The Rural Payments Agency (RPA) has narrowly met its target of delivering the majority of Basic Payment Scheme (BPS) payments in England by the end of December.
But the agency has achieved its target by focusing on smaller claims and, despite more than half of claimants now having received their money, it has paid out less than 30 per cent of the estimated BPS fund in England.
The RPA announced on Monday 44,400 farmers, just under 51 of all claimants who are eligible for BPS 2015, had now been paid.
But the money delivered so far amounted to just under £425 million of an estimated fund, according to NFU, of £1.45 billion, leaving about £1bn still to be paid out.
Defra Secretary Elizabeth Truss said: “I can confirm the RPA has met its commitment to pay the majority of eligible claims in December and remains on track to pay the vast majority of claims by the end of January.
“We understand the importance of these payments to our hard-working farmers and the RPA will continue to work flat out to ensure the agency meets its commitment to pay the remaining claims as quickly as possible.”
But NFU vice president Guy Smith was critical of the RPA’s performance, highlighting the relatively low proportion of money paid out.
He pointed out payments delivered so far were worth, on average £10,000, while those still to be delivered - £1bn to 43,500 claimants - were worth on average in excess of £20,000.
He said: "The RPA has confirmed there is almost exactly £1bn – 70 per cent of the fund - left to go out to 44,000 BPS claimants.
“Many rural businesses, not just farmers, are desperately waiting for this money.
“Additionally there is the impact this will be having on overdrafts; £1 billion at an average borrowing rate of 3.3 per cent equates to over £90,000 in interest every day being sucked out of the rural economy."
NFU President Meurig Raymond said the RPA’s ‘bare minimum’ approach did not bode well for its ‘vast majority’ promise by the end of January.
“The NFU will keep up the pressure on Defra and the RPA to be transparent in its progress announcements and is stressing the importance of having sufficient resource to get the payments out to farmers in the coming weeks," he said.
“Farmers must have certainty of when they are going to be paid and this will give them the confidence they need to be able to run their businesses as normally as possible until they receive that crucial payment.”
An NFU survey in December showed only about a quarter of NFU members, who typically represent larger farmers, had been paid, way below the RPA figure at the time of in excess of 40 per cent.
Commenting on his blog before Christmas, Mr Smith wrote: "It’s clear that the vast majority of the payments going out are in the sub £10,000 bracket.
"Obviously we are not saying payments to small farmers are not important but what we are very conscious of is the fact that our survey of NFU members shows that nothing like half have been paid."
He said about 20,000 claimants, out of a total claimant population of around 87,000, had now been sent letters telling them they are ’unlikely to be paid by the end of January’, a figure he described as ’alarming’ and ’unsettling’.
He said: "In rough terms these letters seem to have gone out to a number of groups, those being anyone with a common or a cross border claim; anyone who has had an inspection irrespective of whether there was any problem or whether the farmer knew they were being inspected; anyone who has a ’complex claim’ meaning if your claim is over 300 hectares you are probably in this complex category.
"The other worrying thing is there seems no clear idea when this 20,000 will be paid.
"And logic tells you this group will probably represent a third of the money.
"So do we think (RPA chief executive Mark) Grimshaw is going to hit his vast majority target by the end if January?
"No we don’t but we are open to being pleasantly surprised."
The RPA said more complex claims would take longer to process and were therefore likely to take longer to pay, as they did under the Single Payment Scheme.
The agency said it would provide an update to those claimants who were unlikely to be paid by the end of January and an estimate as to when they will be paid to help them manage their cash flow.
Country Land and Business Association (CLA) president Ross Murray said: “It is crucial that the RPA speeds up all outstanding payments.
"If it proves impossible to pay some businesses before end of January, they must be completely clear about the process and timeframe in which they will be paid.
"We will continue to do all we can to help the RPA to ensure that applications are processed as swiftly as possible.”
In addition the Forestry Commission (FC) has also paid out over a third of capital payments, totalling £8million to woodland owners to protect, improve and expand woodlands in England.
FC has also paid out 32 per cent of valid annual claims worth just under £3m, and work is ongoing to pay outstanding valid annual claims as soon as possible.
The 2016 version of ‘The guide to cross compliance in England’ is now available on the Government website.
This guidance applies from January 1 and farmers are urged to familiarise themselves with it to make sure they know which rules apply to their holding.
RPA has also sent a leaflet to offline farmers, to explain what’s changed in the cross compliance guidance since last year.
See details of cross compliance changes for BPS 2016 in England here