and the scheme delivery costs.
“Above all else, it is concerning that the recent food shortages, delays and difficulties in administering our current environmental scheme – Glastir – and hundreds of consultation responses highlighting concerns about the overall direction of travel has not given the Welsh Government more pause for thought.”
TFA Cymru said: “Any new regulatory framework must take into consideration standards which are being used in other parts of the UK and internationally; particularly where goods produced under those differing standards find their way in front of Welsh consumers. That not only undermines domestic production, but it also allows poorer standards to continue in other jurisdictions.
“If it is felt important to introduce a new level of regulation in respect of agricultural production which is not applied elsewhere, the Welsh farming community would legitimately expect protection against products imported to Wales produced to standards which would be illegal at home.”
WG SHOULD ‘PAUSE & REFLECT’
NFU Cymru President John Davies said: “This announcement provides us with some additional clarity on the direction of travel as regards future support. In light of the continuing Coronavirus disruption, as well as ongoing Brexit uncertainty, I would really have liked to have seen Welsh Government taking the opportunity to pause and reflect on this process rather than pressing ahead with new policy development.
“Despite the representations made by NFU Cymru, today’s statement from Welsh Government makes no provision for some sort of stability payment, and that is very disappointing, especially in light of the recent market volatility.
“I was pleased to see the Minister acknowledge the role of agriculture and the food supply chain in keeping the country fed during the Coronavirus outbreak. I am, however, keen to ensure we do not forget the lessons of the pandemic: in particular, how it underscored the value of having a secure domestic primary production base – something which we very much consider ‘a public good’. I also welcome what the Minister said about the simplification of some of the rules around CAP legacy schemes. While that is positive news, it must deliver genuine simplification of complex rules if it is to benefit the sector.”
A vision for Welsh upland farming
The NFU Cymru Vision for Welsh Upland Farming report, which was underpinned by a survey of over 750 farmers, was launched at the Vision for Welsh Upland Farming virtual conference on Tuesday, November 24.
The document reveals that 96% of farmers surveyed believed their role as food producers was very important or fairly important, with 95% saying that food production and sales were very important or fairly important to the viability of their business.
The biggest worry for Welsh upland farmers to surface from the research was farm business profitability, with 85% of those questioned stating this was a ‘significant threat’ to the sector. The vast majority of those questioned (92%) said it was vital that future Welsh farming policy included measures that ensured farmers could make a reasonable living.
With the Brexit transition period coming to an end, 84% of farmers surveyed said that future trade deals were a significant threat to upland farming, while 80% stated that future policy was a significant threat.
NFU Cymru said the findings of this research work provide ‘another compelling argument’ as to why future Welsh agricultural policy should include a stability measure to help ensure the safe supply of food and as an economic foundation in rural communities, alongside the other multiple benefits provided by Welsh farming, amid changing trade and climate conditions.
The new NFU Cymru study also shined a light on Welsh upland farmers’ attitudes towards the environment.
The survey data further emphasises farmers’ role as drivers of the rural economy. 30% of farmers surveyed said their business supports or buys from 21 to 50 different businesses, with a further 10% stating that their business trades with or buys from more than 51 other businesses.
The important contribution of Welsh upland farming to rural communities and Welsh culture was also revealed.
Diversification remains an important income stream for many Welsh farms; 43% of farmers responding to the survey stated that they had a non-farming element to their business. The most popular diversification enterprises were renewable energy (43%) and accommodation (42%).
Discussing the importance of NFU Cymru Vision for Welsh Upland Farming project, NFU Cymru LFA Board Chair Kath Whitrow said: “In recent years, despite their extent and significance, we have seen upland farming policy de-emphasised. As our relationship with the EU changes, the economic rationale for upland livestock production is threatened. Global environmental challenges, such as climate change and biodiversity decline, are viewed by some as drivers for land-use change without any consideration of the wider impacts.
“At this pivotal time for Welsh farming as we transition out of the CAP and into a new ‘made in Wales’ agricultural policy, the NFU Cymru LFA Board wants to ensure that the voice of Welsh upland farming is clearly heard in this debate. This is a message that has resonated strongly with Welsh upland farmers and, despite the limitations placed on us as a result of Covid-19, the voice of farmers across Wales has been clearly heard with our survey attracting a fantastic number of responses.”
NFU Cymru President John Davies said: “The Vision for Welsh Upland Farming report launched at today’s conference is one of the most comprehensive pieces of research work undertaken by NFU Cymru. Its findings are of strategic importance not just to the people living and working in the Welsh uplands, but to the whole of Wales.
“This research provides another compelling argument that future Welsh agricultural policy should include a stability measure to support farmers by protecting them against the increased volatility that affects businesses, trade and production. Such backing would ensure our farmers can continue providing safe, affordable food, as well as boosting the economy, enhancing the environment, caring for our cherished landscapes communities and being champions of Welsh language, culture and rural communities.
“I urge our policymakers in Cardiff Bay to carefully consider the report’s key recommendations and work with us to ensure that the people and communities of the Welsh uplands can continue to deliver for the whole of Wales.”
Potato production up despite tough year
THE TOTAL harvest of British potatoes this year will be 5.3m tonnes according to provisional estimates – up two point eight per cent (2.8%) on last year’s figure but just below the five-year average of 5.4m tonnes.
This estimate by the Agriculture and Horticulture Development Board (AHDB) has been released during a time when growers have battled an exceptionally wet harvest period for the second year running.
They have fared better than last year, as on 10 November it was estimated that two per cent of the planted area was yet to be lifted. This compares with 11 per cent of the crop that was estimated to be unlifted on 12 November 2019.
This production figure follows an AHDB estimate that the planted area this year is the third-lowest on record.
Alice Bailey, Senior Analyst at AHDB said: “This overall net yield sits in line with the five-year national average (2015-2019). Anecdotal reports suggest that yields have been somewhat variable from farm to farm, even field to field. Yet overall, crops are within farm expectations so it is not surprising that the national yield is in line with recent years.
“We saw planted area drop by two-point three per cent this year, yet we are estimating a two-point eight per cent rise in production. This is based on both a slight increase in yields year-on-year and the fact that a large area was left unharvested last year. The unlifted area in 2019 was estimated at six per cent, whereas in 2018 less than one per cent was estimated to be left in the ground and we would anticipate similar this year.”
It was also noted that the estimate could be amended in the coming weeks, with 2.1Kha still to harvest in the East of England, and some members of the 450 strong AHDB Grower Panel still to return their survey information.
WINTER MARKETING CAMPAIGN
Meanwhile, Potatoes Strategy Director Rob Clayton announced that AHDB would be launching another promotional campaign in reaction to the market conditions caused by the coronavirus. This follows on from a similar campaign in the summer that reached 5 million shoppers via catch-up TV, social media and display advertising.
“Since the pandemic hit we have increased the amount of data we analyse from supermarkets and other areas of the marketplace. While potato sales at retail are up eight to nine per cent overall – analysis from Kantar Worldpannel shows baking potatoes lagging behind at a rise of three per cent.
“Jacket potatoes are a fantastic healthy and cost-effective option for families, so we will be launching a winter campaign to inspire shoppers to take advantage of all the great things they can do with bakers,” said Doctor Clayton.
Farmers should prepare for IHT changes
There are less than six months before the Spring Statement, and changes to the IHT format – based on recommendations originally outlined by the Office of Tax Simplification (OTS) in July 2019 – are likely. “The recommendations were primarily geared towards streamlining IHT administration but may have the secondary effect of reducing some of the favourable reliefs available to farmers,” explains Catherine Vickery, associate director at Old Mill.
“Current IHT legislation can be very beneficial for farmers, giving confidence that they can pass down agricultural business and property assets to the next generation tax free on death,” she adds. “Unfortunately, the coronavirus pandemic has left the Government with a very large debt, so there’s potential that it will implement any OTS recommendations to increase tax revenue.”
So, with the Spring Statement anticipated for March, what can farmers do to mitigate any potential changes?
“Under the existing rules, agricultural land and property qualify for Agricultural Property Relief (APR) from IHT at up to 100%,” explains Mrs Vickery. Other land and property assets, like diversified enterprises, can qualify for up to 100% Business Property Relief (BPR) as part of an overall farming business which is at least 50% trading. “These reliefs can apply on lifetime transfers as well as on death where the conditions are met.”
Transfers on death currently also qualify for Capital Gains Tax (CGT) free uplift so that gains are effectively washed out. Lifetime transfers of agricultural land, property, and businesses which are at least 80% trading qualify for gift holdover relief, meaning gains can be deferred until a later disposal.
However, a key OTS recommendation is to remove the CGT free uplift on death when IHT relief is also available. This would mean that the next generation would inherit the farm at an historically low base cost, leading to higher CGT on any future sale.
“The most tax efficient option has often been for farmers to continue to actively farm and hold onto assets until they die,” says Mrs Vickery. “Now, given speculation about potential changes, the best course of action is to get a succession plan in place as soon as possible and start implementing it.
“Plans need to be arranged based on what is right for you, your family and the farm right now, rather than how things might stand at a later date.”
This means establishing who is taking on the assets and if they have the skills needed to drive the business forward. “Pass over this responsibility while you still can and while you can be on hand to guide and support your successor,” advises Mrs Vickery.
It’s also important to review partnership or shareholder agreements, and consider the handing on of other assets. Additionally, farmers should collate any trust and gift deeds, so that paperwork is on hand to be reviewed.
“Though we suspect the new IHT rules won’t be favourable, farmers need to make use of the rules we have now as these are a current certainty,” says Mrs Vickery. “Succession planning is so easy to put off but it’s a vital tool in safeguarding the future of farming businesses.”
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