Welsh Mountain ewe and lamb in upland landscape

Welsh Mountain ewe and lamb in upland landscape

Sustainable Farming Scheme: your questions answered

Published 12/03/2024   |   Reading Time minutes

Farmers across Wales have been protesting against the Welsh Government’s proposed Sustainable Farming Scheme (SFS).

This article answers some FAQs about the scheme.

What is the Sustainable Farming Scheme?

The proposed SFS would pay farmers for actions resulting in environmental, animal welfare and social outcomes, over and above minimum legal requirements.

Farmers would be required to carry out a suite of ‘Universal Actions’ for which they would receive the ‘Universal Baseline Payment’.

Non-compulsory ‘Optional’ and ‘Collaborative’ actions would be available for additional payments.

Scheme rules include:

  • at least 10% of each farm managed as habitat; and
  • at least 10% under tree cover as woodland or individual trees.

The SFS is currently due to be introduced in January 2025.

Entry into the scheme is voluntary and farmers must have sole control of the land to receive payment.

Why is a new scheme being proposed?

The Welsh Government has developed the SFS to replace the previous EU Common Agricultural Policy (CAP) system of support.

Under this system, payments have been made through the Basic Payment Scheme (BPS) and the Rural Development Programme (RDP).

Direct payments to farmers via the BPS have continued since Brexit, but are proposed to be phased out between 2025 and 2029, once the SFS has been introduced.

The SFS and BPS would run concurrently during this ‘Transition Period’. Farmers would be able to join either scheme, but not both, during this time.

Farmers joining the SFS during the Transition Period, could receive a ‘Stability Payment’ to top up their payments to the level they would have received under the BPS in 2024.

The RDP ended at the end of 2023 and the interim rural investment schemes and Habitat Wales Scheme are bridging the gap until the SFS starts in 2025.

What are the scheme actions?

There are 17 proposed Universal Actions which would be mandatory for scheme participants. They broadly fit into four categories: farmer development; soil health; animal health and welfare; and landscapes and habitats.

Optional Actions are intended to be voluntary and go beyond the requirements of the Universal Actions.

Collaborative Actions would be voluntary measures for farmers to deliver action at a local, landscape, catchment, or national scale.

The Optional and Collaborative Actions would be developed and introduced after the Universal Actions, during the Transition Period. This is to take account of farmer concerns there was too much change.

The Welsh Government says it will implement interim schemes ahead of the Optional and Collaborative Actions being introduced, subject to budget.

Why is the 10% tree cover rule so contentious?

Farmers have been protesting about a number of issues affecting agriculture recently. These include elements of the proposed SFS, but also agricultural pollution regulations and bovine TB policy.

The requirement to have at least 10% tree cover and to manage at least 10% of land as semi-natural habitats have been key areas of contention.

NFU Cymru argues the two 10% requirements wouldn’t be feasible on many farms and the 10% tree cover rule is likely to “prove a barrier to entry for many businesses”. Farmers argue the two scheme rules could take 20% of their land out of production.

Wales Environment Link welcomes the requirements. RSPB Cymru emphasises the “right tree in the right place”, to ensure environmental benefits.

The 10% tree cover rule has been revised as the proposals have developed. The current proposal is for 10% of suitable land, rather than 10% of the entire holding as was previously the case. Existing woodland and trees are included within the 10%.

The Woodland Trust has assessed that, on average, farm tree cover in Wales is currently 6 to 7%.

The Nature Friendly Farming Network says 10% tree cover and 10% habitat can be integrated with food production so it’s possible to do both.

The Rural Affairs Minister, Lesley Griffiths, says that unlike the BPS, trees and woodlands will be included in the land area which generates payments, “so I hope farmers can once again learn to value the multiple benefits provided by trees”.

How will farmers be paid?

The payment methodology proposed for the Universal Basic Payment would be an estimate of the cost incurred and income forgone for farmers for undertaking actions under the scheme’s Universal layer.

The Welsh Government is considering rewarding the social value of the outcomes of the actions through the ‘natural capital’ approach (i.e. the monetary value of benefits derived from the natural environment).

Farming unions are concerned the proposed payment methodology will provide no meaningful income.

What other issues have been raised?

There’s concern the scheme won’t work for tenant farmers and common land farmers due to complications around land ownership, restrictions in contracts and rights to the land

FUW is concerned there won’t be proper support for new entrants.

Both NFU Cymru and RSPB Cymru are disappointed maintenance payments for Sites of Special Scientific Interest aren’t included in the Universal Baseline Payment.

RSPB Cymru says the proposals won’t guarantee the mix of farmland habitats required to halt the loss of nature by 2030.

What will be the impact of the scheme?

The Welsh Government published modelling suggesting the scheme would create around 26,000ha of new semi-natural habitat and 28,000ha of new woodland, but also reduce total farm income by £199m and farm output by £125m.

The modelling also shows livestock units reducing by 122,000 and on-farm labour decreasing by 11%. NFU Cymru equates this to 5,500 jobs lost.

The modelling is “indicative of worst-case outcomes” and comes with significant caveats.

The Minister has said the modelling is based on an earlier version of the scheme and further modelling will take place.

What is the budget for the scheme?

The budget for the SFS has yet to be confirmed.

The Welsh Government says it will pursue at least the same level of funding for farmers from the UK Government as it will receive in 2024-25, including an inflationary uplift.

The Minister has said £238m would be the “baseline”, i.e. the previous annual funding for the BPS.

It isn’t yet known how the budget would be allocated across the Universal, Optional and Collaborative tiers and therefore on which elements emphasis will lie.

RSPB Cymru highlights an independent assessment which found Wales needs £496m annually to meet environmental land management priorities alone.

NFU Cymru says the budget needs to rise to over £500m “just to stand still” and meet “shared ambitions for food, climate and nature”.

What are the next steps?

The third and possibly final SFS consultation closed on 7 March. The Minister issued a statement on 8 March.

The Minister told the Senedd’s Rural Affairs Committee on 6 March that “nothing is set in stone” and “there will be changes; there are no two ways about it”.

The Minister confirmed it was more important to get SFS right than to get it done by 2025.

The Welsh Government has said the incoming First Minister (on 20 March) “will want to carefully review the results of the consultation and consider in detail the pace of implementation of SFS”.

Senedd scrutiny of the scheme continues.

Article by Elfyn Henderson and Katy Orford, Senedd Research, Welsh Parliament