Welsh BPS Proposals

It looks increasingly likely that there will be a single region under the Welsh BPS – resulting in some significant redistribution of support in the coming years.  The Welsh Government has just launched a consultation on how the BPS should be structured.  This comes after proposals to introduce a three-region model including a Moorland region were ruled illegal(see December article). 

The consultation identifies 4 main options (A-D) and three Top-up options (E-G).  Reading between the lines of the ‘consultation’, and what might be allowed under EU legislation, it seems clear to us that a single region with some Redistributive Payment seems the clear favourite.  Below we have summarised the options and the Welsh Government’s comments. Are own comments are in italics.

Option A: Introducing three regions (SDA, DA and Lowland). The WG comments that the current mapping information is not detailed enough and there is not enough time to remap.  We are unsure why this has been included; it appears it is not a feasible option and has already been ruled out.

Option B: Flat rate from 2015. This option is ruled out as having a too dramatic a change too quickly.

Option C: Flat rate by 2019:  This would take place in five equal steps, with all claimants by 2019 reaching the estimated payment rate of €176 per hectare.  Modelling shows that around 47% of claimants would see lower payments by 2019 whilst 53% would have higher payments. Under 1,200 claimants would see payments fall my more than €2,500 each year.  This seems by far the preferred option.

Option D: Tunnelling. This would take a longer period to move to the flat rate, 7 years has been proposed under this option. This option creates the same number of winners an losers as Option C but the annual change is diluted.

One of the four options above must be selected.  However the only feasible options seem to be C and D. The table below shows the transition in payments to 2019 based on current payment amounts.  

The Top-up options are detailed below.  According to the Welsh Government none, one, two or all of these options can be used.   

Option E: Redistributive Payments. EU regulations permit a top-up payment on the first hectares. The Welsh Government is proposing to use 30% of the budget for the Redistributive Payment, with the first 54 hectares receiving a top-up.  This would mean a flat rate of €124 per hectare on all land with the first 54 hectares receiving an additional €119 per hectare.  Farmers with less than 125 Ha would benefit using this option compared to simply moving to a flat rate.

Option F: Adjustment of entitlement allocations by limiting entitlements. This option would limit the number entitlements to the number of hectares claimed in 2013 or the number that would be allocated in 2015, whichever was the smallest. This seems to be the same as Scotland proposed – and this was disallowed by the EU so seems an unnecessary inclusion to the consultation.

Option G: Adjust entitlement allocations by a reduction coefficient. This would reduce the number of entitlements allocated for hectares of permanent grassland in areas with difficult climatic conditions. The Welsh Government acknowledge that remapping would need to take place and that time required to do so would put paying within the 2015 payment window at risk.  Therefore this looks unlikely to be favoured. 

The consultation assesses how each of the four main options fit with their objectives.  Meeting legislation and paying as soon as possible are the two key objectives.  Other objectives are movement to a common payment rate by 2019, providing time for claimants to adapt, minimising financial disruption to the industry, allowing new entrants to claim and recognising different types of farmland. Option C meets these more than any of the others.

The consultation also looks at the comparison between using option C alone or in combination with option E (Redistributive Payments). Over ¾ of claimants are forecast to do better using the combination than using Option C alone. The table below shows estimated 2019 payments depending on farm size.

Reading through the consultation it seems odd that so many options have been given as the Welsh Government already knows that some will not work/not be allowed.  It seems clear to us that Option C (Flat rate at 2019) and Option E (redistributive payments) are the Welsh Governments favourite. We wait to see what will be announced in July, what is for certain is that a decision will not be announced prior to the application deadline (even if that is extended).