Direct Payments to Farmers (Crop Diversification Derogation) (England) Regulations 2020
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Lord Gardiner of Kimble
That the Virtual Proceedings do consider the Direct Payments to Farmers (Crop Diversification Derogation) (England) Regulations 2020.
Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Gardiner of Kimble) (Con)
My Lords, I declare my farming interests as set out in the register. In light of the wet weather that England experienced during the autumn and winter of 2019 and 2020, this statutory instrument will remove crop diversification requirements for the direct payments scheme in 2020. This statutory instrument applies to England only, and each devolved region of the UK has introduced a comparable derogation in its legislature. In accordance with the “made affirmative” procedure, this statutory instrument came into force on 1 May 2020 to coincide with the start of the crop diversification period. It was made affirmative as it is an emergency measure introduced at pace, and the following debate is confirmatory.
It is ironic, and a stark reminder of the unpredictable conditions in which farmers must conduct their business, that we are considering a wet weather derogation today. Although farmers—perhaps other than those making hay—are now desperate for rain, only a few weeks ago this was an emergency. The endless changeability of nature and the farmer’s exposure to the elements require government to be proactive in supporting the agriculture industry through difficult seasons. It occasionally requires emergency measures such as the statutory instrument we are now discussing.
Crop diversification requirements were brought over from EU law when the UK left the EU on 31 January and require farmers managing more than 30 hectares of arable land to grow at least three different crops on that land. Farmers with smaller landholdings are also subject to crop diversification requirements and must grow at least two different crops. The removal of these requirements for 2020 means that farmers in England will not be required to grow more than one crop to receive their full greening payment. The removal of these rules is fully supported by farmers, landowners and industry representatives.
This SI is made under article 69(1) of Regulation 1307/2013, which was incorporated into domestic law and applied for the 2020 scheme year by the Direct Payments to Farmers (Legislative Continuity) Act 2020. As I said before, the SI relates to the 2020 scheme year only. That article allows regulations to be made, where necessary and justified, to resolve specific problems in an emergency. We are continuing to act in accordance with the EU legislation that has been rolled over, in line with our decision to operate an equivalent direct payments scheme for 2020 in order to maintain state aid exemptions, as laid out in the withdrawal agreement.
Extreme wet weather events over autumn and winter 2019 had an adverse impact on farming communities across England. Large areas of farmland had been under flood-water or were severely waterlogged at a principal time for drilling crops. Consequently, this left farmers with the option to plant spring crops only. Following the two storms in February 2020, the opportunity to plant spring crops was pushed back by a considerable amount of time due to further issues of land being flooded and waterlogged. Consistently from September 2019 through to February 2020, England experienced rainfall significantly higher than the long-term average. February tipped the scale at 267% of the average, as farmers were preparing to enter the spring cropping period.
These conditions created significant difficulties for cultivating crops, either because farmers could not access flooded land or because land was too waterlogged. Anyone living in the countryside will have seen with their own eyes the severity of the situation and the impossibility of farmers holding even to the best-laid plans.
The devastation wrought by prolonged wet weather and these floods clearly impacts on farmers’ ability to meet crop diversification requirements for the 2020 direct payments scheme. Failure to meet these requirements would lead to reductions and penalties for the greening element of direct payments, which accounts for approximately 30% of a claim’s total value. Having up to 30% of their payment at risk would be a significant financial burden for farmers to bear and cause considerable worry. Continuing to enforce the crop diversification requirements is not practical in light of extreme weather events. It was clearly necessary and, in our view, justifiable to absolve farmers of such a requirement for 2020.
Industry stakeholders have been clear that this derogation is very much needed. The department has frequently engaged with industry representatives on this issue at our regular stakeholder forums, and the necessity of taking action to support farmers through this difficult season has been absolutely evident. Further to farmers welcoming this approach, industry stakeholders such as the National Farmers’ Union have told us:
“This will make a huge difference to thousands of farmers in England”.
The Country Land and Business Association, CLA, has also been very supportive of our decision. This derogation will provide much-needed relief to the thousands of farmers adversely affected last year and this by severe wet weather.
The derogation we are considering today is part of a broader package of support that the Government have made available to farmers in the aftermath of these devastating floods. In addition to the crop diversification derogation that this statutory instrument will introduce, £6 million of funding has been made available through an extension of the farming recovery fund.
The costs to farmers can be overwhelming following extreme flooding, which is why the Government are taking action in supporting farmers through this difficult season, helping them back on their feet and allowing them to get on with the vital work of farming. This is about supporting farmers who have faced a very difficult season.
While I stress to your Lordships that this derogation is very much needed, it is also absolutely apposite that I use this opportunity to reaffirm and endorse in the strongest possible manner our recognition of and appreciation for the dedication and commitment of farmers, who continue to work tirelessly in the production of the nation’s food during what we all know is a challenging time. I beg to move.
Lord Gardiner of Kimble
My Lords, I thank all noble Lords who contributed to the debate. I am confident that we will have considerable opportunities to discuss some of the matters raised on the Agriculture Bill, which is coming up. This statutory instrument is welcomed by the farming industry as a much-needed measure to support England’s farmers in the aftermath of the extreme weather.
The noble Lord, Lord Grantchester, asked about the agricultural transition period and its timing. We remain committed to introducing new schemes that reward farmers for producing goods that are valued by the public, while producing healthy, sustainable food, starting from 2021. The Government plan to start phasing out direct payments in England in 2021 as part of the seven-year transition to the new system of public money for public goods. I say to the noble Lord, Lord Carrington, and my noble friend Lord Shrewsbury that we believe that the seven-year agricultural transition gives sufficient time for the sector to adapt to a new model, but I emphasise to all noble Lords that we will be working extremely closely with the industry. It is in the national interest that we have a successful, dynamic and innovative farming sector.
Noble Lords have also asked how any BPS changes will be made after 2020. We will of course use powers in the Agriculture Bill. The Government intend to bring forward SIs to continue the direct payment schemes for the 2021 scheme, to begin to phase these payments out and to simplify the schemes. I fear that this will require rather more than one SI, but I have sympathy with all noble Lords looking to minimise the number of separate statutory instruments, within reason. The Government have said that the simplifications for 2021 could include removing some or all of what I would describe as burdensome greening rules. Removing these rules would, for example, avoid the need for an SI next year to derogate for crop diversification rules should—I emphasise “should”—extreme weather occur again.
The noble Baroness, Lady Jones of Whitchurch, and a number of other noble Lords, including the noble Baroness, Lady Bakewell of Hardington Mandeville, asked why we did not do this before and asked why now. It is best that I read this out: I emphasise that the threshold for considering it “necessary and justifiable” to issue a general derogation—this is our legal requirement —meant that we had to consider whether there were other reasonable alternatives first. Until the guidance was withdrawn earlier this year we signposted farmers to some of these alternatives, such as using the spring cropping period to satisfy the requirements. After the two storms in February this year and the clear evidence that extreme wet weather was experienced nationwide, we could conclusively say that a general derogation was necessary and justifiable, and promptly set about its issuance. We must be led primarily by evidence, and there is clear evidence that farmers could not be reasonably expected to comply with these rules.
The noble Baroness, Lady Jones of Whitchurch, asked whether we could demonstrate similar flexibility in other emergencies, mentioning the current Covid-19 crisis. Regarding this—and points made by my noble friend Lord Shrewsbury, and the noble Lord, Lord Carrington —earlier this month we extended the application dead- lines for BPS, environmental stewardship, countryside stewardship and woodland legacy revenue claims, all in order to help farmers. We have used a power to make necessary and justifiable provision to deal with emergencies, including an ability to derogate from certain direct payments scheme provisions to the extent or period of time necessary.
The noble Earl, Lord Devon, asked about any plans to incorporate crop diversification rules into the future ELM scheme and whether we consider crop diversification to be good farming practice—a point also raised by the noble Baronesses, Lady Parminter and Lady Northover, the right reverend Prelate the Bishop of St Albans, and the noble Lord, Lord Liddle. Although this derogation is an emergency response measure and not a reflection of views concerning crop diversification as a policy, it is generally recognised that the crop diversification rules have not delivered the environmental and climate-related outcomes that they were designed for. This view was documented in the European Court of Auditors’ 2017 special report on greening.
Turning to the issue of ELMS, I was struck by the points made by the noble Lord, Lord Whitty, my noble friend Lady Redfern and the noble Baronesses, Lady Boycott, Lady Northover and Lady Bakewell of Hardington Mandeville. It is important to emphasise that much of this consideration on the ELM will take place during the passage of the Agriculture Bill, but may I give encouragement? Looking at Clause 1(1) of the Agriculture Bill and the Secretary of State’s powers to give financial assistance, Clause 1(1)(j) is about financial assistance in
“protecting or improving the quality of soil”,
and Clause 1(1)(d) is about
“managing land, water or livestock in a way that mitigates or adapts to climate change”.
Also, I quote specifically to my noble friend Lady McIntosh of Pickering, Clause 1(4):
“In framing any financial assistance scheme, the Secretary of State must have regard to the need to encourage the production of food”.
This is where the farmer has such a vital role to play in providing food for our nation and exports of a very good standard. However, we must ensure that nature recovery comes with that, and that involves resilience.
The noble Earl, Lord Devon, also asked about environmentally beneficial crop rotation. Crop diversification and crop rotation are often separate practices. The practice of crop rotation is very well established in England. Again, a special report carried out by the European Union Court of Auditors in 2017 found that crop diversification rules do not influence farmers’ decisions to use crop rotation techniques.
The noble Lords, Lord Addington and Lord Grantchester, and the noble Earl, Lord Devon, referred to the Met Office. This derogation was based primarily on meteorological data from the Met Office and the Environment Agency, which included rainfall and river-flow data compared with the long-term average. I will take back the point made by the noble Lord, Lord Grantchester, regarding investment in the Met Office.
I should also say that we have no plans to extend this derogation into 2021. It applies only for the BPS for 2020 only. Were future circumstances to warrant a grant of derogation from the scheme rules, we would need to consider it at the time.
The noble Baroness, Lady Jones of Moulsecoomb, raised a matter that no doubt we will consider in great detail when considering the Agriculture Bill, the Trade Bill and beyond: it is the Government’s determination that standards be maintained. I was talking only last week to my noble friend Lord Grimstone about what I hope are very considerable opportunities for British farmers, for excellent produce at the highest possible standards and exports of this great food.
The noble Baroness, Lady Parminter, asked what had changed to persuade the Government that mitigations were no longer plausible and that a general derogation was needed. This refers to all the evidence that we received. Those two severe storms made it impossible for us to proceed with the advice that we had previously given and the evidence that we had.
My noble friend Lord Bourne of Aberystwyth asked about engagement with the devolved Administrations. As always, there is strong collaboration with the devolved Administrations. Agriculture is devolved, and this work is taking place across the UK, so all parts of the United Kingdom will benefit from this derogation.
Regarding consultation, this was an emergency. We had many discussions beyond the NFU, the Tenant Farmers Association, the CLA, the Central Association of Agricultural Valuers, the Wildlife Trusts, the National Trust, the British Institute of Agricultural Consultants and the Farming Community Network. Usually, the Government are constantly consulting; Defra is in particular. I take the point about the need for rigorous consultation, but in an emergency we worked with all those interested parties to ensure that there was agreement and that there was a strong desire that this would be helpful.
The SI amends for this year alone. A number of points have been made about what I think is the future dynamic of British agriculture: the importance that we must place on precision farming and integrated pest management, mindful that farmers have many tasks that we ask them to fulfil for us. We will be asking them to do ever more, and that is why we believe in the financial support for environmental advancement, in the way that we will consider in the Agriculture Bill, the way in which we want to extend productivity, the way in which we want the farmers to have a better deal within the market and the way in which we place importance on food production. Having been very closely involved in what we have been going through with food supply, no one could be more aware than I of the critical nature of food production, of good production of food at home and abroad, and good and strong standards.
There are some detailed questions. I will look at Hansard to see whether I can give a better outcome than what I have outlined, but the advancement of the environment and the production of food is a challenge, even among our great farmers in this country. It is also an enormous challenge across the world, with an increased population, with climate change and the importance of resilience. In the environmental work in air, water and in how we mitigate floods and extreme weather events and climate change, the British farmer is going to be asked to do a great deal. In this debate, we are intervening and acting for their interest, and therefore, in the national interest, I beg to move.