English CAP Reform Implementation

DEFRA’s consultation on CAP reform in England was published on the 31^st October.  This gives some clear pointers on how the new subsidy arrangements are going to work in England.  Although titled a consultation, a number of key decisions have already been decided by Ministers.

A brief summary of the key decisions already made are;

• existing SPS entitlements will be ‘rolled-over’ into the new Basic Payment Scheme (BPS).  This means there will be no need for a re-grant of entitlements and all the issues around the ‘golden ticket’ relating to 2013 claims, and business changes become irrelevant.
• the three basic EU greening measures will be enacted.  These are crop diversification, retention of permanent pasture and Ecological Focus Areas (EFAs).  The option of a national certification scheme has been rejected as being too complicated and open to disallowance (EU fines).  This, at least, puts English farmers on the same footing as those elsewhere in Europe in terms of greening.  Although not specifically stated,it seems clear that the permanent pasture test will be operated at a national rather than farm level.
• the three existing English regions (lowland, SDA, and moorland) will be retained.  But DEFRA is looking hard at the option of shifting funding between the regions to boost hill incomes (see below).
• the minimum claim size for the BPS will be 5 hectares (under the SPS it is 1 hectare).  This will exclude around 16,000 of the current 100,000 claimants.
• there will be no coupled support in England, no Small Farmers Scheme and the ‘top-up’ for Areas with Natural Constraints (hill areas) will not be used initially.  As it is a mandatory EU requirement, there will be a Young Farmers Scheme in England.
• there will either be capping (degressivity) or the redistributive payment.  Both will not be used and DEFRA seems minded to go for the degressivity option. 

Given all these decisions that have already been made there perhaps would seem little left to consult on.  Despite that, the consultation document runs to 109 pages.  (Perhaps then, not surprising that it took Ministers a while to sign-off on its publication).  The main areas on which the Department is asking for industry views are;

• whether the payment rate in the lowland region should be cut (marginally) to fund higher payments in the SDA and moorland regions.  DEFRA’s preferred option appears to be equalising the lowland and SDA payment rates and giving a sizeable increase in the moorland payment.  This would boost sums going to the uplands by €43m per year. 
• how to implement payment reductions.  DEFRA’s preferred option is to implement degressivity at the lowest 5% rate and not introduce the salary mitigation option.  The redistributive payment would not be taken up.
• how to operate the active farmer test.  The first part of the test has a ‘negative list’ of entities that are not automatically eligible for the BPS (water companies, railways etc.).  DEFRA has an option to extend this this, but appears minded not to do so.  The second part of the test refers to minimum activity levels on land ‘naturally kept in a state suitable for agriculture’.  The detailed EU rules have not yet been written on this test so it is not included in the consultation.  DEFRA states it will discuss the rules with stakeholders early in 2014 when more detail is available. 
• the detailed operation of the Young Farmers Scheme.  This asks on what number of entitlements the top-up should be paid, and what, if any, qualifications those applying should have.
• within the framework of the three basic EU greening measures, can they be made more beneficial for the environment?  This revolves around EFAs and what land should count.  There is a specific focus on trying to encourage pollinators. 
• the shift of funds between Pillars (this used to be called ‘modulation’, of course, but the new term is ‘inter-pillar transfer’).  It is fairly clear that DEFRA is strongly leaning towards a shift of the maximum of 15% of Pillar 1 into Pillar 2. 
• how the new Rural Development Programme should operate.  This is particularly focused on the balance of funding between environmental schemes, farming competitiveness, rural growth and the LEADER programme.  This is obviously closely linked to the issue of inter-pillar transfers as the ambition of the next RDP will be limited by funding. 

All the documents can be accessed via – https://consult.defra.gov.uk/communications/cap-consultation.  Various impact assessments and supporting papers are included alongside the consultation itself.  The closing date for responses is the 28^th November.  There will be a series of regional workshops where DEFRA officials will be on hand to take views. For more details see – http://rdpenetwork.defra.gov.uk/activities/all-activities/cap-consultation-local-workshops.