Following the UK’s departure from the EU and its common agricultural policy (a system of farm subsidies and other programmes), the government is introducing the most significant changes since the 1940s in how it supports farmers financially. 

This Insight explains the changes, which aim to support food production and improve the environment, and how they have been received by farmers, environmental groups and political parties at a time of rising pressures on farm costs and consumer budgets.  

Agriculture is a devolved issue and this Insight does not discuss future support plans for Scotland, Wales and Northern Ireland. 

How is public funding for farmers in England changing? 

Under the Agriculture Act 2020, a new farm support policy is being rolled out in England between 2021 to 2027 to replace previous support under the common agricultural policy. A key part of this pays farmers for providing ‘public goods’ such as environmental improvements rather than paying them for farming an area of land as under the common agricultural policy. There are three main tiers of Environmental Land Management schemes in the new policy: 

  • the Sustainable Farming Incentive (SFI) pays farmers to adopt and maintain sustainable farming practices that can protect and enhance the natural environment alongside food production. Examples include improving soil quality or planting hedgerows. 
  • Countryside Stewardship pays for more targeted actions relating to specific locations, features and habitats, with an extra incentive through ‘Countryside Stewardship Plus’ for land managers to join up action across local areas. 
  • Landscape Recovery pays for bespoke, longer-term, larger scale projects to enhance the natural environment. 

Separately, the government is providing grants to improve farm productivity, innovation, and research and development, as well grants to improve animal health and welfare. 

The government is closing the previous area-based ‘direct payments’ scheme, which pays farmers based on the amount of land they farm. It intends to phase out these payments completely by 2027. These direct payments made up more than 80% of government support for farmers under the common agricultural policy; the rest was paid mainly to support rural development and agri-environmental schemes. 

How much is spent to support farms? 

The government has committed to maintaining the overall farm support budget during the 2019–24 Parliament at the same amount as was spent under the common agricultural policy: around £2.4 billion a year.  

In 2022/23, spending on farm support in England was around £2.33 billion. The Environment Secretary Steve Barclay said in March 2024 that support scheme underspends from the last two years would be used to increase the 2024/25 farm budget by £400 million from the 2020/21 level. 

The proportion of the farm support budget spent on direct payments is decreasing in stages until these types of payments are phased out entirely by the end of 2027. Only 30% of the 2024/25 farm budget is ear-marked for direct payments, with most of the remainder to be spent on environmental, animal welfare and climate schemes on farms (such as the Environmental Land Management schemes mentioned above). 

What do farmers and environmental groups think about new farm support policies? 

Farmers and environmental groups supported the Agriculture Act 2020’s broad aims of paying farmers to improve the environment.  

The National Farmers’ Union (NFU) welcomed the Act’s recognition that “food production and caring for the environment go hand-in-hand”. However, Minette Batters, the previous NFU President said in February 2024 that growing food should be given as much support as environmental work as these were “two sides of the same coin”. 

The NFU’s 2024 General Election manifesto called for food production and food security to be given priority, adding that politicians cannot “ignore our own food production capabilities and simply import the food we need from other countries”. In May 2024, the NFU called for a halt to cuts to direct farm payments in 2024 because global food price volatility, climate change pressures and labour shortages had led to a “crisis of confidence” among farmers. 

Environmental groups have largely supported the new approaches to farm support policies. For example, the Wildlife Trusts (an association of wildlife charities) supported the concept of public money for public goods. It said that as long as schemes were ambitious and well implemented, they could be “transformational”, creating a “nature positive” agriculture sector which can produce the food the country needs while helping to recover species and mitigate the effects of climate change. 

How do the changes aim to balance food production and the environment? 

Under the new approaches, the government has committed to the UK continuing to produce at least 60% of its food. It said that schemes will “boost sustainable food production while delivering positive outcomes for the environment”. 

However, following concerns about farmers taking land out of food production to pursue payments for environmental outcomes, the government announced in March 2024 that it would place limits on the area of land that farmers could assign to some environmental actions in the Sustainable Farming Incentive (SFI). For example, providing flower-rich grass margins or growing winter bird food.  

About 1% of those who applied for SFI payments in 2023 entered 80% or more of their farm into actions that involved taking land out of food production, and the government thought this went further than necessary. It placed area limits on those SFI actions which were “unlikely to deliver their intended aims” if undertaken on more than 25% of a farm’s area.  

The Country Land and Business Association (CLA) said that the cap could delay reaching the target of getting 70% of farms in land management schemes, “hindering our ability to produce food while protecting the planet.” However, the National Farmers’ Union (NFU) welcomed the change because it “sets out to achieve a greater balance” between supporting food production alongside protecting and enhancing the environment. 

What do political parties say about farming and the environment? 

The main political parties in England have said they would support farmers both to grow food and to protect the environment. 

The Labour party’s 2023 National Policy Forum document (PDF) said that “farming and environmental protection are complementary priorities and Labour will ensure both are supported”. It also pledged that a Labour government would “ensure more home-grown sustainable food is bought, made and sold, supporting farmers across the country through public procurement targets”. The party criticised underspends in farm budgets of £110 million in 2021/22 and £117 million in 2022/23 and pledged to “free up the missing funding for farmers and make it easier to receive money from environment schemes”. 

The Liberal Democrats would reform the Environmental Land Management scheme and other farm support schemes to “support farmers’ critical role in delivering public goods… while producing sustainable food”. The party would ensure that more than 60% of farmers would receive a “greater financial return” than now. The party called for an additional £1 billion a year in farming support, considering that many of the new payments were “unlikely to cover the cost of delivering the ‘public good’ prescribed”.  

Neither Labour nor the Conservative parties have yet set out how much farm support they would pay in the longer term.  

About the author: Sarah Coe is a researcher at the Commons Library specialising in agriculture.