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Sustainable Farming Scheme: NFFN Cymru analyses the latest updates

Wales
Policy & Views
Government
Sustainable Farming Scheme

On 25th November 2024, Huw Irranca Davies, the Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, announced an updated outline plan for the Sustainable Farming Scheme - the Welsh Government’s proposed new, long-term programme to support the agricultural sector. Rhys Evans, NFFN Cymru Manager, takes a closer look at the updates.

Designing a new domestic agricultural support scheme is no mean feat. Just ask the Welsh Government! The case for reforming farm support payments was presented to us back in Autumn 2018 with the Welsh Government’s Brexit and our Land consultation.

Fast-forward six years - in which there have been numerous consultations, inquiries, meetings and workshops - the Welsh Government (WG) has announced its latest Sustainable Farming Scheme (SFS) update. Is there light at the end of the tunnel?  Before we answer that question, let’s look at the latest state of play.

Maintaining ambition

The WG’s aims for the SFS remain ambitious. The scheme still intends to deliver multiple outcomes and reward farmers for actions that align with Sustainable Land Management (SLM) objectives including:

  1. Producing food in a sustainable manner,

  2. Mitigating and adapting to climate change,

  3. Maintaining and enhancing the resilience of ecosystems and the benefits they provide,

  4. Conserving and enhancing the countryside and cultural resources; promoting public access to and engagement with them; and sustaining the Welsh language and promoting and facilitating its use.

These are all vital outcomes that agriculture can help deliver. Indeed, I’m struggling to think of any other sector that can deliver so many multiple cross-cutting benefits. So how is the WG going to support farmers to help achieve all of this?

Scheme structure

The framework for the SFS will remain largely the same and will retain the three-layer structure of Universal, Optional and Collaborative actions.  

  • Universal Actions: Mandatory actions that farmers will need to undertake to receive an Universal Baseline Payment.

  • Optional Actions: If farmers want to go above and beyond the Universal Actions, this Optional Layer will include a menu of actions that farmers will be able to choose from and receive payment for delivery (in addition to the Universal Baseline Payment).  

  • Collaborative Actions: This layer will provide the opportunity for farmers to deliver action at a local, landscape, catchment, or national scale. It aims to support an increase in collaborative and partnership working between farmers, land managers, foresters, and others. 

The SFS Universal Layer will be launched in 2026. The Optional and Collaborative Actions, which will offer the most in terms of delivering ambitious nature and climate benefits, will be introduced in phases throughout the transition period, scheduled to run between 2026 and 2029. 

In the meantime, the WG will work with stakeholders to agree which priority Optional and Collaborative Actions will be made available at the start of the scheme in 2026. NFFN Cymru will be pushing hard to ensure that the most ambitious land management actions are included in the upper scheme tiers as soon as possible.


Universal Actions 

The bulk of the changes relate to the Universal Layer. Here’s an overview of what the Universal Layer looks like following WG’s latest update. For a full overview of the updated proposals you can read NFFN Cymru’s Summary Paper.

  1. Benchmarking

  2. Continuous Personal Development

  3. Soil Health Planning

  4. Integrated Pest Management

  5. Habitat Maintenance

  6. Create Temporary Habitat on Improved Land

  7. Designated Sites Management Plan

  8. Hedgerow Maintenance

  9. Woodland Maintenance

  10. Tree Planting and Hedgerow Creation Opportunity Plan

  11. Historic Environment

  12. Animal Health and Welfare

There is also a rule covering the entire scheme that 10% of each farm should be actively managed as habitat for the benefit of wildlife alongside the production of food.

Those who have been closely following the SFS' development will notice the number of Universal Actions has been reduced from 17 to 12, with changes made to 10 of the dozen remaining.

The following Universal Actions have been removed. However, there will be opportunities to support these practices through the Optional Layer;

  • UA4: Multispecies cover crop 

  • UA6: Managing heavily modified peatland 

  • UA10: Ponds and scrapes 

  • UA16: Good animal welfare (merged with Universal Action 15)

  • UA17: Good farm biosecurity (merged with Universal Action 15)

The Animal Health, Welfare and Biosecurity actions (UA15/16/17) have been merged into a single simplified Universal Action, while changes to hedgerow management requirements seek to achieve bigger and denser hedges through incremental cutting every two years or more.

NFFN Cymru broadly welcomes the SFS Universal Layer: it is considerably more ambitious than the previous land-based Basic Payments Scheme (BPS). There’s a lot of focus on gathering data, testing and measuring in the universal layer, which makes perfect sense as baselining is an essential first step to inform management and measure success. There’s a lot to be welcomed, including measures to enhance soil health, animal health and welfare, benchmarking, habitat maintenance and improved hedgerow management. However, we would expect the ambition of this layer to increase over time.

Habitat and nature

Thankfully, the WG has retained the requirement for 10% of farms to be managed as habitat alongside food production, which has been a key priority for NFFN Cymru. We have been increasingly frustrated by claims that this will reduce farm productivity and economic viability, and will result in taking 10% of land out of food production.

Habitats can include species rich grasslands, herbal leys, hay meadows, marshy grasslands, hedgerows and wood pasture, ffridd and unimproved hill land (to name a few) - all of which contribute towards food production in Wales.

There is plenty of evidence that shows that integrating a diverse range of habitats and features on farmland can maintain and even increase yields. For livestock systems, studies have demonstrated increased yield in grassland because of increasing plant diversity and species richness, as well as increasing resilience to drought and flooding for greater farm business resilience. 

We’re also delighted that the WG will make payments in the Universal Layer on Sites of Special Scientific Interest (SSSI) so farmers who manage some of our most important wildlife areas will not lose out. This was not always the case, and we are glad the WG has listened to our concerns.


Common Land

The WG initially proposed to support common land solely through the Collaborative Layer.  Now, a proportional part of the Universal Baseline Payment can be made to Scheme participants with livestock and who hold common land grazing rights. 

The Collaborative Layer intends to pay more where graziers are part of a Grazing Association and can demonstrate compliance with a set of coordinated grazing actions, with additional funding available for those who choose to go further. 

Almost 10% of agricultural land in Wales is registered common land, therefore it’s vital that the scheme works for common land.

Trees

You might ask how we’ve gotten this far without mentioning trees. By far the biggest change to the scheme is that farmers will no longer be asked to have a minimum of 10% tree cover on their land - easily one of the most contentious elements of the scheme.

This has now been replaced by a new Universal Action that requires farmers to create a tree planting and hedgerow creation plan (supported by advice and guidance from WG), while planting grants will be available through the Optional Layer of the scheme. There will now be a scheme-wide tree cover target, which will be agreed at a later date following stakeholder engagement. 

NFFN Cymru cautiously supports these changes. The previous requirement for farms to maintain at least 10% tree cover could well have resulted in planting the wrong trees in the wrong areas, leading to perverse outcomes, such as biodiversity net loss or even carbon losses from the soil, as well as an unnecessary reduction in food production. After all, it’s human nature to resist rules that are mandatory or forced upon us, which can result in following the path of least resistance without giving enough thought and consideration. 

Back home we’re part of Ffermwyr yr Wnion - a group of 10 farms involved in a landscape-scale project to collaboratively address local issues like flood risk and water quality.  Working with Parc Cenedlaethol Eryri and Cyngor Gwynedd, 11 ponds have been created across the 10 farms. 

This was entirely optional, but appropriate advice and funding ensured good uptake. Importantly, the ponds were of good quality - ultimately because it was our decision and we took ownership of the project. 

This is likely to be true for tree planting.  Enabling farmers to plant trees where they best fit local conditions, supported by expert advice, tailored guidance and well-designed, well-funded agroforestry schemes, can enhance both uptake and quality.

A more flexible approach that helps farms strategically plan tree planting and hedgerow creation could unlock multiple benefits - boosting farm efficiency and productivity, while enhancing biodiversity and tackling climate change.

Budget and payment rates

The SFS has the potential to benefit both nature and agriculture, provided sufficient funding is allocated to support ambitious action across Wales.  Indeed, the costs of meeting environmental priorities through land management in Wales are estimated at over £600m per year. However, the Welsh Rural Affairs budget has seen consecutive cuts over recent years: a £37.5m cut in the 2023/24 financial year, followed by a further cut of £62 million in 2024/25 - the largest relative reduction of any of the Welsh Government departmental budgets at around 13%.

It is therefore welcome news that the WG’s Draft Budget 2025-26 sees the Climate Change and Rural Affairs budget receiving an extra £71.95m in capital funding (a 31% increase), and £36.35m more for revenue spend (a 6.6% increase). Therefore, the proposed revenue funding for Climate Change and Rural Affairs will be £566m, with a further £314m for capital funding. This equates to 3.56% of WG’s total annual spending.

NFFN Cymru broadly welcomes the SFS Universal Layer: it is considerably more ambitious than the previous land-based Basic Payments Scheme (BPS). However, we would expect the ambition of this layer to increase over time

Rhys Evans

However, we don’t know how what the overall SFS budget will be, or how that funding will be allocated between each scheme layer. The challenge for the WG will be to set payment rates high enough to encourage widespread scheme participation while ensuring the Optional and Collaborative layers of the SFS remain attractive for those ready to do more for nature on their farms.

If too much emphasis is placed on the Universal Layer with insufficient funding for the remaining layers, then ambitious plans - like those for agroforestry and soil health - risk staying on paper instead of becoming reality.

As farmers we are being asked to deliver numerous outcomes: food production, climate change mitigation, nature recovery, reducing flood risk, access and recreation opportunities, as well as being the cornerstone of rural communities, economies and the Welsh language. We are up for the challenge and are more than ready to deliver - all we ask is that we’re supported fairly to do so.

Next steps

It’s important to note that this is not the final scheme - the WG has not made any final decisions on it. An updated economic analysis and impact assessment will be undertaken to reflect the changes so that we can understand what the Scheme will mean for farmers and wider society. Welsh ministers will then make final scheme decisions by summer 2025, when we’re expecting to see the final scheme detail, including payment rates.  

So, is there light at the end of the tunnel? The answer might be a cautious “yes”.