Category: Policy & Business

The Countryside Stewardship Scheme (CSS) in England is now open for applications.  This for agreements that will commence on the 1^st January 2018.  As in previous years, applications are paper-based.  Full scheme guidance can be found via the following webpage – https://www.gov.uk/government/collections/countryside-stewardship-get-paid-for-environmental-land-management

For the Mid-Tier CSS, application packs must be requested by 31^st July.  The deadline for completed applications is the 30^th September 2017.  This is the same as in previous years.  There was some thought to bringing it earlier in order to give Natural England more time to produce agreements ahead of the 1st January start date, but this has not happened. 

For Higher-Tier agreements, application packs must be requested by 13^th April 2017 and an initial application must be submitted by 5^th May 2017.  Natural England will then aim to conclude negotiations with applicants by the end of August 2017.

The RPA has confirmed it may have merged some land parcels incorrectly.  This may be due to Remote Sensing or Proactive Land Change Detection (PLCD).  Fields may have been incorrectly merged where there are no permanent visible boundaries but marker posts are being used to separate land parcels between two or more claimants (although in some cases, parcels have been merged where there is a visible boundary).  The RPAhas amended its policy now, so that if a merger involves more than one claimant it will not automatically make the change but will check with allparties concerned first.  But where one claimant is only affected it will continue to make the changes.

Unfortunately, where these mergers have already taken place, it will be up to the claimant to send in an RLE1 and sketch map to request that the merged parcels are split again.  Where the request involves more than one party, only one RLE1 should be submitted but a covering letter should be included confirming that all parties agree with the correction.  The RPA has said that where requests are received by 5pm on 17^th March, it will endeavour to correct the land parcel information by the end of March.  It is very doubtful that requests received after this date will be made in time for this year’s BPS submission and claimants will have to make their own amendments to the online system to reflect the position on the ground as at the 15^th May 2017.  Not only is this frustratingly adding more to the work load, it could increase the chance of a dual claim if not picked up and changed.

Philip Hammond delivered his first (and last) Spring Budget on 8^th March and, as was probably expected, most of the announcements were pretty small scale, perhaps leaving a number of ‘bigger’ spending decisions to be announced in his new Autumn Budget.

One of the most controversial announcements is the increase in the main rate of Class 4 National Insurance Contributions (NICs) for the self-employed.  This will see an increase from 9% to 10% in April 2018 and to 11% in 2019.  The Government has said the measure is to ‘level the playing field’ between the self-employed and employees, opening up arguments on both sides.  As the majority of farm businesses are either partnerships or sole traders this will impact many agricultural businesses.  As announced in the Autumn Statement, Class 2 NICs will be abolished from April 2018.  Therefore taken together, those self employed individuals with profits over £16,250 will have to pay more National Insurance.  And for those thinking about incorporating to gain a tax advantage, the tax free dividend allowance for directors and shareholders will decrease from £5,000 to £2,000 from April 2018.  Other key announcements include:

• Business Rates – support is being made available for businesses that are facing a significant impact when the Business Rates revaluation for all non-agricultural businesses takes effect in England from April 2017.  Those small businesses losing the Small Business Rate Relief, will see a limit to the increase in their rates bill to the greater of either £600 or the real terms transitional relief cap for small businesses each year.  In addition, local authorities in England will have a share of £300m to provide discretionary support for individual hard cases in their area.  The Government will set out its preferred option, of three yearly revaluations for Rates, in the Autumn Budget but will also consult ahead of the next revaluation (due 2022).
• Living Accommodation – the Government will launch a consultation on 20^th March on the tax treatment of employer-provided accommodation and board and lodgings.  Currently any living accommodation is exempt from Income Tax if it is necessary for the ‘proper performance’ or for the ‘better performance’ of the employees duties.
• Taxation of Benefits in Kind – the Government will also publish a ‘call for evidence’ on exemptions and the kind of valuation methodology for income tax and employer NICs treatment of benefits in kind.
• Making Tax Digital –  the Government has announced that those (unincorporated) businesses with an annual turnover under the VAT registration threshold (see below) will not have to keep digital records and send HMRC quarterly updates until April 2019 (delayed for one year).  Those under £10,000 will be exempt.  But for the majority of farming businesses, digital records and quarterly updates will become mandatory from April 2018.
• VAT Registration – as from 1^st April 2017 the VAT registration threshold will increase from an annual turnover of £83,000 to £85,000.  The de-registration threshold will increase from £81,000 to £83,000.
• Soft Drinks Levy – Soft drinks or cordial producers whose products have 8 grams or more added sugar per 100ml will be levied 24p per litre, those between 5 and 8 grams per 100ml will receive an 18p per litre levy.  Small producers (less than 1m litres) are exempt.
• Red Diesel – the Government will publish a ‘call for evidence’ on the use of red diesel.
• Broadband – there will be £200 million available to fund pilot schemes to find the best ways to roll out a new full-fibre broadband network, there is no specific mention of rural businesses, but plans to offer connection vouchers for businesses may be of some help

The latest Farm Business Income (FBI) figures released by DEFRA for England show an improvement for most sectors following significant losses for the previous year.  The data is for the 2016/17 year which runs until February/March 2017 so includes the 2016 harvest.  At present the figures are initial estimates and will be updated in October, but the overall trends are clear.

FBI can be thought of as average profit for farms in a particular sector.  The fall in the value of the Pound has been the main driver for the increase in FBI.  Not only did it make domestic commodities more competitive, leading to price rises for most, it also meant the 2016 Basic Payment was in the region of 19% better than in 2015 for all sectors.  Even so, as the chart below illustrates, not all sectors saw an increase.  Once again dairy incomes have seen another big drop (-49%), due to a combination of lower milk prices and a fall in production.  Costs are forecast to be fairly similar for the sector.  Higher feed prices in the second half of the year are expected to be offset by lower volumes.  A decrease in fertiliser cost is expected to be offset by an increase in fuel, labour and other general farm inputs.

The other sector to record a fall in profits is specialist poultry (-31%).  This is driven by higher input costs, mainly feed, which accounts for over 50% of input costs on poultry farms and a reduction in the egg price.  Avian Flu is not expected to have a significant impact on 2016/17 incomes.

Cereals farms see a small increase to £38,000 (7%), as higher prices and and increase in the Basic Payment offset reduced yields.  General cropping farms are forecast to increase by 22% to £77,500.  It was the only sector to see a rise last year, except for LFA grazing livestock and once again it is largely driven by increased potato prices, which together with an increase in cereals values is expected to more than offset the reduction in sugar beet and OSR production.

After a big fall in FBI in 2015/16 specialist pig farms see the largest rise, by 160% to £57,000 due to higher pig prices and increased output, although feed prices have also risen over the year.  Both grazing livestock categories have seen an increase, although from pretty low bases.  Lowland grazing livestock incomes are expected to increase by 56% to £19,000 and LFA by 28% to £24,500 due to better livestock prices.

The chart below splits returns into four ‘profit centres’ for the previous four years.  This data is not yet available for 2015/16.

The Rural Payment Service is now ‘open’ to make online applications for the 2017 Basic Payment Scheme (BPS).  It is also possible to transfer land and entitlements now via the online system.  To get started claimants can log on at https://www.gov.uk/claim-rural-payments  In addition all the 2017 Scheme Guidance and accompanying forms and documents can now be found on the 2017 dedicated BPS web page at https://www.gov.uk/guidance/bps-2017  Paper application forms will only be sent to those who applied on paper last year and did not receive assistance from an agent; these will be sent out from mid-March.   For further guidance on this year’s application see our note of 15th February –  /generalpolicy/bps-2017/  

Andrea Leadsom has announced that a 75% bridging payment will be made to those still awaiting their 2016 BPS monies after the end of March.  According to the Secretary of State, about 4,000 claimants are still left to be paid.  The announcement was part of her address to delegates at the NFU conference.  The rest of her speech concentrated on five key areas which future farming policy must address:

• Trade – the Government would push for tariff-free and frictionless cross-border trade with Europe
• A productive & competitive industry – Ms Leadsom commented that the Government has heard what a vital role seasonal workers contribute to agriculture, but control of immigration was a key factor behind the vote to leave, will not be of much comfort
• Sustainability – leaving the EU allows the UK to provide an agricultural policy that promotes both productive farming and environmental improvement
• Trust – improving our animal welfare standards whilst ensuring that we are not put at a competitive disadvantage
• Resilience – one of the biggest threats continues to be bovine TB

Most of this was not really fresh news, nothing more than the platitudes heard at the Oxford Farming Conference and no mention of the Green Paper which was expected to be published in February.

BPS 2017

The Single Application Form (SAF) will be available to complete via RPW Online from 6^th March 2017.  Claimants can access RPW Online from the following link http://gov.wales/topics/environmentcountryside/farmingandcountryside/rpwonline/?lang=en.  Guidance and further information will also be available from this web link from 6^th March.  The deadline for BPS application is 15^th May this year.  Similar to last year, all applications must be made online.  If claimants require ‘digital assistance’ they can contact RPW’s Customer Service Centre on 0300 062 5004 from 7^th March and book an appointment at one of the offices at either Aberystwyth, Caernarfon, Carmarthen or Llandrindod Wells.  The deadline for booking an appointment is 31^st March.

Entitlements

Transfer of Entitlement forms are available to complete via claimants’ RPW Online accounts.  Entitlements can be transferred by sale or lease with or without land or by inheritance.  To be available for use in this scheme year, transfers need to have been submitted by 2^nd May 2017.  Transfers made after this date will not be available until the 2018 scheme year.

Rural Development

• Glastir Small Grants – Claims for capital works under the previous ‘carbon’ theme need to be submitted via RPW Online by 31^st March
• Farm Business Grant – Last month we wrote about a new ‘Small Grant Scheme’ which will open in April.  This has now been re-named the Farm Business Grant to help distinguish it from the Glastir Small Grant Scheme.  The aim of the scheme is to help farmers make their business’ more competitive and environmentally friendly (See January’s article)
• Rural Community Development Fund – A further round for Expressions of Interest (EoI) opened on 1^st February and closes on 31^st March for funds aimed primarily at LEADER Local Action Groups and other community-based organisations to help them grow.
• Co-operation and Supply Chain Development Scheme – The window for EoIs opened on 6^th February and closes on 10^th April.  This scheme supports the development of new products, practices, processes and technologies in agriculture, forestry and the food sectors.
• Timber Business Investment Scheme – A further round of EoIs opened on 1^st Feb and closes on 28^th April aimed at providing funds for capital investments that add value to forests by enabling woodland management activities, timber harvesting and timber processing.

The RPA has made available online a ‘BPS Payment Query Form’.  This can be found at – https://www.gov.uk/government/publications/basic-payment-scheme-payment-query-form.  This should be completed where a claimant has a query about a BPS payment after they have reviewed their Claim Statement.  Completed forms can either be posted back to RPA, PO Box 352, Worksop, S80 9FG or emailed to rural [email protected] with ‘BPS Payment Query Form’ in the Subject.

The use of pesticides on EFA-land, notably nitrogen fixing crops such as peas and beans, looks set to be banned from next year.  This comes following the European Commission College adopting a Delegated Act on the ‘simplification’ of the BPS Greening measures.  This includes the introduction of a ban on pesticides on productive Ecological Focus Area (EFA) options.  This covers fallow land, catch and green cover crops but in particular EFA nitrogen-fixing crops – i.e pulses being grown to satisfy the EFA requirement.  For fallow and catch/cover crops the ban would apply during the crops’ minimum retention period i.e. for fallow land not less than 6 months and catch crops not less than 8 weeks.  For under-sown catch crops, a specific derogation would allow for the ban to start from the date of harvest of the main crop.  After these ‘ban periods’ farmers would be able to use pesticides to prepare for the next crop.

Other simplifications include:

• changes to EFA rules to make them easier to understand and implement
• making certain EFA options more attractive
• removing the sowing deadline for catch and cover crops
• greater flexibility for the qualification of some EFA landscape features

The Council and the European Parliament have 2 months (with a possible 2 month extension) to scrutinise the Act.  Neither are able to make amendments, they can either accept or reject the changes.  The Act is expected to enter into force by mid 2017.  If accepted the changes will apply from 2018, a year later than initially planned.

Under his simplification agenda, the EU Farm Commissioner Phil Hogan, introduced some changes to the legislation last year.  This included a reduction in the minimum duration of fallow land from 9-6 months and also a reduction in the duration for catch crops, reduced from 10 to 8 weeks, Member States did have the option to introduce these changes from 2017, but all of the devolved administrations decided to introduce them from from 1^st January 2018.  Therefore a suite of changes looks likely for the BPS, possibly the last year of the scheme in the UK.

Online Functionality

There will be a number of Countryside Stewardship (CS) functions available online 2017.  These will be available via the Rural Payments Service’s ‘Business Overview’ page (where BPS is claimed, scroll to the bottom) and will be phased-in.  Claimants will be able to do the following online:

• Identify the high priority Mid Tier options for their land
• Apply for the Hedgerow and Boundaries Grant Scheme
• Apply for a Woodland Management Plan
• Claim for agreed CS annual/revenue payments
• Claim for agreed CS capital works
• View and download live CS agreement documents and maps

The following will remain paper based:

• Supplying evidence and supporting documents (in most cases these will need to be sent to the local NE office)
• All Environmental Stewardship Scheme (ESS) activities
• Applications for Mid or Higher Tier
• Applications for Woodland Creation Grants
• Amending a CS Agreement
• Transferring a CS Agreement

Payments and Contracts

According to Natural England, advanced payments for agri-environmental schemes are nearly complete.  Once these have all been made, resources will then revert to sending out Contracts for 2017 Agreements. These Agreements were due to commence on 1^st January 2017 and are frustratingly late.