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The three pillars of success needed for Defra's farming review

After Defra announced that it is reviewing farming policy, Hannah Conway, Policy Officer at Wildlife & Countryside Link sets out how high ambition, ample investment and robust regulation will be key to its success

October 2022

Social media and news channels have been full of concerned voices in recent weeks after it was confirmed that the new Defra Secretary of State, Ranil Jayawardena, is leading a ‘rapid review’ of Environmental Land Management (ELM) and wider farming and land regulation.

The public, many farmers, many Conservative MPs and civil society organisations support paying farmers public money for public goods and paying them well. It was a pledge in the 2019 Conservative manifesto, as was leaving the environment in a better condition by the end of this parliament.

Despite vague reassurances from Defra, until it publishes more detail we’re left to assume that everything is still on the table. This includes the re-introduction of direct payments, a watering down of ELM ambition, scrapping or delaying Local Nature Recovery and Landscape Recovery, a shrinking of the farming budget and the scrapping of key farming regulations.

Such uncertainty for farmers and land managers is the last thing the sector needs after the disruption caused this year by extreme weather conditions and rising gas prices, as well as the uncertainty caused by the slow progress on ELM to date.

At this critical juncture, policies must drive a transformation for farming and the countryside through meaningful incentives, sound investment and robust regulation. These three pillars are essential for shoring up growth and resilience in the long term.

High ambition, high reward

The government’s 2021 Food Security report identified climate breakdown and nature decline as the biggest threats to domestic food security. But until now, agricultural policies have exacerbated the impact of these crises. ELM is designed to remedy this, by ensuring that farmers and land managers are paid public money for delivering public goods such as clean water, air, functioning soils, and biodiversity.

To water down ELM would be a mistake. If ELM consists of low-ambition schemes that don’t protect and enhance the environment- upon which food production relies- then it will yield poor results, adding it to the pile of previous agricultural policies that have failed to turn farming from a net polluter to champion for nature.

Local Nature Recovery and Landscape Recovery are vital to this end because they would be the real vehicles of change, accelerating the sector into a future which is modern, sustainable and resilient. Demand is already high for Landscape Recovery; this year over 50 groups of farmers, estate managers, local authorities and NGOs applied for the first round of Landscape Recovery schemes.

Yet comparatively, they have not received as much resourcing and attention as their lower-ambition sibling, the Sustainable Farming Incentive. Landscape Recovery is only running a limited number of projects this year, and Local Nature Recovery is yet to be piloted. If the government is serious about food security, it will accelerate these schemes to future-proof both farming and our green and pleasant land.

Big budget, big business

High ambition in ELM must be matched by an ample budget. Rightly, the Treasury have a duty to ensure that taxpayers’ money is spent wisely. They would do well to increase the current ELM budget, which currently only receives around £1bn per year on average.

Why? Because 72% of UK land is agricultural, 55% of the UK food supply is domestically produced, and because farming, our economy and our survival all face an existential threat from poor soils, polluted waterways, extreme weather patterns and poor air quality- the list goes on.

What’s more is that paying £3bn or even £4bn per year for sustainable land management would be a bargain. It would cost the economy less than allowing environmental degradation to continue. To take a few examples: 

  • Soil degradation alone is costing the UK £1.2bn per year;
  • Crop losses due to extreme weather in 2018 cost the industry £185m, with similar or higher predictions for 2022;
  • Poor water quality costs the UK economy roughly £1.3bn per year;
  • Nitrogen wastage costs the UK economy an estimated £2.5bn per year.

This all amounts to over £5bn already, before accounting for carbon losses, flooding and a range of other environmental harms that continue to come at an economic cost.

The money must also be distributed carefully between the schemes. Currently, only £50m going into Landscape Recovery and the budget for Local Nature Recovery is unconfirmed. While over time, more private sector money may be invested in nature recovery, these markets are not yet mature enough to prop it up entirely.

This is why ELM needs to funnel money into the places where it will work the hardest. The more budget for the higher ambition schemes, the more delivery there will be. Afterall, this Government has promised to ‘deliver, deliver, deliver’.

Ranil Jayawardena acknowledged himself that over half of the global economy is reliant on nature, which equates to around £40 trillion. An investment in farming today will deliver the growth of tomorrow.

Regulation underpins growth

The ‘Retained EU Law Bill’ gives Ministers the powers to amend or revoke countless regulations relating to agriculture, giving them a ‘sunset’ date of December 2023 whereby they are automatically scrapped unless otherwise put into law.

While some would have us believe that a bonfire of regulations would stimulate growth, the evidence shows otherwise. A government report found that environmental regulation is likely to have a net positive impact on growth in the UK economy, because it drives innovation and provides certainty to markets.

Conversely, deregulation could actually harm farmers and the food supply chain more than help them. For example in 1984, the New Zealand government imposed swift and severe deregulation on the agriculture sector, along with the slashing of state subsidies. Farmers in New Zealand are now very vulnerable to market shocks, which is evident in the industry’s volatile profitability in recent decades.

Although large dairy producers in New Zealand may have profited, these reforms have priced out many smaller farmers. They have also come at a cost to the environment and to the climate, with around half of the country’s GHG emissions coming from agriculture, and the erosion of 84m tonnes of soil per year. 

This is now coming back to bite them, as the country introduces a costly policy to reign in agricultural emissions in the face of intensifying climate change. This is a fate that could have been avoided with robust regulation. 

Deregulation could also transfer costs and bureaucracy onto the very businesses the government are trying to liberalise. Evidence shows that government deregulation can actually lead to overregulation at the business level, transforming straightforward government regulations into company-led bureaucratic nightmares. Indeed, for farming this is already evident in the inefficiency of some farm assurance schemes.

A deregulatory push with finite support through low-ambition schemes would be bad for business, bad for growth and bad for food security. When the Secretary of State takes to the stage in the coming weeks to announce his plans for farming reform, we hope he takes heed of the evidence.

Hannah Conway is Policy Officer at Link, and coordinates its agriculture and chemicals work.

The opinions expressed in this blog are the authors' and not necessarily those of the wider Link membership.