Scotland CAP Implementation Plan June 12, 2014 12:00 am Scotland’s Rural Affairs Secretary, Richard Lochhead has announced how the Common Agricultural Policy (CAP) will be implemented from 2015. Central to the new system are ‘tough’ rules to ensure direct payments are only made to genuine farmers and not so-called ‘slipper farmers’. There will also be specific support for new entrants and livestock producers and the introduction of three payment regions. Whilst the announcement provides some additional detail, it poses as many questions as it answers. Transition and Payment Regions There will be a five year transition between 2015 and 2019 to move from the historic based payment method to a regional average payment. Three payment regions will be created. Better land (arable and grassland) will be classed as a single payment region and will receive around €200 to €220 per hectare (depending on the number of hectares declared) including greening. There will be some 1.8 million hectares in this region. Rough grazing will be split to avoid any overcompensation for the least productive land. This will be done using the LFASS grazing classification. Rough grazing in the non-LFA, and in LFASS grazing categories B, C and D, will be in one payment region. This ‘Region 2’ will cover around 1m Ha and attract a rate in the region of €35 per Ha including greening. The least productive rough grazing land in LFASS grazing category A will be the in Region 3, covering around 2m Ha; this will receive €10 per Ha including greening. But in this region there is a proposal to introduce coupled support of around€25 per ewe. However, this is still subject to agreement with the rest of the UK. Whilst having a ewe premium deals with the issue of commercial farms in this very extensive grazing region, it will add significant complication. Older readers will recall the pre-Fischler Sheep Annual Premium with its retention periods etc. Entitlements granted under the BPS will be limited to the area claimed in 2013. Effectively, this means that claimants will get entitlements equal to either the area claimed in 2013 or 2015 – whichever is the smaller. This appears to be an attempt to make sure entitlements go to those who are actively farming, but it begs the question of whether there be some kind of mechanism for those who have expanded their business since then? It will limit the dilution effect on payments as less new land will be bought into the BPS system. However, it will also mean that there continues to be a large amount of ‘naked acres’ in Scotland. There will be a windfall profits clause so claimants’ history is not artificially boosted where land has been given up. Basic payments will be capped at around £400,000 per year, after labour costs ‘part-way’ through the transition period. There is no exact date when this capping will commence, or any details on how labour costs will be calculated. greening money, coupled payments and the Young Farmers top-up are exempt from capping. It is instructive to note that Scottish arable farmers received a payment of around €277 per Ha in 2013. By 2019 it will be down to, say, €210. This is a 24% reduction. In 2019 English farmers are likely to be receiving a bit over €230 per Ha (before any Financial Discipline). Inactive Farmers Mr Lochhead announced that every effort has been made to target active farmers and under the ‘Scottish Clause’; land with no farming activity will not be eligible for direct payments. However, no specific detail of how this will be calculated has been announced. It is clear that this will only apply to land ‘naturally kept in a state suitable for grazing or cultivation’ – i.e. not to all land. The announcement refers to minimum stocking levels, but WTO rules on decoupling do not allow a simply stocking rate calculation to be applied. Therefore ‘alternative measures’ are also proposed. There are no details provided on any of these requirements. Sporting estates will be added to the ‘negative list’ which will mean they will not receive Pillar 1 payments unless they can prove they are a genuine farm business. But again, there is no indication on how a sporting estate will be defined. Top-up Payments As well as the Sheep Premium in Region 3, there will continue to be coupled support for the beef sector. Around 8% of direct payment funds will be retained for a calf payment similar to the current Scottish Beef Scheme. Animals with 75% beef genetics will receive an annual payment with a higher rate paid on the first 10 animals claimed. Rates are estimated at €170 per head for the first 10, and then €85 for the remainder.. In addition (subject to EU approval) there will be a coupled top-up payment for beef producers on the islands of approximately €65 per calf. There will also be a new £45 million three-year beef improvement scheme, ‘Beef 2020’, available through the Scottish Rural Development Programme (SRDP). The detailed shape of the package has not yet been finalised although it will focus on genetics and herd performance. The Young Farmers Scheme will pay a 25% supplement on the value of the regional average payment on the first 90 entitlements held. This scheme is available to those 40 years old or younger when the BPS starts. It is a seprate scheme from any new-entrant provisions (see below). Greening The three crop rule has proposed a significant issue for specialist barley producers. The Scottish Government is seeking approval from the European Commission whereby a winter cover crop is used. This gives the same environmental outcomes but will not affect production. This use of the ‘equivalence’ provisions requires EU approval. It is not clear whether or when this will be received, but the Government has said it will implement it as soon as possible but it may not be in place for 2015. Therefore Scottish farmers could need to comply with the thee-crop rule next year. With reference to Ecological Focus Areas (EFAs), there are no details available on the weighting factors and co-efficients as work continues with stakeholders on this area, but the following will count towards EFAs: Buffer strips Fallow Field margins – including hedges and ditches Catch and cover crops Nitrogen-fixing crops Nitrogen-fixing crops will be subject to ‘management’ conditions, although no detail has been given. It seems wooded banks, trees, ponds and stone walls have all been excluded, together with agro-forestry and short rotation coppice. The complications in mapping these features and the risk of EU penalties seem to be the issue. The other greening measure is Permanent Pasture. Subject to EU approval, farmers with permanent grassland will have to produce a fertiliser plan, with the possibility of a soil analysis being introduced in later years to verify this. In addition to the funds already outlined above which will be available under the SRDP, Mr Lochhead has announced a further £10 million per year available for agri-environment schemes and that the budgets for LFASS, forestry and LEADER will be maintained. The capital grant scheme for crofters will also be reinstated. New Entrants New entrants who could not claim under the old SFP scheme will now receive the regional average payment rate from the start of the BPS via the National Reserve. This will mean it will could have to be larger than the standard 3% – depending on the level of claims. Again no specific detail is provided on this scheme, save to say future new entrants will also be able to apply to the National Reserve as the Government has agreed that this mechanism can be repeated in the future. New Entrants will also be supported via the SRDP through start-up grants of €70,000 plus capital grants and specific advice from the Advisory Service. The National Reserve will be funded on an ongoing basis through a siphon on entitlement transfers without land. General The announcement does provide some of the answers that producers urgently needed, but there are still large gaps in the plans. Many important details still require work and in some cases approval from the Commission and the UK Government. In the meantime time continues to pass and the start of the scheme gets ever closer. The Scottish Government has added considerable complexity in trying to address the concerns of various different constituencies in Scottish farming. This appears to add considerably to the task of implementing and administering the BPS. We hope they have not bitten off more than they can chew. The full announcement made to the Scottish Parliament can be found at: http://news.scotland.gov.uk/Speeches-Briefings/Richard-Lochhead-CAP-statement-d83.aspx
