Basic payment system will replace single payment in 2015
Direct payments to farmers will remain in place following the agreement on CAP reform in Brussels last month but larger farms could see their claims reduced.
As well as compulsory degressivity, member states will also be allowed to switch up to 15 per cent of direct agricultural subsidies into rural development funding.
The new Basic payment system will replace the Single Payment Scheme (SPS) in 2015. To claim, farmers will need to have entitlements which must be matched against eligible hectares.
As expected, direct payments over 150,000 euros (£125,610 at the rate prevailing on September 30) will be compulsory reduced – or degressed in EU-speak – by at least five per cent (after salary costs).
It is likely that in England existing SPS entitlements will be converted into BPS entitlements for January 1, 2015. Payments will be calculated as a flat rate per entitlement, rather than linked to the level of agricultural production.
Excess entitlements could be confiscated or recalculated so CAP reform experts at business consultants Andersons suggest that farmers should check that they have their entitlements in place well before the end of 2014.
The worry is that there could be scramble for entitlements at the end of 2014. It takes six weeks for the RPA to process entitlement transfers which means farmers must allow a big enough window for the transfer to be in place before the cut-off date in December 2014 .
In Wales and Scotland, countries currently on the historic payment system, there will be a completely new grant of entitlements based on land occupied in 2015 (not 2014) . The grant will only be paid to those receiving a SPS payment in 2013.
The important thing here according to Andersons is not to make business changes such as partnerships to companies until more detail is known.
One of the most important changes is that 30 per cent of the direct payment will be dependent on meeting certain 'greening' requirements – described as 'agricultural practices beneficial for the climate and environment'. There will be three measures – crop diversification, permanent pasture and ecological focus area.
To receive direct payments farmers must meet a new 'active farmer' test. There will be a simple 'negative' list of entities not eligible for BPS such as operators of airports, water companies, railways, real estate service and sports grounds. You may be able to claim if you can prove a bona fide farming activity. The trouble is you may not find out you aren't eligible until it's too late to do anything about it.
There will be a top up scheme to help young farmers (under 40 years old).
