Credit where due

Financing a just transition to agroecology in the aftermath of Brexit

How we farm has a major impact on our health, our communities, our climate and nature. Today, our global food systems are responsible for a third of all human-caused greenhouse gases and have contributed to the destruction and degradation of our soil, water bodies and biodiversity. The way we farm has contributed to the UK being one of the most nature-depleted countries in the world. But UK agriculture is now at a crossroads. 2021 has marked the effective exit – meaning the phasing out of Direct Payments in England from 2021 to 2027 – from the European Union’s Common Agricultural Policy (CAP) and the arrival of the first Agricultural Bill in more than half a century. With this comes significant opportunities to transition towards the more ecologically and climate friendly food and farming system that is urgently needed to address the twin threats of climate change and biodiversity loss.

However, this post-Brexit transition also presents numerous uncertainties for British farming. Agricultural subsidy schemes will shift from guaranteed basic payments under CAP, which – in many cases – previously provided a majority of farm income, to a new regime focused on Environmental Land Management schemes (or ELMs). But the details of the new schemes are yet to be confirmed. Any major changes will risk disruption that could ripple through the food and farming system, just as the industry is already rocking from the impacts of Covid-19 and the current and future implications of the climate crisis.

Some farmers are gradually adopting nature-friendly farming practices such as agroecology – systems such as organic farming or regenerative agriculture that reduce or eliminate chemical inputs to improve soil and ecological health and work with nature – to mitigate the negative environmental impacts of agriculture. Agroecology provides distinct benefits for both natural ecosystems and economic wellbeing through improved soil carbon content, fewer greenhouse gas (GHG) emissions, enhanced biodiversity, restoration of degraded land, improved water and nutrient cycles, enhanced pollination, ecological pest and disease management, higher nutritional value of produce, higher and sustained year-round employment, shorter supply chains and an integration of traditional knowledge into farming practices.

Nonetheless, agroecology remains at the fringesof our food and farming systems. Less than 3% of farmland in the UK is currently certified organic. The key constraint to growth for agroecology remains access to finance, within which there are four key aspects:

  • The comparatively small size of agroecological farms, making them less attractive to conventional finance
  • Limited access to land owing to unequal ownership and a rise in land value
  • The dwindling size of publicly-owned farmland
  • The complex web of metrics and banking jargon that alienates new farmers interested in agroecology.

Addressing these barriers is vital in supporting a fair transition for current farmers and new entrants to nature-friendly farming. All forms of capital such as public and private debt and equity, philanthropic resources and other creative financial and fiscal instruments will be needed to support this agenda. We therefore make, among others, the following headline recommendations:

  1. Ensure ELMs offer specific incentives for a just transition to agroecology. The Department for Environment, Food & Rural Affairs (Defra) must include agroecological farming and a whole farm systems approach in ELMs to deliver a just transition for farmers. Farmers will initially require assistance to reduce environmentally harmful impacts (for example, emissions, chemical inputs or pollution) but should be supported to do so alongside transitioning into delivering positive outcomes (for example, increasing soil carbon).
  2. Set up an agroecological development bank. In alignment with the recommendation of the Food, Farming and Countryside Commission, we believe agroecology needs a bespoke, state backed investment bank to finance the transition at scale. However, there is also scope for the new National Infrastructure Bank (NIB) to perform that function if given an explicit agroecological purpose in legislation.
  3. Philanthropic and impact investors should pool their resources and direct their community grants to further support agroecological enterprises and foster knowledge exchange. As new opportunities emerge to procure land for ecosystem services, investors should back agroecological farming wherever feasible and support new entrants that can bring innovative, cooperative and community-based models to food and farming.

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