How should money from private sources be incorporated into ELM?

One of the objectives of Dartmoor's ELM Test & Trial was to explore how private finance might be incorporated into ELM. We wanted to gain an understanding of what outcomes funders were most interested in supporting, what model would support farmers within a landscape to attract funding and the advice and facilitation farmers would need.

We had some initial conversations with the Advisory Team about how to approach private finance last year. There was a lot of uncertainty about the best way forward and it was determined that running through a practical example and extracting the learning would be the best approach.

So, we've been working with the Postbridge Cluster group to do exactly that. The group represents about 1o holdings and has been in existence for a couple of years, with support from the Dartmoor Hill Farm Project. They've put together a landscape vision across their holdings which we took out to a range of funders to see what offers would come back.

We then got together with the Postbridge group to look at the offers and what they' learnt from this process about how farmers can best be supported to engage with private finance. Here are the notes from that workshop:

Summary of first impressions of funding offers:

• As tenants we think landlord may not want to part with carbon credits

• No natural regen support is disappointing

• We can use this as match

• Entering land use change on land registry can be an issue with both landlords and mortgage providers

• Very capital orientated rather than revenue

• Doesn’t cover all the money to create it, so you still have to pay and then you don’t’ get revenue

• As a landowner you might get an asset but as a tenant there’s less value

• Accepting of blended finance as a necessity going forward

How could ELM incorporate money from other sources?

Barriers:

• Tax – if private support involves a higher rate of tax in comparison to stewardship support.

• Legislation e.g. you need to be able to manage changes you make on going [i.e. you may not want to introduce something if you’re than stuck with it, unable to change it, forever]

• How much risk can you take when receiving money up front for things like Biodiversity Net Gain

• Concern about impact of longer-term commitments when farm changes over

• Concern about subjectivity in assessment of delivery

• Climate change impacts are a concern for long term commitments

• Ethics around some options, like Biodiversity Net Gain, are questionable

• Concern about private finance going primarily to Landscape Recovery – could be positive or elitist?

• Tenure of agreement is important, particularly if tenant

• Excessive auditing

• Race to the bottom with other farmers, being undercut by a few could destroy whole model

• That you may need to retain carbon if we’re required to off-set our own emissions at some point

• Solving a carbon problem is limited window – only so many trees can be planted but more carbon is constantly being generated

• Too many different codes and systems e.g. carbon for soil, peat, trees

What would help?

• Put tick box on ELM form to enable trading carbon credits

• Central register of providers with track record and acceptable to Defra. Maybe with a ‘Trust Pilot’ style rating system

• Local, free, advisor specializing in blended finance

• Easy to use evaluation model [to assess credit potential] which is universally used

• Green loans – tenants can’t afford to fund works up front, it can have a significant impact on farm business cash flow

• Particularly short-term quick stuff or big projects such as peat restoration

• Rolling windows for funding applications

• Private finance used as challenge fund for small scale innovation e.g. to diversify business into peat restoration

• How do you de-risk commitments for land managers?

• How do you make sure all money doesn’t go on agents and consultants?

• Who owns the natural capital in landlord/tenant relationship?

• ELM needs to have a trajectory of change which sets out steps to improvement

• Happier if govt. paying revenue as, hopefully, they’re less likely to go out of business

• Bonus payments welcome from anyone

• Happier to see capital works covered by private companies and revenue covered by Defra

• Feel more comfortable with capital and works, on reasonable time frames, as long as revenue to maintain what’s present remains consistently covered by Defra

• Defra funding could cover value of carbon credits and then they can off-set UK emissions or trade as they wish

• Defra as market of last resort – if you can’t sell it they’ll buy it for those who don’t want to risk facing market place as an option to check on a form

• Payment for maintenance of features e.g. if one org funds works, one pays on going maintenance

• Insurance scheme to protect farmers if companies go bust

• Avoid confusion between statutory and voluntary obligations – if Defra dictate what happens they should pay because their terms and conditions could restrict what private finance might deliver

• Private finance bidding to pay, rather than farmers competing to be paid, like ebay

• To sell collaboratively but there needs to be a process where agreements are with individual holdings

• National and local initiatives or national schemes with local interpretation

• National emissions trading scheme, matched against national carbon scheme, would keep supply and demand together

• Role of facilitation in encouraging collaboration:

What has worked for you?

• Wouldn’t happen without facilitator you can trust and feel confident in

• Humour

• Trust and confidence between members

• Food bribery

• Individuals with similar mind set came together, rather than based on geography, with shared aims and aspirations

• New members require unanimous approval

• Came together originally looking specifically at butterflies, good to start focussed on one thing

• Share knowledge

• Selecting the right focus at each point in time – self-steered

• Maintaining independence of each holding

• Team feel / being able to pick and choose members / not stuck with ‘Bob’ [invented code word for challenging individual], if you have a ‘Bob’ they can have a lot of power

• Skills, knowledge and perseverance of facilitator

• 2 days a week of support time

• Really good speakers

• Recycle money and resource within cluster

• Genuine commitment and ownership for the long term

Is there anything you would do differently?

• Go further afield [to see what other people are doing] would be helpful and it would be helpful if that was funded

• To host other groups coming to us and fund hosting them

• Start with an advisor with more time, that may tail off but they’re still there

• Facilitator support groups in the same region to join dots and share learning

• Can ELM provide higher payments for those collaborating at scale?

Has working in this group, on this plan, changed you?

• Complete change in mindset, from livestock production to broader range

• Not just thinking about your holding in isolation

• Personal development, you always come away having learnt something

• Appreciating the diversity of our farms

• Provides space and confidence to step back and appraise your business

• Don’t feel alone, can take confidence from learning/changing with others