Category: Policy & Business

The Scottish Government has commenced making top-up payments under the 2017 BPS.  Due to continuing problems with the computer system, a national loan scheme operated for the second year for BPS 2017 which paid 90% of the expected entitlement from November 2017.  The final 10% is now gradually being issued to the 18,000 eligible claimants, but it will be a slow process with batches of payments being made over the next few months.   The Rural Economy Secretary, Fergus Ewing, has promised that the ‘vast majority’ will be fully paid by the time the payment window ends on the 30th June this year.   

The UK Farming Minister, George Eustice, has written to the EU Commission requesting a derogation from the Crop Diversification rules under Greening.  Widely known as the ‘three-crop rule’ the exemption has been requested in response to the wet, late spring affecting farmers’ ability to get spring crops planted – so disrupting cropping plans.  The application covers the whole of the UK.  The EU’s response is expected shortly.

Whilst the UK focuses on its new Domestic Agricultural Policy (or policies), the reform of the Common Agricultural Policy is gathering momentum in the EU.  Draft proposal are now circulating in Brussels and, as is usual, the text has been widely leaked.  The following are some of the main points;

• it is proposed to have a maximum ‘cap’ on payments, set at €60,000.  The calculation would allow claimants to offset labour costs when calculating the level of capping.  It is interesting to compare this with the capping proposals outlined in DEFRA’s consultation paper (see Feb article)
• there would be a compulsory ‘redistributive payment’ which would shift funding from larger to smaller claimants (Wales operates such a system currently)
• there would be greater emphasis on ‘generational renewal’ with a boost to Young Farmers Payments
• also highlighted is a greater promotion of risk management tools (e.g. crop insurance) within agricultural businesses
• as previously outlined, the EU-wide Greening and Cross-compliance rules would be scrapped.  Member States (or regions) would draw up bespoke plans for farm support in their territories, rather like current Rural Development plans, which will include what ‘conditionality’ will be placed on payments in terms of farm management practices.  Additional payments may well be offered for those farmers that go above the baseline standards
• the jargon of the CAP looks set to change.  Rather than the BPS, the paper refers to BISS – ‘Basic Income Support for Sustainability’.

The driver behind some of these changes, especially capping, is the need to save money.  It has been suggested that the next Multi-annual Financial Framework (MFF), or EU Budget for 2021-2027 should see funds for the CAP cut by 6% to help make up the €12bn Brexit shortfall.  Only when the MFF is agreed (in the middle of next year, or possibly later), will the funding be clear.  It is not yet clear whether EU Farm Ministers will agree the structure of support first, or wait until the budget is known before confirming changes to the CAP.

The Scottish Government has announced a £250,000 package of support for farmers affected by the recent extreme weather.  Most of the support will go to offset the cost of fallen stock collections, but there will be some extra funding for the RSABI.  The National Farmers Union of Scotland is calling for a speeding-up of the processing of for outstanding CAP payments (BPS balances; SUSSS, Beef calf scheme) and a derogation to be granted on the three-crop rule under Greening.

The Government has seemingly suffered two setbacks in its plans for Brexit over the past few days.

Firstly, the House of Lord passed an amendment to the EU Withdrawal Bill by a majority of 123 asking the Government to look more closely at the option of remaining in the EU Customs Union.  Leaving the Customs Union is one of Theresa May’s ‘red lines’ in the negotiations.  Although the House of Commons can reject the amendment, it does increase pressure on the Government to reconsider its approach.

The second problem concerns Northern Ireland.  It has been reported in the Daily Telegraph that the EU has rejected all proposals put forward by the UK Government to try and square-the-circle of having no hard border, but still allowing the UK (and NI) to leave the Single Market and Customs Union.  The paper reports that the British plans were subject to a ‘systematic and forensic annihilation’ – indicating there is little appetite for compromise from the EU on this issue.

The RPA should now have made ‘bridging payments’ to all those yet to receive their 2017 Basic Payment.  As set out in our March article, these should be worth 75% of the expected payment (although there appears to be cases of where both more and less than this figure has actually been received).   Payments have gone to around 3,200 claimants, equating to around £117m.  Approximately 4% of claimants are yet to receive their full payments.  The speed at which full payments are being made seems to have slowed right down as resources in the RPA are moved elsewhere.

Michael Gove has indicated that the Agriculture Bill will not now be published before the summer recess.  Speaking to the Environmental Audit Committee of Parliament, Mr Gove indicated it would be published ‘in the second half of the year’.  This is to give time for all the responses to DEFRA’s ‘Health and Harmony’ consultation (see February article) to be considered.  The deadline for responses to the consultation is 8th May. 

Farm rents continue to rise; this is the findings of the latest statistics released by DEFRA.   The average rental value under Agricultural Holdings Act (AHA) tenancies rose marginally by 1% between 2015/16 and 2016/17 to £181 per hectare.  For Farm Business Tenancies (FBTs) the average figure increased more, by 4% (compared to just 1% last year) to £219 per hectare.  The averages do however mask some large variations between farm types, as the table below shows.  The data is collected via the Farm Business Survey.  It is rather historic as the Survey takes some time to undertake.  The latest figures are for the 2016/17 year (roughly Feb to Feb).  They are shown as ‘2016’ in the table below.

General Cropping rents remain the highest for both AHA tenancies and FBTs; these will include a large number of short term potato and vegetable growers who will be prepared to pay high rents.  FBT Cereal rents and Lowland Cattle and Sheep rents have seen the largest increase (both by 10%) probably reflecting the better commodity prices being obtained in these sectors since mid 2016.  However, Lowland Cattle and Sheep rents are much lower than for Cereal land.  LFA Cattle & Sheep FBT and AHA rents have both seen significant declines, by about 12%.  The average rent paid under Seasonal Agreements (likely to be largely grass lettings) in 2016 was £149 per Ha compared to £162 per Ha in 2015.  Full results can be found at https://www.gov.uk/government/statistics/farm-rents

The results from this survey show the amounts actually being paid by farm businesses in England.  This will include some lettings that are not at full market value – for example, lettings within families.  Therefore, the figures may not correspond to some of the ‘headline’ rates often quoted.  These usually relate to situations where new land is being let, or there is a review.  The historic nature of the survey means that current trends are not always picked up.  Tender rents, especially in the cropping sector, still often remain above levels that can be economically justified.