‘Reform ELMs so small farms make a profit’

Farm support payments should be refocused so smaller producers can turn a profit while enhancing the environment, says a think tank.

The Green Alliance argues that the current structure of the government’s Environmental Land Management scheme (ELMs) is unfair and inefficient because it rewards large arable farms that are already profitable without payments.

Meanwhile, comparatively unprofitable family farms – especially in the uplands – are  struggling to benefit, says the think tank. This means bigger arable holdings find it easier to thrive while loss-making livestock farms are in jeopardy.

The alliance wants the government to enhance support for smaller grass-based family farms by increasing the amounts paid for planting trees and restoring peatland. It says this would ensure the scheme delivering its environmental aims.

Increasing payments for carbon sequestration from £17-24 to £75 per tonne of CO2 would help upland farms restore their incomes to 2019 levels by planting native, biodiverse woodland on half of their land, says the alliance.

‘Little benefit’

Green Alliance senior policy analyst Lydia Collas says: “After quite a bit of progress since 2016, we could now be left with a scheme that neither restores nature nor supports family farms.

“We need to act to avoid a system which ends up directing most of the money to the wealthiest farms – the reason ministers have criticised the old EU scheme. We could move to a greener system while helping hard-working upland farmers stay afloat.

“If the government targeted public money towards nature restoration on smaller farms on more marginal land, tackling climate change and restoring nature would cost the taxpayer less and have a lower impact on producing food.”

Following its Agriculture Act in 2020, the Westminster government decided to phase out EU-style Basic Payments in England by 2027 and move towards a system based on restoring nature and other public goods.

Payment rates

The Green Alliance says all types of farms could become economically viable through a mix of agricultural income and nature-based payments – if the payments matched the value attached to climate change mitigation elsewhere in the economy.

There is growing fear that farmers are shying away from the new ELMs scheme because payments are too low for environmental work – with some producers calling for a switch back to the old EU-style system.

Under the old scheme, arable farms making £100,000 from food production also received around £115,000 of subsidy simply for having land. But the bottom 20% of farms received just 2% of the total payment pot.

Even with basic payments and unpaid labour, upland grazing farms earned an average of just £12,700 in 2019. This research shows that rewarding these farmers properly for public goods could see their income rise to £34,525.