CAP Reform Update October 30, 2014 12:00 am DEFRA has published further details on the implementation of CAP reform in England. The full guidance document can be found via https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/367701/cap-reform-october-2014-update.pdf This publication tidies up a few loose ends on Greening and covers other elements of BPS including Active Farmer. Whilst is does tick off a few more points, confirmation from the Commission is still required on some of the finer details. Further guidance is expected before the end of the year. The sections below concentrate on where new information is available or where changes from previous announcements have been made. Exchange Rate DEFRA has confirmed that from the 2015 scheme year the euro exchange rate used to convert BPS payments from Euros into Pounds will be the average throughout the whole month of September; currently it is the rate on 30th September. Crop Diversification – Inspection Period Under the Crop Diversification rules, the crop in the ground during the period 1st May to 30th June will count. This is known as the ‘cropping period’. The RPA will inspect 5% of claimants during this time. For Crop Diversification, fallow land would just have to be out of productionfor this May to June period, but note that EFA fallow land has a longer period – see below. Where crops are harvested before the 30th June, stubble will be judged to be evidence of a crop having been grown. DEFRA is also looking at other sources of evidence for early-harvested crops such as photographs or cropping records. Discussions with the EU Commission are ongoing on how to treat other crops that do not fall neatly into the May to June cropping period or if crops have failed. Crop Diversification – Winter v Spring Crops As previously published, winter and spring crops will count separately for Crop Diversification based on varieties. Previous guidance referred to the ‘National List’ –http://www.fera.defra.gov.uk/plants/publications/gazette.cfm and the PGRO’s Recommended List – http://www.pgro.org/index.php/. The latest DEFRA Guidance states that for varieties not within these publications the EC Common Catalogues should be used – http://ec.europa.eu/food/plant/propagation/catalogues/database/public/index.cfm – within this varieties labelled ‘forma hibernalis’ are winter varieties, those labelled ‘forma aestiva’ are spring varieties. If a variety is not described as either it will count as a spring crop. If the crop is not on any of the above lists check the list of the genus of that crop, if thegenus is not on any of the lists the RPA must be contacted. The most up to date list of crops can be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/367703/cap-reform-october-2014-diversification.pdf EFA – Hedges The long awaited information on hedges has been published and rules seems to have taken a much more sensible turn. The definition of a hedge is the same as it is for cross compliance, a hedge will only qualify for EFA if it is adjacent to arable land and of a continuous length of at least 20m (this can includes, rather generously gaps, of up to 20m – see below). However a continuous length of hedge that is less than 20m but meets another hedge at each end will be eligible. There is no minimum or maximum width or height of hedge, therefore newly planted hedges will be eligible if in the ground when the application is made. Hedges can include gaps, there is no limit on the number gaps you can have as long as none of the gaps are over 20m wide. Hedges separated from the arable land by a BPS eligible feature (e.g. a ditch of less than 2m wide) will be eligible as will those separated by a fence (this applies across all EFA features). Where a farmer has responsibility for both sides of the hedge the whole hedge can be counted for EFA, this includes where one side is adjacent to arable land and the other is adjacent to non-arable land or non-agricultural land (a road or woodland). Where a farmers is responsible for just one side of the hedge, half the EFA value can be counted however the arable land it is adjacent to must be under the farmer’s control. The last leaflet suggested that farmers who used hedges to satisfy their EFA requirement could face payment delays. DEFRA has now rescinded this comment and says they are ‘planning an approach’ so farmers will not be at a disadvantage in the timings of their payments. Although this is good news we do not yet know what this approach is, it could be that hedges must be verified on the CAPIS or applications may need to be made earlier. EFA – Buffer Strips These need to be next to a watercourse. They can also be ‘parallel with, and on a slope leading to, a watercourse’ – this has now been clarified as an infield buffer strip, this must be within the parcel that is alongside the watercourse and have arable land on both sides. If this buffer is located on temporary grass or fallow it must be distinguishable. Each side of the watercourse can be associated with one buffer strip alongside it and one infield buffer strip. EFA buffer strips and fallow land can be situated alongside each other but the two must be ‘visually distinguishable’ for the purposes of inspections. In practice this is likely to mean that the fallow land will be mown and the cuttings left on the land and the buffer strip left. Fallow land The Commission has also taken a U-turn on sowing grass within the fallow period (EFA fallow period is 1st January to 30th June). Previously this was not allowed, but the latest guidance confirms land can be sown to grass during the fallow period as long as no agricultural production takes place within this period. This applies to fallow land used for both crop diversification and EFA. Grazing and harvesting (except of wild bird seed mixes) is allowed after the end of the fallow period (from 1st July onwards). EFA – Catch Crops and Cover Crops Further guidance has now been published as to what crops can be grown. Farmers must sow a mix of one cereal and one non cereal from the following; Rye Vetch Phacelia Barley Mustard Lucerne Oats Grass can also be used as long as it was under sown in the previous crop and is sufficiently established. The guidance goes on to advise farmers to avoid grazing and to establish the next crop quickly after the catch/cover crop has been destroyed, however this does not seem to be a hard and fast rule. It is worth noting that mixes that contain crops other than the 7 listed above will not be eligible for EFA. Kale and stubble turnips are not allowed. BPS Entitlements It has been well publicised that farmers must have at least 5 entitlements and 5 hectares to claim BPS. Less known is that a farmer must activate all of their entitlements in a single year at least once every 2 years, i.e. you cannot rotate entitlements anymore to avoid losing them. In addition to this, in 2015 all excess entitlements will be lost. If a farmers holds entitlements which are both leased and owned excess entitlements will be taken away on a proportional basis. This means some leased entitlements may not be returned, this may cause difficulties when entitlement leases and FBTs come to an end. The trading period for Single Payment Scheme (SPS) entitlements has now closed, but the trading window will reopen in the New Year for Basic Payment Scheme (BPS) entitlements. This will be done via the new online CAP Information Service (CAPIS) and will require both the transferor and the receiver to be registered on the new system. The person transferring the entitlements does not need to be an ‘active farmer’ (see below), however the person receiving the entitlements must be (at the time of the transfer). BPS entitlements can be transferred permanently or by lease with or without land. It is possible for a non-active farmer to lease out their entitlements, in such cases the owner does not have to be an active farmer when these are returned. The deadline for transferring entitlements will be midnight on the 15th of May (not six weeks before as they will be done online on the CAP IS) however farmers will need to leave themselves enough time to submit the BPS application to avoid late application payment reductions. Young Farmers and New Entrants Around 3% of the total BPS budget will be used to set up a ‘national reserve’ this will be used to create entitlements for new entrants and young farmers. It is possible for new entrants or young farmers to be either a sole trader, a partnership or a legal person i.e. a limited company, as long as they are able to show they are ‘in control’ of the business. In practice this means they must be ‘exposed to financial risk based on the success or failure of the business’. It is possible to have more than one person in control of a business but there needs to be a formal agreement for them to vote together (giving majority share) or if they jointly own shares. A young farmer must be at least 18 and not more than 40 years old and provide evidence they have taken over control of the business within the last 5 years, payments of up to 25% of the entitlement value (on a maximum of 90 entitlements) will be paid for up to 5 years. Young farmers will need to apply each year as part of their BPS application, more information about the evidence they will need to supply will be provided later this year. New entrants must be over the age of 18 and have started their agricultural activity in 2013 or later. They must not have carried out or been in control of carrying out any farming activity (at their own risk) in the five years prior to this. New Entrants must apply for BPS within 2 years of starting farming. Applications can be made to the national reserve for entitlements in any year of the scheme from early 2015. Supporting evidence will be required when New Entrants make their BPS application, more information on what will be required will be made available later this year. If successful, new entrants will receive the same number of entitlements as the number of eligible hectares declared. If they already hold some, they will be given the shortfall between the amount of eligible hectares declared and the number of entitlements they already hold. Active Farmer We have previously listed the 5 ‘negative list’ operators. This latest publication has provided more details of who is classified within the negative list and how ‘operators’ can still qualify for BPS. To recap the negative list consists of operators of airports, railway services, waterworks, real estate services and permanent sport/recreational grounds. Most commonly we have been questioned about the real estate services, this is likely to only be property developers and estate agencies and will not include those renting out buildings for accommodation or offices. Although more details are still to follow. Airports are only those licensed by the Civil Aviation Authority for public or ordinary use. Railway services include those operating a timetabled railway service, operators of tramways and miniature railways are not included. Waterworks only includes the 27 licensed utility companies. Permanent sport and recreational grounds includes those where the grounds are dedicated and kept throughout the year for sporting or recreational use and the grounds include one or more permanent structures and the facilities are not just for personal use. The guidance supplies a table of examples Those who are not deemed to be an active farmer can still provide evidence to prove they are eligible for BPS. Farmers in this situation must satisfy one of the following; Annual SPS/BPS payments (incl greening, young farmer payment and Rural Development receipts) are at least 5% of the total non agricultural receipts. Agricultural receipts (this includes only activities on the holding, contracting for another business will not be an agricultural receipt but will count in the total receipts) are at least 15% of total receipts in the most recent financial year. Their principal business or company ‘objects’ include an agricultural activity (no further information is available on this currently). Evidence for the above must be submitted prior to the BPS application deadline. Environmental Stewardship Due to a change in EU rules from 1st January 2015 Environmental Stewardship holders will have to submit a claim each year to receive their payments, this will apply to new agreements and existing agreements. All payments will also be aligned to a January 1st payment schedule, details are being sent out to affected agreement holders over the coming months. The New Environmental Land Management Scheme (NELMS- still to be renamed?) agreements will start from the 1st January 2016, applications will be available after July 2015. Applications for capital water grants and woodland grants will be accepted and paid within 2015. These will be available throughout each year whereas new multi annual agreements will all start on 1st January. We have been given some indication of the value of NELMS agreements, although they will vary significantly from case to case the average middle tier agreement over 250Ha wouldbe worth around £5,000-£7,000 per year, this equates to £20-£28 per hectare. Capital grant funding could be applied for on top of this. Higher tier agreements are likely to be worth more. This latest leaflet seems to have tied up some of the loose ends from the August update, however there is still some discussions going on between the Commission and DEFRA. Further releases are expected later this year, including more details on NELMS.
