Farm payments and rural development funding if no Brexit deal

Posted in Infrastructure, mining and commodities

On 23 August 2018, the government published its first advice notices for industry on arrangements in the event of the UK leaving the EU without agreement. Whilst the government states that a ‘no deal’ scenario remains unlikely given the mutual interests of both parties, the advice notices ensure businesses are able to prepare for all eventualities.

In relation to the agricultural sector, the government has published two notices addressing both farm payments and rural development funding if the UK leaves the EU with no deal.

Farm payments

Financial support to some 12 million farmers across Europe comes from participation in the EU Common Agricultural Policy (CAP), through access to direct payments (Basic Payment Scheme) and funding for rural development projects. According to the UK government’s 25 Year Environment Plan, post-Brexit the UK will operate outside of the CAP which will be replaced by an environmental land management system based on “public money for public goods” - principally rewarding farmers’ work in enhancing the environment and investing in sustainable food production.

Until new agricultural policies are introduced through the Agriculture Bill (expected later this year), domestic legislation under the Withdrawal Act, which is currently being prepared by the Department for Environment, Food & Rural Affairs (Defra) and the devolved administrations, will preserve EU law as it currently stands.

If the UK leaves the EU in March 2019 with no agreement in place, in the short-term:

  • eligible beneficiaries will continue to receive payments under the terms of the UK government’s funding guarantee, requiring beneficiaries to conform to the same standards as they do currently; and
  • the same cash total as is currently provided in funds for farm support will continue until 2022, including all funding under Pillar 1 and 2 of the CAP.

Rural development funding

Currently, farmers, land managers and rural businesses in the UK are eligible for payments under EU Rural Development Programmes (RDP) funded under Pillar 2 of the CAP. RDP provides payments to those who manage their land in ways which benefit the environment, through better management of natural resources and adoption of climate-friendly farming practices. EUR 4,056 million of public money is available to the UK between 2014 and 2020.

In a no deal scenario, the government has guaranteed:

  • any projects for which funding has been agreed before the end of 2020 will be funded for their full lifetime; and
  • projects signed after March 2019 but before 2020 will receive funding up to the value of programme allocations.

In the immediate period after the UK leaves the EU, in a no deal scenario, there will be no substantive change to the agricultural industry. Payments and funding will continue in the short-term and change will only become apparent once new policies are introduced either through the Agriculture Bill in England, or new agricultural legislation in one or more of the devolved parliaments.

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