A sheep is standing on a grassy ridge, silhouetted against a yellow sunset.

In this guest blog, Senior Land Use Policy Officer, Andrew Midgley explains how the right kind of financial support for farmers is essential in tackling the climate and nature crisis.

Change, by its very nature, means doing things differently in order to achieve different results. It requires breaking with the status quo and forging new paths.

The Scottish Government has said it wants Scotland’s agriculture sector to change. In announcing its Vision for Agriculture in 2022 it said it would provide a ‘…support framework that delivers high quality food production, climate change mitigation and adaptation, and nature restoration.’

Asking farmers to do more to address climate change and restore nature on their land is, for some, one set of demands too far. There is however, growing recognition by farmers everywhere that climate change and nature loss are significant threats to food production itself. This year’s wet weather leaving crops under floodwater or last year’s droughts are recent examples of that. Without action, the very foundations of farming are undermined.

We understand these are challenging times for farmers and crofters in Scotland. It is why we have argued consistently that they need to be supported financially by government to deliver what is being asked of them. In fact, we think that the overall size of the UK funding pot for agriculture needs to increase and that Scotland should receive a larger share than it does now based on the contribution Scottish land managers can make on the climate and nature fronts. We also recognise there has to be transition and no cliff-edges. But without change, without doing some things differently, it will be difficult to make progress. This means increasing the levels of financial support for nature and climate friendly farming.

A farmer walking by a stone wall alongside a sheep and black collie dog.

Image credit: Edward Makin

How is the Scottish Government doing so far in changing farming policy?

A few weeks ago, the First Minister told farmers that the Scottish Government intends to spend the vast majority (at least 70%) of the public money it invests in farming in very similar ways as now. This is through a system of payments – known as direct payments – that, according to the government’s own analysis, are not very effective. A recent document shows that direct payments are not targeted or means tested; they tend to reduce innovation, structural development, and productivity growth; and they deliver little environmental benefit (see Annex A of that paper).

On the face of it, this doesn’t sound much like change, but it is worth digging a bit deeper into this headline to understand where we might be heading.

Some context might be useful. The government currently spends about 80% of the farm budget on direct payments (in the 2023-24 budget year this was £485M on direct payments). These are payments that farmers receive related to the area of land they farm with relatively few strings attached. They are provided to support, and avoid major change, in the farming industry. On top of this there is very similar support for farming in more challenging areas (Less Favoured Areas), which amounts to £65M.

With such a large proportion of the budget devoted to direct payments, a shockingly small amount of funding is left for schemes that support farmers to take environmental action (so called agri-environment schemes), or for advice, knowledge exchange etc. A recent agri-environment announcement revealed that only £7M was devoted to new projects this year at a time when the government says it wants to support farmers and crofters to address the climate and nature crisis.


What do we think about the First Minister’s funding announcement?

Looking positively, it suggests a small step in the right direction by devoting only 70% to direct payments (as opposed to 80% now) and potentially freeing up a little more for other things like nature and climate action. But, it remains far too close to the status quo. The consequence is that agri-environment schemes, which we know can deliver great results, will remain underfunded, as do advisory services, innovation and supply change support, training and knowledge exchange – all things that we know are needed more than ever.

A Corn Bunting is perched on a line of barbed wire. It is a small, brown bird with a pale breast and dark, mottled patches.

Image credit: Tom Marshall

How does the government intend to balance this decision to retain direct payments with its commitment to address the climate and nature crisis?

The answer it suggests is that future direct payments will need to be different to those of today and farmers will need to do much more for nature and climate in return for this funding.

In future, the government proposes that the 70% funding will be devoted to two different sorts of payment: a Base Direct Payment (Tier 1) and an Enhanced Direct Payment (Tier 2). More information on this new structure can be found here. Tier 2 is being framed as ‘enhanced conditionality’ which translates as added requirements that farmers have to do as a condition of receiving direct support.

This is how the government is proposing to make future direct payments deliver better outcomes and value for money than they do now. It has published a list of the sorts of measures or actions farmers might have to undertake in return for payments. This includes positive things like bird friendly cropping, having wider field margins, beetle banks, wild bird cover, forage brassica for wild birds, pollinator strips and margins, species diverse grass strips and margins and so on. The list can be found here. While it is important to note that recent research emphasises that proper agri-environment schemes deliver better results than this sort of ‘entry-level’ action, these measures could yield benefits for nature if applied in the right places and at sufficient scale.

But will they? There are some big unresolved issues. We know from similar approaches taken in other places that this sort of scheme can underperform depending on how it is designed. If applicants have complete freedom to choose what they do from a list of options, the best options for nature are not always selected. The most popular measures chosen are often those that require least change for farm businesses. While perhaps understandable from a farmer’s perspective, this limits positive outcomes, especially for nature.

With so many unknowns at this stage, it is extremely difficult to determine whether the new policy will be better or worse for nature. What is clear is that there is now significant pressure on Tier 2 to deliver for climate and nature. If it doesn’t, it’s difficult to see how the government will achieve its statutory climate targets or meet its commitments to halt the loss of nature.


Header image credit: James Duncan