Category: Policy & Business

Countryside Stewardship

Similar to last year, there are delays in getting Countryside Stewardship agreement offers out.  Natural England has said it will be writing to those affected, saying it aims to issue all agreements by the end of March 2018.  These are for contracts which apply from 1st January 2018 and therefore requirements must be being adhered to now.  Natural England has said it will prioritise those with spring-sown options.  For applications being made this year, for a January 2019 start date, the submission deadline has been brought forward, to the end of July, in the hope of avoiding this problem next year.  Having the PLCD mapping update will not have helped; agreement holders are advised to check their offers carefully as if mapping changes have been made which are wrong, this information will have been used incorrectly in the agreement offer.

BPS ‘Bridging’ Payments

The Farm Minister, George Eustice, has announced that bridging payments will be made available to those in England who have not received a BPS payment by the end of March.  A payment of 75% of the estimated 2017 BPS will be made in April.  Although a welcome step, any claimants receiving a payment in (late?) April, for three-quarters of the expected amount, and four months after most people have received payment, could still consider themselves hard done by.  Hopefully, those claims still to be paid will continue to be processed through February and March – resulting in earlier and full payment.  However, the rate of progress in resolving claims seems to have slowed – perhaps indicating RPA resources have been moved elsewhere now the end-December payment target has been hit.  It has been announced that as at the 26th January, 93% of claimants had been paid.  This is only 2% more than the figure at the 31st December.

Capping and Splitting

The announcement from DEFRA Secretary, Michael Gove, that he intends to introduce capping of the Basic Payment from 2020 has prompted much discussion.  As mentioned in previous articles, there is no detail available at present on thresholds and deductions.  Details are expected in the DEFRA paper due in ‘the spring’, but a threshold of €100,000 for direct payments has been widely touted – a level that would impact a large number of commercial farming businesses in England.  Whilst we are still in the realms of speculation, this article looks at some of the issues in a bit more detail.

The first point to make is that the plans to cap payments are still just a proposal.  Many things could happen before 2020 – Mr Gove moving to another job, a different Government, or the upcoming consultation seeing the plans watered-down or found to be unworkable.  However, should Mr Gove stay in post, he has a record of driving through policies on which he has made up his mind (ask a teacher . . .).  There seems a reasonable chance therefore, that capping may well happen.

Reductions in BPS payments already happen under the CAP.  ‘Degressivity’ removes 5% of support over a threshold of €150,000 (excluding Greening payments).  It is optional for Member States to go further than this if they wish.  The table below sets out the choices made by different countries.  Up to this point, the English Government has not been interested in setting higher levels of deductions than the bare minimum.

 

CAPPING UNDER THE CAP
Country Current Capping System
All other EU Member States not shown implement the minimum ‘degressivity’ deduction of 5% above €150,000 of BPS support (excluding Greening)
United Kingdom:

Scotland

Wales

Northern Ireland

  

Cap at €600,000*

Degressivity reductions start at €150,000; full cap at €300,000

Cap at €150,000
Ireland Cap at €150,000
Poland Cap at €150,000
Hungary Cap at €176,000
Italy 50% reduction over €150,000; full cap at €500,000
Bulgaria Cap at €300,000
Source: EU Commission    * was planned for 2018 onwards but appears to have been shelved

 

The obvious question being asked by many larger businesses is ‘is it worth splitting up to avoid any potential cap?’.   In any such decision, the potential savings in terms of BPS receipts need to be set against the costs and hassle of making the split.  Remember that direct payments now appear to have a limited life-span anyway, so any benefits may only last a few years.

Splitting a business is not just a case of getting another SBI and making a claim.  It must be done in such a way to comply with the rules.  DEFRA/RPA are likely to try and prevent businesses splitting where it is ‘artificial’ – i.e. only being done to avoid capping.

In the absence of anything else, it seems best to assume that any post-capping rules would be similar to the existing ‘separate business’ test under the current BPS.  The key issue is ownership – the geographical position of land, how, and who farms it is fairly irrelevant.  The main test is who is the beneficial owner of the farming (claiming) business.  Effectively, it would be difficult (if not impossible) for two separate claims to be made if an owner (or owners) had majority ownership of both businesses.   It is a tricky balance, because there are, of course, many legitimate reasons for re-organising and restructuring farm businesses.  The rules will need to let the farming industry continue to evolve whilst trying to catch those attempting to ‘play’ the system.

The rules as they stand are set out in the following documents;

Separate Business Questionnaire (IACS 26) – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/607912/IACS26_2015_v3.0.pdf

Separate Business Guidance – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/607915/IACS_26_guidance_2015_v2.0_June_2015.pdf

In terms of base years and timings, the RPA may look more closely at business changes after a certain date – perhaps after the capping consultation is published, the date of Michael Gove’s speech, or some date in the future when the capping rules are actually fixed.  But, in theory, any date shouldn’t make too much difference.  After all, the rules on separate businesses apply at the moment, and something similar will still apply in the future.

The only issue is that the ‘seperateness’ test has not been particularly firmly enforced up to now (because nothing was riding on it).  On the BPS application it is a requirement to tick a declaration at the end that states (amongst other things), that ‘I have told the RPA about all the farming business interests held by members of this business’.    This has been fairly easy to ignore up until now – either wilfully or simply through ignorance.  This may be an area where DEFRA and the RPA put greater focus in the future.  Something like the previously-proposed ‘Accountable People’ rule may be implemented, where full details of all the individuals who have an ownership share in a business need to be disclosed.

This means that, in our opinion, if a business split is going to be robust in the face of investigations, there does need to be a separation of ultimate ownership.  This will not be easily achievable or perhaps even desirable in every case.

BPS Update

Active Farmer Test

The Active Farmer rule is being abolished in England as from the 2018 BPS year.  No decisions have been announced yet for the other devolved regions.  Following the adoption of the CAP Simplification: Omnibus Regulation, Member States were given the option to drop the Active Farmer rule.  DEFRA has decided to take up this option and therefore the ‘negative list’ and and the ‘readmission criteria’ are no longer applicable.  In England the readmission criteria was fairly loose anyway, meaning that even if a business operated one of the entities on the negative list, if they claimed more than 36 Ha they were still classed as an Active Farmer.

Despite this rule change, the RPA’s Rural Payment System is not going to be re-programmed for 2018, so will still be expecting Active Farmer information.  At the point of submission, it may still be necessary to tick a box indicating the claimant is an Active Farmer.  Alternatively, the system may simply pre-populate everyone as an Active Farmer.  Where a standalone Active Farmer declaration would previously have been required, this will still be needed for this year.

The most common reason for a standalone declaration is to allow entitlements to be transferred to someone who did not submit a BPS in 2017.  Therefore, new claimants for 2018, who wish to receive entitlements, will have to complete an Active Farmer declaration despite their being no Active Farmer rule!  The declaration can be found on the ‘Business Overview’ page on a claimant’s Rural Payment account.  Everybody should now click ‘No – I qualify as an active farmer’.  The standalone form should be completed before the transfer of entitlements, otherwise the entitlements will remain in ‘pending’ and will require the RPA to manually intervene.  Please note if a BPS application was submitted in 2017, the Active Farmer status is still valid this year and a standalone declaration is not required.

Young Farmers Payment

The rules surrounding the Young Farmers top-up payment have altered slightly.  This is, again, following the adoption of the ‘Omnibus Regulation’.  It sees the payment being made for five years from the year of their first BPS submission.  The previous rules saw the payment being made for a maximum of five years from when the young farmer started or took control of the business.  There is also the option to increase the top-up to 50% of the average value of the claimants entitlements from the current 25%.  Neither DEFRA or the other devolved regions have announced their decision on this yet.

Mapping Update

The RPA has finished the Proactive Land Change Detection (PLCD) mapping update which it started last summer.  The maps on the Rural Payment Service should now reflect these amendments, although as many will be aware, not all the changes the RPA has made are correct.

Previously, the RPA said it would have finished the PLCD by the end of October and where applicants or agents did not agree with any amendments they should send in an RLE1 with ‘PLCD Query’ written on the front and complete with the details they wanted to challenge.  As the mapping update has dragged on longer and the way it was carried out meant notifications came in dribs and drabs, unless there has been a significant problem with payments, it looks like most will pick up the changes when going through this year’s application.  But, potentially there could be a lot to unpick.  Ineligible features have been incorrectly removed and new ones put in, fields that have been temporarily split, with electric fencing, for grazing paddocks have been permanently split into separate field parcels and other parcels have been incorrectly merged to give just a few examples.  Currently the only way to rectify these will be via paper RLE1s.  This is likely to make the 2018 application more time consuming than usual and claimants and their Agents may want to set-aside additional time.  Stakeholders are looking into whether there could be a less bureaucratic process.  We will update readers if and when there is any progress on this.

Farm Business Grant Wales

The Welsh Government has announced the Farm Business Grant will re-open on 29th January and close on the 16th March.  The scheme offers funding for a set list of eligible items which have been identified to improve the economic and environmental performance of farms.  Applicants can choose items from the list.  The scheme has proved popular, with over 850 applications in the first two rounds.

There have been some slight amendments for the third and subsequent windows.  Applications will now be made via RPW Online.  Farmers are are also able to make more than one application in a scheme year as long as they remain within the £3,000 to £12,000 grant limit.  In addition there have been some amendments to the list of items available.  Further guidance and the list of items available can be found at: http://gov.wales/topics/environmentcountryside/farmingandcountryside/cap/ruraldevelopment/wales-rural-development-programme-2014-2020/farm-business-grant-scheme/?lang=en

Welsh farmers must attend a ‘Farming for the Future’ event to be eligible.  Events are being held between 17th January and 1st February across Wales.  For dates see the Farming Connect pages at https://businesswales.gov.wales/farmingconnect/

AECS Opens

The Scottish Government has announced the re-opening of the Agri-Environment Climate Scheme (AECS) for 2018.  The scheme encourages farmers to adopt environmentally friendly land management practices and helps businesses adapt to climate change.

The window for applications opened on Wednesday 17th January 2018 and closes on Friday 13 April 2018.  For collaborative applications involving 5 or more businesses the deadline is extended to Wednesday 31st May.  For more details see – https://www.ruralpayments.org/publicsite/futures/topics/all-schemes/agri-environment-climate-scheme/agri-environment-climate-scheme-full-guidance-menu/agri-environment-climate-scheme-how-to-apply/

Greening Update

DEFRA has confirmed a number of further updates to the Greening rules for 2018.  Our article back in August (see https://abcbooks.co.uk/2018-greening-rules-confirmed/) reported some changes, in particular the ban on the use of PPPs on Ecological Focus Areas (EFAs).  But readers will recall we have been waiting for confirmation surrounding the rules for EFA fallow, these and a few other small but quite key changes have also been confirmed.

With regards to fallow, DEFRA has confirmed it will still be possible to graze and mow EFA fallow outside the the EFA fallow period, which runs from 1st January to 30th June 2018.  There had been concerns that changes to the rules by the EU Commission would prevent this; indeed Wales has disallowed any grazing or mowing for the entire calendar year on land declared as EFA fallow.  There has however been some changes to what is allowed during the EFA fallow period.  In England between 1st January and 30th June producers must not carry out the following operations on EFA fallow land;

  • cultivate to control weeds
  • apply PPPs to the land
  • sow grass, unless specifically required under a Rural Development Scheme
  • apply any manure or fertiliser

In addition, a rule change means that land declared as fallow, including EFA fallow, for more than 5 years will convert to permanent pasture after the 5 year period.  However, the clock only starts ticking from 2018, so the earliest date this will be effective from is 2023.  This means that land which has been EFA fallow will no longer be allowed to be EFA fallow in the 6th year as it will become permanent pasture (which is ineligible to site EFA).  This seems to force people to plough-out areas such as field corners or margins after a period of time – which appears a backwards step in environmental terms.  It must be noted however that Brexit means that this rule change may never have any practical effect. 

Other key changes include;

  • the multiplier for EFA Nitrogen Fixing Crops has increased from 0.7 to 1, meaning 1 Ha of NFC is now worth 1 Ha of EFA (although far fewer claimants will be using NFC this eyar due to the ban on PPPs)
  • the 30 Ha limit for Greening exemptions has been removed.  Previously, where claimants had more than 75% of their eligible arable land in permanent or temporary grassland or where more than 75% of their arable land was in fallow or temporary grassland they were exempt from Greening as long as the remaining arable area was less than 30 hectares.  As from 2018, this 30 hectare limit has been removed.  This was a potential problem for dairy farmers who were all grassland apart from some maize.

Finally we understand that inspectors will be keen this year to ensure that where there is an EFA fallow area next to an EFA field margin, the two are visually distinguishable, this could be different sward heights.  If, as an agent, your client has a temporary grass strip and the first metre is claimed as an EFA margin and the remainder as EFA fallow, ensure they are familiar with the rules.

 

Countryside Stewardship

The Countryside Stewardship Scheme (CSS) is now open for applications.  This includes the Mid Tier, Higher Tier, the Hedgerows and Boundaries Capital Grant Scheme and the four new Streamlined offers; Arable, Lowland, Mixed and Upland.

Applications to the Hedgerows and Boundaries Scheme and the new Arable Offer (where the holding has less than 100 parcels) can be made online, for the other ‘strands’ of the CSS, an application pack must be requested from Natural England by 31st May 2018.  This can be done by phoning the Natural England Enquiries Team on 0208 026 1089 or by emailing [email protected].  Note the deadline for submission of applications this year is the earlier date of 31st July 2018 (previously 30th September).

We wrote last month about the four new streamlined offers available.  These are non-competitive; if applicants fulfill the requirements they will be successful and will receive an annual payment for five years. The streamlined offers are also simpler to apply for.  They can be mixed with Higher and Mid-Tier applications.  Each offer has a set of options and minimum requirements.  Each option has a payment rate and a specific benefit for wildlife.  The amount received will depend on the options selected.  A minimum of 3% of the land must be placed in the scheme.

The Arable offer is the only strand which will be available to apply for online, this functionality will be available as from 20th February, claimants should request a pre-application pack from Natural England.  The Arable offer has 11 options, divided into 3 categories, an option from each category must be selected.  There is no maximum number of options.  In the Mixed offer, claimants can choose from 14 options, divided into 3 categories.  Again, at least one from each category must be chosen.  For both the Arable and the Mixed offer the Wild Bird Food option is effectively mandatory and requires at least 2% of applicant’s land to be entered.  The annual payment rate for Wild Bird Food is £640 per Ha.  Other options available under both the Arable and Mixed Offers include:

  • Nectar flower mix – £511 per Ha
  • Enhanced over wintered stubbles – £436 per Ha
  • 4m to 6m buffer strips on cultivated land – £353 per Ha
  • Management of hedgerows – £8 per 100m

The Upland offer has 4 ‘base’ options and 4 supplements to choose from.  Applicants must choose a minimum of either 1 base and 2 supplements, 2 base and 1 supplement or 3 base options.  There is no maximum.  The Base options are:

  • Permanent grassland with v. low inputs in SDAs – £16 per Hha
  • Enclosed rough grazing – £39 per Ha
  • Management of rough grazing for birds – £88 per Ha
  • Management of hedgerows – £8 per 100m

The supplements are:

  • Haymaking – £85 per Ha
  • Rush control – £73 per Ha
  • Lenient grazing – £44 per Ha
  • Cattle grazing – £45 per Ha

There are 7 options, divided into 3 categories in the Lowland Grazing offer.  Applicants must choose at least one option from categories 1 and 2;

Category 1 (Minimum of 2%):

  • Permanent grassland with v.low inputs (outside SDA) – £95 per Ha
  • Legume and herb rich swards – £309 per Ha

Category 2 (Minimum 1% or 500m of hedgerow mgt.)

  • Hedgerow Management – £8 per 100m
  • Take field corners out of production – £365 per Ha

There are three further options in category 3 which are optional and include Ryegrass seed for bird food (£331 per Ha), a lenient grazing supplement (£44 per Ha) and buffering of in-field ponds and ditches (£201 per Ha).

Further information and guidance of the requirements for each option can be found at https://www.gov.uk/government/collections/wildlife-offers-countryside-stewardship

Online Entitlements and Land Transfers

The RPA has switched on the the functionality to allow online transfers of land and also entitlements for the 2018 Basic Payment Scheme.  Readers will know that the online system to transfer land and entitlements is switched off after the application deadline to ensure that the data held for each holding is ‘stable’ until claims have been validated.  Paper RLE1s are available all year round to make transfers but where possible it is better to wait for the online system.

The deadline for the transfer of entitlements for use in the 2018 scheme is the 15th May 2018 in England.  Any transfers will be confirmed via ‘messages’ on the online system.  The transfer is usually done immediately, although if the transferee has not been paid their 2017 payment, the transfer may be held in ‘pending’ until this has been completed.

If transferring land and the ‘holding type’ online is shown as ‘Tenant’ or the ‘% Owned’ is shown as less than ‘100% owned’ on the Rural Payments system, unfortunately it can only be transferred via a paper RLE1 form.