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CAP reform - Ask the Experts

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The new Common Agricultural Policy, which comes into effect in just a few months’ time, was meant to be a simplified, streamlined version of what went before.

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In reality, it is the opposite.

 

With greening at its heart, the new CAP includes new criteria for qualifying for payments, new rules governing entitlements, a transition to area payments in parts of the UK and new schemes and brand new rural development programmes.

 

There is added complexity and a whole new set of rules, which every farm business needs to familiarise itself with.

  • Here is our Q&A about how the new policy will work in England.

But I still have questions…

If you have any more specific questions about how CAP reform will affect your business in England, we have gathered together a Panel of Expertsto provide the answers.

 

Simply submit your question using the comment facility at the bottom of this page or email it to Alistair.Driver@farmersguardian.com

 

We will put it to the panel and one of them will answer your question.

CAP reform: Your questions answered

New entrant

 

Jane Harding asked via email: “We have purchased 20 acres and registered have CPH and SBI numbers sorted to start farming. This commenced in may this year, and we are still in the proceeds of setting everything up. The land did not come with SPS entitlements, and

 

I am just about to submit land to be registered/ mapped with the RPA. I want to get entitlements for the new BPS scheme, but I have read some comments stating if your land was not previously registered for SPS we would not qualify under the new scheme. Please can you clarify our position?

 

“I also tried to purchase entitlements, but was told by the trader our land had to be mapped with the RPA prior to purchasing, but I am now worried that due to the time frame that it takes for the RPA to map the land we will miss out on purchasing entitlements. Do you know where we stand on this?

 

“I have also read that there is a national reserve for new entrants, but can find no further information on this, again are you able to help with any further information?”

 

Julie Robinson, from Roythornes, replied: Assuming you are farming in England…

 

If you have an SBI number you can buy entitlements and have them transferred to you. The RPA’s transfer form does not ask for details of your RLR field Nos. and, although there is a space for your CPH No., this does not have to be completed if no land is being transferred with the entitlements. In order to make a claim next year you need to have land at your disposal to match your entitlements and, yes, this land does need to be on the rural land register, but that is a separate matter from the entitlement transfer question.

 

However, if you qualify as a young farmer under the Basic Payment Scheme rules, going out and buying entitlements now may be shooting the gun. You have not given your age or said whether you are in partnership (I am assuming that the ‘we’ in your question means you have bought with someone else). We are still awaiting details of how the national reserve will operate and how and when people can apply, but on the face of it, as a new entrant, you will have first dibs on entitlements from the reserve. It is a difficult call – buy some entitlements on the market now and be sure you have them or apply to the national reserve and wait to see if you are allocated some. You can always buy some later but you will have missed out on a year’s payment.

 

Once you have entitlements – whether from the national reserve or out of your own pocket - you will be entitled to the young farmer payment (provided you are 40 or younger in the first year you apply, are an active farmer and in control (or joint control) of your farm).

 

You apply for the young farmer payment every year (for up to 5 years) as part of your application to the Basic Payment Scheme.

 

Richard Wordsworth, the NFU’s senior adviser (Basic Payment Scheme/Single Payment Scheme), added: Under SPS, the land has to be registered on the RLR database to 1) ascertain the boundary and 2) the eligible area for the field.  Once this is done, then I cannot see any reason why if the field is eligible that an eligible claim cannot be made.  Of course the farmer needs to read the BPS eligibility rules when they come out.

 

RPA service standards are to respond to mapping request within 6 weeks.  The sooner the mapping gets done the better.  Clearly in order to obtain entitlements you need (currently) an SBI number / registered with the RPA etc, not sure you need the land at that stage?

 

More information about the national rerserve will be in the next CAP leaflet due out before the end of October

 

fallow land classification

Babette Tegldal asked, via email: “Given this new focus on fallow land, I would be interested in renting some fallow land from a local farmer, increasing the amount of wildflowers on that acerage and then using the land for

 

1) ‘Glamping’ in the form of some shepherd huts on the land

 

AND/OR (so please answer both!)

 

2) An eco wedding venue - where people would pay for access to the land and erect a marquee etc

 

Would the land still be able to be classed by the farmer as ‘fallow’ in the above 2 scenarios? Any tips on if planning permissions etc needed would also be helpful!”

 

Phil Bicknell, from the NFU, responded: I think the bigger question here is that this could be considered as land for non-agricultural purposes and therefore not be eligible for a claim.

 

The SPS Handbook 2013 already sets out the non-agricultural activities permitted when claiming for SPS under 3 different categories. I’d expect you’d want to have structures on the land for more than 28 days, which would likely mean that the land cannot be claimed.

 

Although we don’t yet have the detail, I’d expect these categories to roll forward and for the contents to be broadly similar. So if I was a farmer, I don’t think I’d be expecting to rent land for such diversification enterprises and claim BPS on it.

 

Certainly, if I need the fallow to help me meet my EFA, I’d be looking at having it as eligible fallow rather than renting it out.

 

Julie Robinson, from Roythornes, added: “There are all sorts of amber lights here. If the land is rented from the farmer, there is a risk that, after all, it will not be considered as part of the farmer’s holding for BPS and Greening purposes, defeating the object.

 

The main point though is the non-agricultural use combined with fallow. Fallow is by definition land which is available for crop production…when does it cease to be so due to glamping or wedding activities? We await the small print on that point.

 

ELS options

Toby asked in the comments section below this article: “I am in ELS starting May 2012,usIng options, EE4,EE5,EE6,EK2,EK1,EA1 - none of which appear in the Defra Q/A on double funding environment stewardship agreements. Is it correct then that my ELS payment will not be reduced?”

 

This one proved to be straightforward - Julie Robinson and Richard King both answered simply: “Yes.”

Phil Bicknell added: “If you are one of the 4,400 impacted by double funding on your ELS, you’ll get letter shortly - hopefully in the next couple of weeks.

Fallowing the whole farm

Robert Lodge asked in the comment section below this article: “My dad and brother have 1200 acres in the HLS scheme and 750 acres of combinable crops. With present prices and futures for 2 years the same, we reckon it costs £140/t to grow wheat. Can they not set-aside or fallow the whole lot? What payments would they qualify for?

 

Roythorne’s Julie Robinson replied: If we boil the question down to: “I am an arable farmer. Can I let my whole farm lie fallow in 2014-15 and still be eligible for the BPS and Greening payment?” the answer would be “yes”, provided the land qualifies as fallow land.

 

Cross compliance will still apply across the whole farm of course.

 

The requirement for two or three crops, (with the main crop not covering more than 75 per cent of arable land) doesn’t apply where:

 

“More than 75% of the arable land is used for the productions of grasses or…is land lying fallow…provided that the arable area not covered by these uses does not exceed 30 hectares.”

 

Field margins

Alistair Haigh, from Northamptonshire, asked via email: ‘Will the greening regulations have any effect on the current field margin requirements? Will any one of the EFAs covering a field margin count as a field margin, or do growers still need to leave a margin before the EFA?

 

The NFU’s Phil Bicknell replied: Field margins are not one of the EFA options that will be available in year 1 of greening.

 

Buffer strips are listed as one of the options but they must be on or adjacent to arable land, next to a watercourse or parallel with and on a slope leading to one.

 

However, field margins, provided they are over 2m in width, could be considered as fallow (fallow is one of the EFA options and it has the added advantage that fallow also counts as a crop for the Crop Diversification requirement under greening).

 

It may be the case that the margins are a requirement of an agri-environment scheme.

 

If that’s the case, you need to consider the impact of any changes you might make with your margins on your agri-environment agreement.

 

The signals from Defra are relatively clear – they don’t want to see field margins ploughed up when an agri-environment scheme comes to an end, hence the ability to class relatively small parcels of land as fallow and gain credit for EFA.

Active farmer

James Ward asked via email: “Under the new arrangements my trust won’t qualify as an ‘active’ farmer on permanent pasture let out under a grazing agreement. Could we be deemed an ‘active’ farmer if we charge the grazier for the grass? And/or any other inputs eg fencing etc.”

 

Julie Robinson replied: To answer this question we need to go back to the basics of the new scheme rules.

 

Does the BPS claimant (the Trust) carry out agricultural activity on its own account? That includes not only what we traditionally think of as agricultural activity (growing crops, rearing livestock) but also keeping land in a state which makes it suitable for grazing or cultivation without any preparatory action that goes beyond normal interventions.

 

If the answer to the above is yes, then the next question is: does the BPS claimant operate any of the following: airports, railways, waterworks, real estate services (e.g. agency) or permanent sport and recreational grounds?

 

If the answer to that question is no, then in England the BPS claimant is, by definition, an active farmer. Even if the BPS claimant does operate one of the ‘negative list’ activities, it can keep its active farmer status if it can pass one of the three supplementary tests (e.g. by showing that it generates a certain percentage of its income from agricultural activities).

 

The other key question that a claimant needs to ask himself is whether he has the areas of land against which he is claiming at his disposal on the relevant date (to be fixed by the relevant authority, but likely to be 15 May each year).

 

Having land at your disposal does not preclude having a third party on the land grazing or mowing, but the claimant would need to be able to show that it remains in overall control of the areas concerned, ensuring – for example – that third parties do not breach cross compliance rules.

 

Buffer strips

Bill Jones asked via email: Can you please define how the “buffer strips against water” works? Say if I have 1000m of watercourse with a 10m buffer against it, does this count for 1000 x 10 x 9 = 9ha EFA? Or just 1000 x 1 x 9 = 0.9haa EFA? If it is the latter, can the remaining 9m be used as fallow for EFA?

 

Similarly if I have a “normal” hedge say 1m wide plus 1m either side for CC, does this qualify for the full 10m?? eg does 1000m of this normal hedge count for 1000 x 10 = 1ha EFA?


Julie Robinson replied: How buffer strips and hedges will be treated for EFA purposes is on the awaiting further information list.

 

Looking at the regulations and the information we have been given so far, the logical answer is your first one.

 

On a related note, the regulations allow cross-compliance buffer strips along water courses to count as EFA features, a useful provision.

 

On your fallow question, if the buffer strips are grass, it is not clear that you’ll be able to describe them as land lying fallow given that grass is a crop.  As I said, though, we’re waiting for further details – frustrating for everyone trying to plan for next year.

 

But Phil Bicknell takes a different view. He replied: My view is that Defra are more likely to go with the second option.

 

For both buffer strips and hedges, the EFA coefficient is based on the length of the strip/hedge, rather than the width. I can’t see the EFA coefficient being applied to every square metre of buffer. They will treat buffer strips wider than 1m as a 1m buffer strip and the remainder as land lying fallow. So in Bill’s situation of 1000m of watercourse, that would give him 0.9ha of EFA. However, the additional land would then be counted as fallow -  so that’s another 9m x 1000m length to give another 0.9ha of EFA.

 

The caveat (which applies to both of these responses)is that nothing is definite until published by the RPA.

5ha minimum threshold

Trevor Williams asked via email: Does the 5ha claim threshold mean the total area owned, or the actual claimable area i.e. forage area in our case?

 

Phil Bicknell replied: To be eligible for the Basic Payment Scheme, you need to have at least 5ha of BPS eligible land and have at least 5BPS entitlements.

 

You also need to be an active farmer. So if I owned 10ha, but only had 4ha of eligible land or 4 entitlements, my interpretation is that I would not be eligible.

 

Greening area calculation

Fred Mawsley asked via email: Could you please clarify the situation regarding the following queries: My total farm size is 30.75ha which is all registered with the RPA, but my SPS entitlement area allowable is only 16.95ha - which figure do I use when calculating my 5% Greening area?

 

4.80ha of my non entitlement area is a wood which includes 0.83ha of managed but not cultivated land - is the wood countable as my Greening area?

 

If not countable, would the non-cultivated area then count if I bought 1ha of entitlement?

 

If none of the above is possible, would growing the required amount grass for haymaking fulfil the greening requirements?


Julie Robinson replied: We need to go back to basics to help answer these questions.

 

The 5% ecological focus obligation relates to the area of eligible arable land on your holding. It has nothing to do with whether you have more or fewer entitlements than arable hectares.

 

The first step is to calculate the area of eligible arable land on your holding. Arable land is land which is cultivated for crop production, except for permanent pasture and permanent crops. Arable land includes fallow and temporary (≤5 years old) grass.

 

If you have more than 15ha of arable land, then unless you tick the box for one of the exemptions, you will have to ensure that an amount equivalent to 5% of your total arable area is maintained as EFA. If you have just 15ha or less of arable land, you do not have to observe the requirement.

 

The 2nd step, if you do have more than 15ha of arable land, is to check whether you fall into an exemption. It may well be that in your case, with under 30ha of arable, you do, for example (a) if your holding or most of it is certified organic or (b) if more than 75% of your arable land is in temporary grass or fallow or cultivated for leguminous crops, or (c) if more that 75% of your total eligible agricultural area (not just arable) is permanent grassland or temporary grass (or used for crops grown in water like watercress).

 

If you are not exempt, the 3rd step is to work out what features you will need to implement or include to meet the requirement.

 

Unfortunately trees and managed woodland are not among the features that will ‘count’ towards that obligation in England, at least for the time being. Including a sufficient amount grass (temporary) within the rotation could bring you within an exemption (see 2nd step).

 

Having (temporary) grass on your holding will also go towards meeting the crop diversification element of Greening. In your case, with between 10 and 30ha of arable land you will need to have two different crops but remember that your largest crop must not cover more than 75% of the arable area. Again, exemptions may well apply in your case depending on what your cropping mix is.

 

Richard King added: Greening only applies to your eligible agricultural area. This is basically the ‘farmed’ area - arable land, permanent grassland and permanent crops (the latter being things like orchards, miscanthus etc.). Therefore, areas of woodland, scrub, buildings, tracks, ponds etc. do not come into the calculation.

 

Greening is calculated on the total eligible agricultural area even if you don’t have enough entitlements to cover all of that land.

 

In terms of the ‘5% greening area’ this is the Ecological Focus Area (EFA) requirement.  It is only calculated on the arable area on your holding.  This may be less than your 16.95 Ha total farmed area.  If the arable area is less than 15 Ha, you do not have to undertake the EFA requirement at all.

 

EFA area must be sited on arable land. It does not sound like the 0.83 Ha would count under the definition and therefore would not eligible whether it has entitlements or not.

 

There are five types of land that can be counted towards your 5% EFA requirement in England (should you need it).  These are fallow, buffer strips, catch crops, nitrogen fixing crops, and hedges. The detailed management rules are awaited.  However, on fallow land for example, it seems unlikely that taking a crop of hay would be allowed.

 

HLS/ELS implications

Richard Harvey, from Owston, in Leicestershire, asked via email: “I am 6 years into a HLS and 3 years into a ELS. Will I have to adopt any other measures immediately to comply with ‘greening’. What will happen when my ELS and HLS come to an end?”

 

The NFU’s Phil Bicknell replied: Yes, just being in agri-environment schemes now does not mean that you automatically meet the greening criteria that will operate from 2015.

 

You still need to comply with crop diversification and ecological focus area requirements (EFAs). The positives are that if you are in HLS, or your ELS began before 2012, activities you undertake for environmental schemes can also count towards EFAs where eligible.

 

For instance, if you have field corners that are uncropped, they are likely to count as fallow; similarly, you’ll most likely get credit for

buffer strips in your ELS and this can count towards EFA. But remember to check your ELS start date – there are implications for those schemes that started from 2012 onwards.

 

In terms of follow-on schemes, what happens in future will depend on the development of a new set of environmental schemes (NELMS) – I’m afraid it’s a case of ‘watch this space’, but we won’t see an equivalent of ELS in future.

Succession implications

Robert, from Lincolnshire, asked via email: “I am in a farming partnership with my wife and daughter. My daughter is 28 years old and now taking over most of the decision making. Can she apply for the higher rate of SFP?”

 

Phil Bicknell replied: There’s no doubt your daughter meets the ‘40 or under’ criteria of the Young Farmers Scheme.

 

For me, the important criteria is that entrants are setting up as a head of holding for the first time. There’s more detail to come in the autumn on how schemes operate, but we already know that new entrants can farm in partnership and need a minimum 50% share.

 

So your daughter may be eligible – but it all depends on when she entered the farming partnership and the level of her share.

 

Remember that the top-up on entitlements is capped to the first 90ha – so the maximum is €3600 per year, and it’s only payable for up to 5 years. From speaking to many NFU members in recent weeks, many view the young farmer top-up as a limited incentive.

 

There are clearly many logical reasons why businesses are structured as they are; they tell me that they will look at changes to their structure in the round rather than immediately target this uplift in payment. 

Future of HLS

Under our article on greening Maggie Edwards asked: We are an organic farm of 70 hectares within the Higher Level Scheme. (60hectares permanent pasture, rest woodland). You mention ELS turning into NELMS. What will happen to the HLS?

 

Richard King answered: ‘Both ELS and HLS agreements continue until the end of their terms.  As HLS agreements are for 10 years, you are likely to still have a few years left under your current arrangements (depending on when your agreement started).  Only when it is finished will you need to think about applying for NELMS’  Feel free to re-write if you want.

 

Julie Robinson answered: Current HLS agreements will run their course. Under the new Rural Development Programme for England Environmental Stewardship agreements and English Woodland Grant schemes will be brought together into one scheme, NELMS. NELMS will be launched and open for applications in 2015, but the first agreements are not expected to start until 1 January 2016 (details awaited). The ELS and HLS distinction will disappear, but there will be ‘upper tier’ agreements that focus on priority sites and that will be similar to the current HLS scheme. ‘Upper tier’ agreements will be by invitation only, but there will also be ‘mid-tier’ agreements available.

 

The panel

Richard king

Richard King

Richard is head of business research at Andersons the Farm Business Consultants.  He is responsible for interpreting and advising on CAP policy for Andersons’ consultants and the wider industry.

 

Julie Robinson

Julie Robinson

Julie is a partner at specialist agricultural solicitors, Roythornes, heading up its agricultural team. She was part of the NFU’s legal team during the last big reform. She has several years’ experience out in the field advising farmers and landowners on their positions under the CAP and trying to allow farmers and growers to get on with their businesses while respecting the rules of the various Pillar 1 and Pillar 2 CAP schemes.

 

Contact details: julierobinson@roythornes.co.uk Tel: 01775 842618.

 

Phil Bicknell

Phil is the NFU’s chief economist. Based in the NFU’s Stoneleigh headquarters, he has kept a close eye on the reform process as part of the NFU team responsible for explaining the complex reform for members.

 

Phil’s specific responsibilities include identifying farm business prospects, shaping rural development policy and delivery, and analysing food chain trends.

 

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