Ellisons Solicitors look at the impact of ELMS on UK farming

The benefits are said to be environmental; greater sustainable farming and food production; an expedited application process and payment of grants and subsidies; less punitive monitoring by DEFRA; and less red tape.

ELMS is also designed to replace the Basic Farm Payment (BFP) and provide greater fairness between different rural and agricultural sectors; as well as between large and small, arable and livestock farms. It has been established that, historically, larger farms have benefited from more farm subsidies than smaller to medium-sized ones.

Environmental impact

In 2023, both the new CAP (EU countries) and ELMS (UK) have been introduced to enable European countries and the UK to meet their commitments towards mitigating the release of carbon gases into the atmosphere.

To help achieve these objectives, there is an emphasis on changing farming practices to encourage farmers and landowners alike to manage their land in more environmentally sensitive ways – on the premise that our food production comes from just 30% of UK land.

Do CAP and ELMS have similar objectives and effects?

The new CAP and ELMS schemes appear similar in both stated principles and effect.

In Europe, unlike the UK, farm income subsidies will continue to be linked to land ownership and tenure, to encourage the production of food, but it is recognised that there should be greater fairness between larger and smaller farms, and this has been addressed in the new legislation.

At present, the UK produces about 60% of its annual requirement for food – and imports the remainder, primarily from Europe.

The government has now embarked upon new trade deals with Commonwealth and more remote countries, such as Australia, New Zealand, and Canada, which may lead to cheaper imports of poorer quality food and reduce the level of food production in the UK.

It still needs a trade deal with the USA, which may cause further erosion of quality in respect of food imports, given the inequality of bargaining power between the two nations.

The government argues that any fears about cheap imports are unwarranted and that ELMS will lead to more sustainable farming and food production in the future.

Tim Logan, senior partner and head of rural affairs at Ellisons Solicitors (Image: Paul Cudmore Photography)

How does the future for UK farming look?

Overall, the future looks difficult for smaller to medium-sized farming operations, whether arable or livestock.

More imports from non-EU countries offering different standards of food production and cheaper prices are likely to undermine the ability of UK farmers to compete on a level footing with their foreign competitors.

The BFP, which has underpinned many farming operations over many years, may not effectively be replaced by ELMS.

Earlier this month, the government announced financial details for many of the replacement grants and subsidies and whilst, in many instances, these show a marked increase in value, there has not yet been the level of expected take-up by farmers.

Will land values be affected?

Land prices have increased over the last 25 years, and current land prices would appear to be unaffected by the UK’s departure from the EU.

Land remains highly sought after, and although the decoupling of farm subsidies may make land acquisition less attractive, most land agents are optimistic that the demand for land, and associated value, will remain high.

With the diminution in farm subsidy linked to land ownership and tenure, and the knock-on effect that this may have on farm balance sheets, many small to medium-sized farms may take the opportunity to take advantage of the government’s lump sum scheme and sell up.

If so, it is likely that larger farms, institutional land-owning companies and lifestyle farmers will continue to buy land and keep values high.

In summary, the full effects of the UK leaving the EU are not yet fully known, but the signs for UK agriculture, despite government assurances to the contrary, remain uncertain.

The gradual phasing out of BFP through the introduction of ELMS, along with the potential for the cheap importation of food and the lack of seasonal labour, will all undoubtedly contribute to challenging times ahead.

Frustratingly, for farmers and environmentalists alike, details of ELMS have been slow to emerge, although there are signs that the speed of disclosure and implementation will start to intensify, as the date for the phasing-out of BFP gets ever closer.

Free advice on ELMS is available from government-appointed agencies. For more information, contact Tim Logan, senior partner and head of rural affairs at Ellisons, on tim.logan@ellisonssolicitors.com, 01206 719608 or 07956587863.