CAP reform: what it all means to farmers

Direct Payments

The overall UK pot, or ceiling, for direct payments will remain largely unchanged over the 2014-2020 CAP period. But the money will be used in different ways.

• Basic Payment Scheme, subject to cross compliance – compulsory.
• Greening element (30 per cent) - compulsory.
• Small farmers scheme – (up to 10 per cent) – compulsory. 
• Young farmers scheme (up to 2 per cent) – compulsory.
• Areas with Natural Constraints (up to 5 per cent) - voluntary.
• Coupled payments (up to 10 per cent) – voluntary. 

NFU senior CAP adviser Gail Soutar said the Basic Payment could end up at between 43-58 per cent of its equivalent today, the Single Payment scheme, although farmers will be able to claim additional funds through the other aid ‘pots’.

Who will qualify?

Only ‘active farmers’ will qualify for direct payments. Applicants would need to demonstrate their direct payments represent at least 5 per cent of any non-agricultural income (ie if direct payments are £1,000, they must not earn more than £20,000 outside farming). They must also carry out a minimum level (to be set by the member state) of farming activity on their land.

The NFU and CLA say this 5 per cent economic test will be bureaucratic, difficult to enforce and discriminatory.

Entitlements

Entitlements will be allocated based on applications made on May, 15 2014. New entitlements will be allocated on the basis of eligible hectares declared but only to those who activated at least one payment entitlement in 2011. This is order to prevent landlords taking land back to claim it in future, Ms Soutar said.

There will be provisions for new entrants who started farming after 2011 to receive entitlements in 2014 and going forward from the national reserve.

Move to area payments

All Member States will be obliged to move towards a uniform area payment at national or regional level by January 2019.

This will be phased in over five years with a 50 per cent area-historic split in Year One.

This will affect Wales and Scotland, which currently operate an historic model, but not England. NFU Cymru president Ed Bailey said the move is a concern in Wales. He had heard from one farmer who will lose £20,000 in year one alone, he said.

Greening

In order to receive the 30 per cent top up, farmers must:

• Maintain 95 per cent of permanent pasture;
• Cultivate at least three crops on arable land of more than 3ha, with none accounting for more than 70 per cent and none less than least 5 per cent.
• Maintain an ‘ecological focus area of at least 7 per cent of farmland (excluding permanent grassland), including field margins, hedges, trees, fallow land, landscape features, buffer strips, afforested area.

The NFU warns this will be bureaucratic, take land out of production and discriminate against some farmers, such as dairy producers growing a small acreage of a feed crop.

Young farmer payment

Top up payments, limited to 25 per cent of average value of up to 54 entitlements, will be made to  farmers under 40 setting up for the first time as head of the holding, or who have already set up within the previous five years.

Small farmer payment

Small Farmers complying with the minimum claim threshold (which could be up to 5ha or €200 in the UK) may apply for an annual payment of between €500 and €1,000. Participating farmers will be exempt from greening and cross compliance.

Areas of Natural Constraint

Member States have the option of granting top up payments, worth up to 5 per cent of the national ceiling, to farmers in ‘Areas of Natural Constraint’, effectively the new Less Favoured Areas. 

Recoupling

Member States may grant coupled support to farmers, worth up to 10 per cent of the national ceiling, to create an incentive to maintain current production levels.

Cross compliance

The number of Statutory Management Rules (SMRs) will be reduced from 18 to 13 and Good Agricultural & Environmental Conditions (GAEC) from 15 to 8. But there will be a ban on ploughing carbon rich soils.

Organic farmers

Organic farmers will be exempt from greening and benefit from new aid under Pillar Two.

Capping (or degressivity)

The Basic Payment (greening element does not apply) will be reduced as follows:

20 per cent for payments of €150k – 200k         

40 per cent for €200k – 250k 

70 per cent for €250k – 300k 

100 per cent  for €300+k                   

Salaries ‘effectively paid and declared’ will be offset against the threshold. Members states will take measures to ensure holding ‘artificially’ split up to avoid the cap post October 12, 2011 receive no aid.

UK farming unions say capping will be bureaucratic and hit large, efficient UK farms.

Pillar Two (rural development) and modulation

Pillar Two, covering rural development, will continue with six priorities, including preservation of eco-systems and tackling climate change. 

Compulsory EU modulation will end, although member states will have the option of shifting up to 5 per cent of total funds either way between the Pillars.

One of the UK’s biggest concerns is that agri-environment schemes will receive less funding and also be harder to operate, if, as is likely, Pillar One greening measures overlap with current agri-environment scheme measures.  

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