BPS Update November 26, 2014 12:00 am Our article last month reported on the new information contained in the October CAP Update from DEFRA. Now the dust has settled, it is worth looking at where we are in terms of knowing the rules. In general, we are most of the way there in terms of Greening – although one or two important questions remain outstanding. There are also elements of the wider Basic Payment Scheme in England that need clarification. A further CAP Update is expected in December. Hopefully this will answer most of the questions. Consolidated guidance for the BPS is expected in the New Year. In the meantime we set out below both some of the queries we have, and some further interpretation of the rules as we understand them. Greening – Crop Diversification Firstly, a question. What happens with cropping changes during the cropping period (1st May to 30th June). This is a wider issue than just early harvest which DEFRA has promised to clarify. An example would be someone ploughing up grass to put in a maize crop (quite common). Which crop does one enter (and which one is counted towards crop diversification)? Is a change even allowed during this period? Secondly, there is an interesting issue around Crop Diversification (CD) fallow and temporary grass. It has been confirmed that temporary grass can be used a fallow for both EFA and CD purposes. This may not sound important but consider a dairy farm that has got plenty of EFA (so doesn’t need EFA fallow), but is struggling with CD. For example, it might have cropping of temporary grass and maize (with the maize area over 30 Ha). The farmer could simply shut up some of his temporary grass fields for the CD cropping period of 1st May to 30th June, call them CD fallow, and he has created a third crop. It would also not impact much at all on his farming. He could take a cut of silage on the 30th April, and another one on the 1st July. It has also been confirmed that if temporary grass is used as fallow (EFA or CD) and claimed as such on the form then will this count as an arable crop. It will therefore mean a break in the 5 year chain which makes temporary grass into Permanent Grassland. Ecological Focus Areas (EFA) A number of questions remain around EFA; Grass margins. It seems clear that existing field margins / buffer strips under an agri-environment scheme will retain their arable status even if they have been in place for 5+ years and have had grass on them. The SPS 2013 Guidance (page 36) sets these out. However, what is still not clear is what happenswith other grass field margins. These might have been old agri-environment scheme margins that have been left in place, or just any other grass field margin. Strictly, if they have had a grass cover for more than five years the margins should be deemed as Permanent Grassland. This would render the land, and any adjoining feature ineligible for EFA. However, most of these margins will have all been coded as per the main crop (arable) in the last few years, so effectively their history is unknown to the RPA. It is unclear how this is going to be dealt with. Where there is both a hedge and ditch the interaction of EFA for hedgerows and any possible buffer strip for the watercourse is unclear. What the effective EFA area delivered by such hedge and ditch combos is still to be clarified. The guidance suggests any ditch over 2m is an ineligible feature. This seems new to us. The SPS 2013 Guidance (page 31) indicates a 4m maximum width for eligibility. We are not clear whether there has been a rule-change of whether this is an issue of where the feature is measured from (ditch centre?). It leads on to beg the question that, if the maximum is now 2m where is this measured from – ditch-top to ditch-top?; average water width? We have been questioned whether it is necessary to destroy catch/cover crops at end of their relevant retention periods. It seems there is no requirement for destruction so they could be used for grazing or forage for example. However, DEFRA believe that this is not perhaps in the spirit of the EU regulations so would prefer not to refer to it in print. General Greening Greening penalties. It seems clear that there will be no additional penalties above the 30% Greening payment loss. At one point there was a thought that submitting an non-Greening compliant BPS application might be deemed as intentional non-compliance/over declaration. This will not be the case. In purely practical terms it will be possible to submit an application through CAPIS that is not Greening compliant (the computer will not say ‘no’). Remember that Greening penalties are split in half, so avoiding one element (EFA or CD) only reduces the payment by 15%. The definition of ‘Permanent Crops’ within the Greening land-type calculation. This will simply be on the crop type in place i.e. the crop doesn’t actually have to be there for 5 years or even have the intention of being there for the land to be classed as Permanent Crops. The changeover of land type definitions is not completely clear. For example, if you ploughed up Permanent Grassland in the autumn and planted the field with, say, stubble turnips, would this change its status to ‘Arable’ for the following BPS year. (And then it could be used as EFA fallow from 1s Jan). Is a non-grass crop even required – at the extreme, could the field be ploughed on the 31st December to turn it ‘Arable’. DEFRA guidance has been silenton this point until now. Some clue may come from the Scottish Government guidance. Although not directly relevant, this states that EFA fallow, ‘must have been, in the preceding year, fallow or an arable crop (including temporary grass)’. Active Farmer This issue continues to cause a lot of confusion. It is badly named, and is nothing to do with how much agricultural activity a claimant does or doesn’t undertake. There are only two tests that can render the claimant ineligible. The first test is whether the claimant’s land is mainly land that is ‘naturally kept in a state suitable for grazing and cultivation’ (over 50% of total land) and they do not comply with the minimum activity rules. In England no areas have been defined as ‘naturally kept in a state suitable for grazing and cultivation and therefore this test does not apply. Secondly, they canappear on a ‘negative list’ of entities not eligible by default for direct payments – operators of airports, waterworks, railway services, real-estate services and permanent sport and recreational grounds. Permanent sport and recreation grounds were defined in the October update. Although very few farmers will be caught a couple of examples have come our way where there may be problems; The first example is large country houses who open themselves and their gardens up to visitors. They also have substantial farming interests and will make a BPS claim. This is covered on page 22 of the guidance. The second is farms who have a caravan park (with the farming and caravans all going through the same business). Caravan parks are covered at the bottom of page 24 of the guidance. It appears that as soon as you undertake these activities within your business, you get caught by the active farmer rules. This is irrespective of whether the land involved is going to form part of the BPS claim (gardens couldn’t anyway). We are attempting to verify our reading of the rules. The Active Farmer category not yet defined is ‘Real Estate Services’. An earlier draft of the October guidance did have more detail on this, but it didn’t appear in the final version. Therefore, the rules could well be changing. However, to provide readers with some idea of what may be covered we set out the earlier definitions below. Professional property developers, real estate agencies and natural/legal persons managing real estate on a fee or contract basis will all be considered to be operators of real estate services. Specific examples of those who will fall under this heading are: Applicants who have bought land in the current or previous three calendar years and planning permission for a non-agricultural use on that land has subsequently been granted Those acting as agents for the sale or letting of land or property by others, and those who manage property owned by others for a fee or commission. Companies listed on the London stock exchange as operating in relevant sectors. The following will not be considered as operating real estate services: Renting accommodation facilities on a farm Renting out apartments or homes that are in a farmer’s private property Letting out part of the buildings or surfaces on the holding’s premises, Letting agricultural land forming part of the applicant’s holding to third parties If this definition, or something like it, emerges in the final guidance most claimants will not be affected. One specific category that we have found problems with is claimants (often large estates with an estate office), that also do some estate management for third parties. Even £1 of fee income from the management of someone else’s property turns them into a real estate services company. Other BPS Points Some other points to be clarified in England include; Detailed eligibility rules for the National Reserve. Detailed eligibility rules for the Young Farmers Scheme. This includes the trigger point from when the 5-year period will run. For example, what happens if business commenced in 2014, but no claim was made? Confirmation that the 28-day rule (non-agricultural use) will continue under BPS. There are probably other things and, as ever, we are happy to discuss queries or try and answer on specific issues. Hopefully the next CAP update will answer some of these points.
