CAP reform - outline of scheme rules

Outline of the rules as at 22nd April 2004

What is the Single Payment Scheme?

• system of payments which no longer links to production
• a single annual payment instead of individual support payments
• the Scheme does not include payments made under the rural development programmes such as agri-environment schemes and the Hill Farm Allowance

Who is eligible to join the new Scheme?

• applicants must be farmers in the region concerned at the start of the Scheme in 2005
• a farmer is defined as an individual or group who or which exercises an agricultural activity on a holding situated within Community territory
• farmers must ensure that they have their eligible land at their disposal for a 10 month period still to be fixed but which could start at any time from 1st September 2004

Applying to the Single Payment Scheme

• in Spring 2004 RPA will contact all farmers who claimed support payments in the reference period. This contact will be to inform farmers of the crop area and livestock numbers that will be used to perform the historic part of the entitlement calculation and to resolve any outstanding queries. Therefore any farmers who have not received support payments but who will be eligible for the Single Payment must make themselves known to their local RPA immediately
• application forms to be issued early 2005
• precise entitlement allocations will not be known until all applications have been received and analysed
• payment for the first year of the Scheme will be made at some time between 1st December 2005 and 30th June 2006

Claiming payment – the usage rules

• entitlements must be activated by matching them with a corresponding number of eligible hectares
• entitlements not used for a period of three consecutive years will be withdrawn and returned to the national reserve
• for hectares to be counted as belonging to a holding in any calendar year, it must be available in a window of 10 months beginning on a date not earlier that 1st September of the year preceding the claim year

Trading of entitlements

• entitlements cannot be built up on the same eligible hectare
• land can be sold with or without entitlements
• entitlements can be leased only if they are accompanied by an equivalent number of eligible hectares. Transfers without land can only occur once at least 80% of entitlements have been claimed on, cumulatively, over a three year period
• set-aside and fruit & vegetable entitlements are transferable
• there may be a siphon on transfers, with amounts reverting to the national reserve
• entitlements allocated from the national reserve cannot be transferred for a period of 5 years from allocation

Conditions to be met in order to be eligible for the Single Payment

• set-aside – The rules here are still unclear. All eligible land (not just that claimed on) will be subject to the set-aside obligation. It is likely that the set-aside management requirements will be similar to those already in force with a number of changes
• good agricultural & environmental condition – This is a must for all farmers receiving the Single Payment. Details of requirements will be provided by DEFRA & ARAD to all farmers. This will include a broad requirement to maintain land in permanent pasture in 2003 as permanent pasture thereafter
• cross-compliance – Compliance with EU regulations covering a wide range of public, animal and plant health, environment and animal welfare issues. These conditions apply to all farmers, not just those receiving payment. However, for those receiving payment, failure to comply may result in substantial penalties or exclusion from the scheme for one or more calendar years
• Farm Advisory Service – will be set up to advise farmers on land and farm management including what is required to satisfy the above

How will the Single Payment be calculated?

• in England, a flat-rate area payment approach will be adopted. This means that the available funds in England are spread evenly across all eligible hectares in England
• a transitional period will be introduced between 2005 and 2012 to gradually bring in this area based scheme. During the transitional period, payments will be made up partly by a flat rate payment and partly by an amount based on subsidy claims made in the 3 year period 2000-2002 (historic payment)

What are the rates of payment?

• England will be split into 3 regions – those in Severely Disadvantaged Moorland areas, those in other Severely Disadvantaged Areas and all other land
• those in Severely Disadvantaged Moorland Areas can expect rates of around £20-£40 per hectare (£8-£16/acre), those in other Severely Disadvantaged Areas can expect rates of around £110-£130 (£44-£52/acre) and those in all other areas can expect rates of around £210-£230 per hectare (£85-£92/acre). These payments are BEFORE deductions and they are subject to fluctuations depending on the exchange rate
• these rates will be multiplied by the number of payment entitlements an individual has
• actual rates will depend on the funds available and the amount of land registered

Deductions from the Single Payment

• deductions will be made form the Single Payment for modulation, financial discipline and for the national reserve. The likely rates of deduction are as follows:

• no use or national envelope in England
• first 5,000 euros of each farmer’s direct payment exempt from EU modulation

How will the transitional period work?

• payments will comprise a percentage of the area payment rate together with a percentage of the historic payment. The percentages are as follows:

How is the number of payment entitlements determined?

• entitlements will be allocated to individuals according to the number of eligible hectares they have at their disposal in 2005. Eligible land is all land other than land used for permanent crops, forestry or non-agricultural activities

Dairy Premium

• as part of the reform of the EU dairy regime, dairy farmers will receive a direct payment in 2004 based on the amount of milk quota held on 31st March 2004. The dairy premium will become part of the Single Payment in 2005
• the dairy premium will be made up of 2/3rds premium and 1/3 additional ‘top-up’ payment, which could have been siphoned off and targeted elsewhere. The 2004 dairy premium is planned for payment in December but may be brought forward to mid-October
• from 2005 the dairy element of the Single Payment will not be linked to production. The amount of premium available will effectively be rolled into the historic element of a farmer’s Single Payment and this will depend on milk quota held on 31st March 2005
• rates: 2004 – 1.8ppl; 2005 – 2.4ppl
• milk quota to be increased by 1.5% phased in between 2006 to 2008.

Environmental Stewardship Scheme

This new scheme is now likely to start early in 2005. The Countryside Stewardship Scheme and the Environmentally Sensitive Area Scheme have now closed to new applicants. However, if you are already in these schemes, you may have a choice of either continuing or swapping to the new scheme.

There will be three levels of entry to the new scheme:

• Entry Level
• Higher Level
• Organic Entry level

Payment under the new scheme depends on scoring a target number of points awarded for achieving different management options.

Payment rates are planned at:

• Entry level £30/hectare/year (based on 30 points/hectare)
  The agreement will last for 5 years. Payment rates & targets will be lower for extensively grazed upland areas. The entry level scheme will be open to all.
• Higher level entry will depend on completion of a successful application and acceptance is not guaranteed. Higher level entry will be combined with the Entry level scheme and the combined agreement will normally last for 10years. The higher level scheme will concentrate on more complex types of management and payment rates will depend on the management options selected.

Additional information is currently available from DEFRA (also on their website).

Further details for potential applicants are expected to be available later this year.

Remember that the Single Farm Payment rules are still not finalised and much could still change between now and January 2005. It is important therefore to continue to monitor the developments of the Scheme. No action should be taken without first obtaining professional advice.

Other CAP Reform information:

Frequently asked questions

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