Sustainable Farming Scheme - will the Welsh Government get it right?

The Sustainable Farming Scheme is touted as a Made in Wales policy that will "keep farmers farming". Rhys Evans, NFFN Cymru Manager, takes a look at whether the scheme's proposal will serve the sector well.

Following the passing of the historic Agriculture (Wales) Act 2023, the Welsh Government (WG) has the power to design its own agricultural support system in Wales. This will come in the form of the Sustainable Farming Scheme (SFS), which is intended to be introduced in 2025 and will replace the Basic Payment Scheme (BPS) and the main elements of the Rural Development Programme, in particular agri-environment and farm business support schemes.

Sustainable Land Management

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

Producing food in a sustainable manner
Mitigating and adapting to climate change
Maintaining and enhancing the resilience of ecosystems and the benefits they provide
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

The WG says the principle of 'keeping farmers farming', ensuring land continues to be managed by those who know it best, has remained largely unchanged throughout the development process.

Scheme Structure

The SFS will have a three-layer structure:

Universal Actions: These include 17 mandatory actions that every farmer will need to undertake to receive and Universal Baseline Payment. These include actions relating to soil health planning, looking after habitat, improving animal health and welfare, benchmarking and looking after the historic environment. In addition, farmers will have to adhere to two scheme rules:

At least 10% of each farm is managed as habitat
At least 10% under tree cover as woodland or individual trees

You could think of this Universal Layer as an evolution of the BPS area-based payment, but with additional conditions attached to it.

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). There is no definitive list of Optional Actions, however it’s likely to include activities like creating new habitat, natural flood management, hosting educational visits, capital support for infrastructure or diversification opportunities.

You could think of this layer as an evolution of previous higher-tier agri-environment schemes and farm business support schemes.

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. Actions might include the delivery of nature-based solutions at landscape scale, knowledge transfer in agriculture, the sharing of facilities and resources or exploring new supply chain opportunities.

You could compare this layer to previous collaborative schemes, like the Sustainable Management Scheme.

Both the Collaborative and Optional actions are proposed to be introduced during the SFS transition period 2025-2029.

Transition Period

From 2025 onwards, farmers will have the option of choosing either the SFS or BPS, with the condition that once a farmer chooses to participate in the SFS, they will no longer have the option to revert to the BPS.

Beginning in 2025, the BPS will be phased out over a five-year period, with a proposed 20% taper in equal steps per year, meaning the BPS will cease to exist in 2029.

BPS Entitlement Value, Redistributive Payment and Young Farmer Payment:

2025	2026	2027	2028	2029
80%	60%	40%	20%	0%

Farmers who enter the SFS during the transition period will also receive a Stability Payment, which is essentially a top-up payment to match what they would’ve received under the BPS and help farmers make the transition from one system of support to another.

For a more detailed overview of the SFS, read our NFFN Cymru SFS Summary.

Will the SFS make a difference?

There are many positives in the consultation, not least the fact that our farm environments feature prominently, and many of the Universal Actions can help maintain and enhance farmland biodiversity through food production. We welcome the Scheme Rule that at least 10% of each farm is managed as habitat, whilst payment for actions, such as appropriate hedgerow management, cover cropping, creating wetland features and agroforestry, can play a big role in improving our farm landscapes and farm business resilience simultaneously. This is a marked improvement on the blunt BPS arrangement, which included very few environmental obligations.

Are nature-friendly farmers being left behind?

Farmers who are delivering above and beyond the Universal Actions or want to do so will be looking towards the Optional and Collaborative Actions for additional payments and opportunities. Any delay in introducing these layers means that many nature-friendly farmers stand to lose out in the short term. To ensure that no farmer gets left behind, we’re urging the WG to deliver all scheme elements by 2026, including the optional and collaborative layers, to support the most ambitious land management actions.

Budget

The size of the SFS budget remains a huge concern. The costs of meeting environmental priorities through land management in Wales are estimated at over £500m per annum, however the Rural Affairs budget has recently seen a cut of £62m - a reduction of 13% from the previous financial year. Furthermore, Economic Modelling estimates that farm business income will reduce by £199m under the SFS Universal Action payments. Coupled with stability payments (valued at £117.3m), this is reduced to £81.6m. Either way, the SFS is clearly under budgeted, and the level of funding does not match the level of ambition outlined in the consultation.

Uncertainty remains regarding future SFS payment rates. If the Habitat Wales Scheme (HWS) payment rates (£69/ha for habitat and £62/ha for woodland) are indicative of future SFS payment rates, then many nature-friendly farmers will stand to lose out financially. We're calling for payments that deliver genuine outcomes through schemes that are more flexible, reward genuine results and harness existing farmer knowledge.

Trees

One of the most contentious aspects of the scheme is the requirement to have 10% tree cover on farms. There’s a narrative at play that pits agriculture against trees, where you have to choose between producing food or planting trees. This is a huge shame as agroforestry, silvopasture, orchards, hedgerow trees, and appropriately planted woodlands can form an important component of the farmed landscape, helping to improve productivity and animal welfare and deliver a host of environmental benefits.

However, a gung-ho approach to woodland creation can result in planting trees in the wrong areas. The WG’s tree planting targets are being driven solely by the need to sequester carbon, but we need to think about biodiversity, efficiency and productivity gains, and economic opportunities. A narrow focus on carbon sequestration could lead to perverse outcomes, such as biodiversity net loss or even carbon losses from the soil, as well as an unnecessary reduction in food production. These unintentional outcomes highlight some of the complexities of developing an effective climate mitigation strategy at the farm level. When it comes to tree planting, we must plant the right tree in the right place for the right reason based on sound strategy.

Micromanaging?

Many of the habitat management requirements outlined in the consultation follow the traditional payment system that is management-based, prescribing when or what the farmer must or must not do to receive a payment. Whilst do's and don’ts can form an important component of habitat management, and over-reliance on this approach can be counter-intuitive as the whole process becomes too rigid and constrictive.

We urge the WG to move away from this traditional approach and transition towards a more results-based payment approach. This approach offers farmers the flexibility to use their knowledge and experience to manage the land in a way that delivers agreed environmental results alongside their food and fibre production activities. The farmer is, in principle, free to do what fits the site, the weather of the year, the farm and her or his own situation - it is only the environmental results that count.

Advice and support for farmers

Navigating a new scheme with its various rules, requirements, monitoring, data gathering, and inputting may cause additional stress to farmers. Around 16,000 farmers receive the BPS in Wales, but only some 3,000 farms entered Glastir AES agreements. The SFS will mark a culture change for many farmers. We need the right advice, guidance and support to help transition to and deliver the SFS, particularly increased investment and capacity for face-to-face advisory services and farmer-to-farmer knowledge exchange.

Our Key Points briefing

This paper outlines some of our thoughts on the proposals, including what we consider to be the positives as well as areas of weakness and concerns. We highlight our five key asks for what the scheme needs to incorporate to work for all farmers.

Read

Sign our open letter to Lesley Griffith

We have written an open letter to the Welsh Rural Affairs Minister, Lesley Griffiths, outlining our five key asks for ensuring the Sustainable Farming Scheme works for all farmers.

Read

Rhys Evans

Wales Manager

Rhys Evans is NFFN Cymru’s Sustainable Farming Lead. Along with his parents and brother, Rhys is involved with running the family farm in Rhyd-y-main near Dolgellau, North Wales. They have a flock of Welsh Mountain sheep and pedigree Welsh Black cattle which are used to manage roughly 700 acres of hill and mountain land. As well as farming, Rhys worked as a Conservation Officer with Natural Resources Wales, working with farmers on developing nature conservation projects in the Meirionnydd area. He also brings policy experience to the role, having worked as a Food and Farming Policy Officer at RSPB Cymru. His experience of working in nature conservation as well as a hands-on farmer is a perfect combination for this role. Rhys’s mission is to demonstrate how food production and nature can, and must, go hand in hand.

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