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In the rush to net zero, we can’t forget the role of farming

A new report sets out how to incentivise farmers to promote biodiversity.

By Ned Hammond

Environmental debates are often dominated by how to reach net zero through expanding renewables and decarbonising industry. Less discussed, but just as urgent, is restoring nature.

The UK has the dubious record of having the worst biodiversity in the G7. The trajectory of many wildlife populations remains negative. But the Environment Act 2021 promised to end the downward slide with a target to halt nature’s decline by 2030.

This presents a significant challenge for the next government, and particularly for Labour, a party that’s pitching strongly for climate leadership, with plans to decarbonise the power system by 2030 and invest up to £28bn per year on a green prosperity plan.

But Labour lags far behind the Conservatives on nature. Alongside stemming biodiversity decline, the government has set multiple, ambitious targets – including giving everyone access to nature within 15 minutes of their home. It is also transitioning farm subsidies from payments for land to payments for nature-friendly actions under the Environmental Land Management schemes (Elms), although their implementation has caused some concern among farmers.

Farming communities will have a major influence over halting nature’s decline. Farms cover 70 per cent of all land in the UK, and intensive agriculture has been one of the biggest drivers of biodiversity loss. But by transitioning to regenerative agriculture practices and carrying out nature restoration projects, farmers can create habitats for wildlife, enabling biodiversity to flourish.

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Farming’s financial difficulties, however, mean the next government will have its work cut out to bring them on board. Onward’s recent report, “Greener Pastures“, finds that more than two fifths of farms make less than £25,000 in profit each year and 15 per cent make a loss. Supermarkets and large food manufacturers squeeze farmers on price and change their orders at the last minute, creating uncertainty over production. Farmers are also struggling to cope with climate change. Droughts in the UK caused wheat yields to collapse by 40 per cent in 2020, and hundreds of tonnes of vegetables were lost to floods in recent months.

The next government must resolve a three-pronged battle over farming’s future to stop nature’s decline by 2030. It will need to simultaneously help farmers go green while boosting their rock-bottom profits and keeping affordable food on shelves.

Labour’s proposed “new deal for farmers” is a good starting point. A veterinary agreement with the EU will reverse some of the recent decline in the UK’s agri-food exports. The launch of a flood resilience taskforce would reduce farms’ vulnerability to climate change. Procuring more British food through public bodies, supplying cheaper power, and accelerating grid connections for farmers are worthy ambitions too.

But the deal sidesteps some critical issues. It ignores farmers’ frustrations with Elms, which are neither simple nor generous enough to encourage sufficient participation. And it fails to address how it would stop supermarkets treating farmers unfairly, despite the party committing to doing so. If Labour wants to win round rural communities at the election, it must provide farmers with a profitable route to go green while keeping food prices low.

The next government’s starting point should be to commit to Onward’s five-point plan to reform Elms to better reward environmentally ambitious farmers and make it easier to enter schemes. Rewards can be improved by offering bonuses to farmers that carry out environmental actions on most of their land and extending agricultural inheritance tax exemptions to farmers that undertake nature restoration projects.

Entering schemes can be simplified by improving the Rural Payments Agency’s IT systems and recruiting third-party organisations to deliver more agreements with farmers for the most nature-enhancing schemes. Creating a whole-farm subsidy for regenerative agriculture would provide more flexibility to farmers that want to transition.

As well as boosting nature and increasing farmers’ financial return, these measures would improve food security by enabling the land to better cope with extreme weather. The next government should also look to rebalance the relationship between farmers and their biggest customers. One approach to improve certainty for farmers is to require supermarkets and large food manufacturers to offer longer contracts, with quarterly price and volume agreements. But reducing order flexibility may affect their margins, with knock-on consequences for prices on shelves. Before implementing permanent regulatory change, a trial programme should be run to assess whether any impact on household costs outweighs the benefits to farmers.

Another route to thawing tensions is through the Groceries Code Adjudicator. Since its inception a decade ago, the regulator has improved relations between supermarkets and direct suppliers. Extending its remit to the full supply chain would also limit farmers being mistreated by intermediaries, such as food manufacturers and wholesalers. Giving it the powers to launch its own investigations would enable problems to be found where suppliers feel unable to speak up.

By rewarding the most environmentally ambitious actions to drive biodiversity gain, repairing the relationship between farmers and supermarkets, and improving food security to guard against rampant inflation, both parties can make a serious pitch to rural communities at the election.

Read the full “Greener Pastures” report from Onward.

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