The Welsh Government’s proposals for a new agricultural policy – the Sustainable Farming Scheme (SFS) - caused controversy earlier this year. The Senedd saw thousands of farmers’ wellies lined up on its steps in protest, and tractor go-slow demonstrations hit the news.
In May, the newly appointed Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca-Davies MS, decided to delay introduction of the SFS from 2025 to 2026. Next year will now see a ‘Preparatory Phase’ to develop the proposals further, informed by an SFS Roundtable of stakeholders.
Two Senedd committees carried out inquiries into the SFS proposals in the spring. You can read their reports here:
- Economy, Trade and Rural Affairs (ETRA) Committee; and
- Climate Change, Environment and Infrastructure (CCEI) Committee.
The ETRA Committee also looked at Farming Connect’s preparedness to support transition to the SFS.
This article sets out the committees’ work and the Welsh Government’s response. A previous article and research briefing provide further background. A guest article also looks at comparisons to schemes in England.
Design - rewarding farmers for sustainable land management
The SFS proposals are a significant departure from the legacy EU Common Agricultural Policy’s Basic Payment Scheme, with more emphasis on rewarding actions to deliver Sustainable Land Management objectives.
The most recent consultation, which closed in March 2024, proposed a tiered structure to the scheme. All farmers participating in the SFS would be required to carry out 17 ‘Universal Actions’ (many environmental) to receive the ‘Universal Baseline Payment’.
Building on this, more complex non-compulsory ‘Optional’ and ‘Collaborative’ actions would be available at a higher tier for additional support.
The scheme rules, required for participation, included:
- at least 10% of each farm managed as habitat; and
- at least 10% under tree cover as woodland or individual trees.
The proposed payment methodology was based on ‘costs incurred and income foregone’ and also an additional ‘social value’ payment. However no payment levels or budget for the scheme were provided, and are still unknown.
Reaction – fears the scheme would not attract farmers
Payment methodology
Both Senedd committees heard concerns from farmers and environmental groups that insufficient reward could result in lack of scheme up-take.
There were concerns that the ‘costs incurred and income foregone’ methodology would only neutralise costs and therefore provide no meaningful income, and that the ‘social value’ payment was too complex. Environmental groups called for sufficient funding for the higher scheme tiers - to maximise environmental outcomes.
The Cabinet Secretary told ETRA and CCEI that the Welsh Government will discuss payment methodology options with the SFS stakeholder groups later this year. He committed to incorporating ‘social value’ in the payment. He also accepted the CCEI recommendation on considering ‘payment for results’ (reward for outcomes instead of actions) – particularly for the higher tiers.
Action layers
Farming unions told the committees that in their view the 17 Universal Actions would be too onerous and bureaucratic.
There was concern across the board that the Optional and Collaborative Actions wouldn’t be available on scheme launch, but later during a transition period, as they are still being developed. As such, stakeholders highlighted those already doing more for the environment would be at the back of the queue in receiving reward.
The Cabinet Secretary committed to providing updates on the scheme design to both committees. However he didn’t agree to the three monthly or termly updates proposed by ETRA and CCEI respectively, instead preferring one update before the end of 2024.
The Cabinet Secretary told CCEI he recognises the importance of the higher tiers, noting the value of the collaborative tier for landscape-scale biodiversity work.
New entrants
ETRA explored stakeholders’ views (e.g. Young Farmers Clubs) that the scheme wouldn’t support new/young entrants into farming. It raised concerns about loss of local authority farms, which offer a route to enter into farming.
The Cabinet Secretary spoke of his commitment to deliver a scheme accessible to all farmers and highlighted his view that the proposals included the removal of barriers for new entrants.
Tenant, common land and organic farmers
ETRA explored how accessible the scheme would be to different farming types. The Tenant Farmers Association (TFA) said the proposed scheme wasn’t workable for tenant or common land farmers due to restrictions in their contracts/rights and tenancy law. The TFA highlighted “30 per cent of Wales is farmed by someone other than the landowner”.
The Cabinet Secretary told ETRA the scheme had been designed to accommodate tenant farmers e.g. the eligibility criteria included the ‘active farmer’. He said “We are not aware of any unique impediment to tenant farmers but are testing revised proposals against their requirements”.
He went on to say finding an acceptable position for common land is a priority and is considering the possibility of graziers participating in a Commons Agreement - having access to funding equivalent to the Universal Payment through their combined grazing.
CCEI emphasised that changes to the scheme to allow access for different farming types shouldn’t compromise the scheme’s environmental ambition, which the Cabinet Secretary accepted.
ETRA heard of a lack of incentive for organic farmers to join the scheme, especially given the expected delay to the higher-level tiers. The Committee recommended the Welsh Government should look to other schemes in Europe. The Cabinet Secretary told ETRA the government is considering how best to reward organic farmers and is looking to Europe and seeking advice from the Welsh Organic Forum.
Carbon and biodiversity
The scheme rules requiring tree cover and habitat management have been central in the debate. Some farmers fear this could take too much land out of production.
The Welsh Government and other stakeholders (such as the Nature Friendly Farming Network) argued the scheme rules can be integrated into agricultural systems and actually benefit agricultural production e.g. through trees providing shelter belts and flood alleviation.
CCEI heard there were some misunderstandings over the tree-planting requirements and recommended the Welsh Government should address this and promote the benefits of integrating trees and habitats into productive systems.
The Committee sought assurance that any changes to the tree-planting rule would still deliver the Welsh Government’s tree planting targets. It recommended the government seeks advice from the UK Climate Change Committee. The Cabinet Secretary accepted the recommendations.
On biodiversity, CCEI sought assurance that any changes to the 10% habitat rule would support delivery of biodiversity commitments including the global 2030 targets. It called for the scheme to support a diverse range of habitats. The Committee also called for fair reward for farmers which have Sites of Special Scientific Interest (SSSIs) within their land. The Cabinet Secretary accepted the recommendations and in July announced SSSI land will be included in the Universal Basic Payment.
Farming Connect
Stakeholders have highlighted the need for an appropriate advisory service to implement the SFS. The Farming Connect programme should be instrumental and the ETRA Committee considered issues such as programme structure; funding; new entrants; and demonstration farms. The Welsh Government has responded, outlining work to prepare the industry for transition to the SFS.
Next steps – preparations for scheme launch in 2026
The Welsh Government has published initial plans for further development of the SFS, and aims to publish final details next summer. The Senedd will debate both committees’ SFS reports, and ETRA’s report on Farming Connect, together in Plenary on 23 October. You can watch the proceedings on Senedd TV.
Article by Dr Katy Orford, Senedd Research, Welsh Parliament
