When Britain left the EU, and with it, the Common Agricultural Policy (CAP) that had been in place for 47 years, Mark Wycherley is exactly the kind of farmer who should have benefited.

He is a seventh-generation dairy farmer who has been organic since 1997, produces antibiotic-free milk, and “likes the feeling of working with nature, not trying to beat it”.

After decades of CAP and the much-criticised Basic Payment Scheme (BPS), which prioritised big landowners and intensive farming over environmental stewardship, Brexit was seen as an opportunity to rewrite the rules.

A new payment system for farmers should have rewarded Wycherly. Instead, he says, he stands to lose half his income.

“A lot of the new payments are more favourable to my way of farming; more environmental, lower intensity,” he says. “But it’s only going to cover about half the money I was getting under the old scheme…and I will also probably have had my margins squeezed even more on the food I’m producing.”

Labour shortages and rising costs have already hammered British farmers, but this latest change is putting the future of many farms in doubt.

Subsidies were first introduced in the UK after the Second World War. Amid concerns over the supply of food from the Continent, farmers were offered an assured market and guaranteed prices for their produce – ensuring a stable supply of affordable, homegrown food. 

Countries in the EC introduced the CAP in 1962, and when the UK joined the EC in 1973, it joined CAP, too. The scheme, famously, encouraged overproduction, leading to wine lakes and butter mountains. But there were other victims of the subsidy scheme; namely, the waterways full of fertiliser, the meadows turned over to intensive farming, and the trees and hedgerows ripped up to make fields larger and easier to work.

To counter this, the payments were re-nosed by the EU and the BPS was introduced in 2015 to encourage farmers to improve the environment. Even after Brexit, the onus of the Government’s replacement scheme was on farmers working for the good of the public and the land.

Which is precisely why farmers such as Wycherly, who put nature front and centre, should be looking ahead to this new farming settlement with relish. But that’s not the case.

Along with his wife, Wycherly farms roughly 250 acres of land each year. Under CAP, he received about £100 per acre just for being an active farmer, and this provided a valuable buffer.

Now, this payment is being phased out and will be reduced to zero by 2027. This decrease in income has coincided with his first case of bovine TB, which means affected animals must be slaughtered.

“I’ve got the second [TB] test next week, and that might decide my dairy future,” he says. If his cattle are affected, there is no incentive to continue dairy farming – he would now get the same payments to “grass it all down, take a subsidy payment off it twice a year for leaving it to nature, and get a job in Asda.”

In the biggest overhaul of farming for generations, a new post-Brexit scheme for Environmental Land Management was unveiled in 2020, which pays farmers to improve nature rather than just for owning and farming land.

“We’re about halfway through the transition to the new scheme, and there are probably more [income streams] coming in the future that I can tap into,” says Wycherly. However, before Brexit, “direct payments” from the EU based on acreage comprised 60 per cent of farm net income.

“The old CAP payments have been reducing for two or three years now, so most farmers are on about half their previous level, and that will continue to phase out,” says David Exwood, vice-president of the National Farmers Union (NFU).

“That money was a guaranteed source of income they could rely on… regardless of any market conditions or weather. It provided stability and underpinned what they did as a business. Now that’s disappearing. There are new schemes that farmers can enter, but they’re all conditional [rather than universal].”

For the 2023 Sustainable Farming Incentive (SFI) agreement, which Wycherley is part of, these include producing a soil-management plan at £5.80 per hectare, maintaining or establishing hedgerows (£10 per 100 metres), providing winter bird food on arable or horticultural land (£732 per hectare) and adding grass buffer strips to farmland (£451 per hectare).

“The idea of SFI is that it can sit around your profitable food production. It just encourages you to do it in a more sustainable way,” says Exwood. But many farmers feel the new plans don’t do enough to incentivise farmers to actually produce food. Many others feel they are being undercut.

“Most of the money we currently get, or have been getting – it’s likely we’re not going to be able to draw that amount in the future without producing a lot less food,” says Wycherly.

This is the central contradiction: EU legislation gave smaller farmers a raw deal, but the new rules reward farmers for everything other than their main source of income creation: growing things and actually putting food on the table.

Wycherly agrees with the principle that public money should be spent on providing public goods. “If we’re going to take public money, we do need to give something back that is tangible,” he says. “But it’s not going to be enough income for me and the market doesn’t want to pay us anything different; they’re not prepared to pay more for less food.

“My costs are up 30 per cent this year and they haven’t come down – so with my income dropping, I have to be smart. I will have to sign up to a lot more [actions] to get the cashflow I need to still be a food producer, but I’m getting to the stage where I think, ‘Is it worth it?’ I don’t have a fair opportunity to make a decent living out of this and look after the countryside.”

Last year, subsidies were cut by an average of 22 per cent, yet payments made under the new SFI equated to only 0.44 per cent of the total funding plan for farmers, leaving them asking where the money is going, according to figures obtained under the Freedom of Information Act and published in The Observer.

Jake Fiennes, the conservationist, from the Holkham Estate, Norfolk, said the farm’s subsidies were cut by about 45 per cent.

A spokesman at the Department for Environment, Food and Rural Affairs said: “Our farming schemes are supporting farmers to produce high-quality food and deliver for the environment. The EU’s bureaucratic Common Agricultural Policy disproportionately rewarded the largest landowners and held back smaller farmers while delivering little for food productivity or the environment.

“As direct payments are reduced, every single penny is being reinvested into our new schemes, which are tailored to the specific interests of British farmers and are already proving popular among every type of farm across the country.”

Exwood also points out that the new environmental schemes are, ironically, less of an incentive for those who already farm sustainably. “Some farmers can replace their last Basic Payment Scheme income easier than others,” he says.

“For example, if you’re in the uplands, you’re in a Higher Level Stewardship agreement. So you’re in a higher tier [and] doing good things for the environment already – you can’t do more, because you’re already doing it in order to be being paid for it.

“It’s good that it’s incentivising people to farm more sustainably. But the challenge is that it can, by default, mean that those who are already doing it – it’s hard for them to do even more.”