CAP Reform – still waiting for the detail

15th May 2014

In our series covering Cap Reform, Claire Bainbridge, Director of Research for George F White discusses in further detail the up and coming changes to the subsidy system.

Over the last month there has been very little concrete news released from DEFRA regarding the new scheme. The announcement at the end of April that the payment rate for Moorland would be increased by £26 per hectare (making the moorland payment up to about £56 per hectare), was very welcome for those with moorland. The 2013 payment rate was at £38, so the increase is significant. When looked at in context with the possible payment rate of €244 for both SDA and Lowland for 2015 under the Basic Payment Scheme (approx. £202) farmers with land across the North East can now start to plan what their payments could be from 2015 onwards.

Yet we still await the detail on fundamental elements to the scheme such as the definition of an active farmer, rules associated with claiming on common land, dual use and cross border farms. More significantly, for those farming and getting on with the job, there is still a significant amount of detail still to emerge on the greening elements and with DEFRA announcing that it will not be making any further announcements until after the European elections on May 22nd, the wait goes on.

There have been several reports recently in the farming press giving detail on the Ecological Focus Areas and what options are available, however it should be made clear that DEFRA has still not announced what the possible options are for EFA’s. Understanding aspects of Greening such as the weighting that is being given to many of the EFA options will be important, but the reality is that until DEFRA release what the EFA options will be it is hard for farmers and land managers to plan what to use or do.

One announcement that has emerged from the European Commission is that if Nitrogen Fixing crops are to be used as a possible EFA option, they will have a weighting element applied to them of 0.7. What this means is that if you choose to plant clover as your nitrogen fixing crop to satisfy your 5% EFA requirement you will need to plant 7.14% of your arable area (with a previous weighting of 0.3 you would have needed to plant 16.67% of your arable area).

What is also still not clear is the interaction of EFA options with stewardship scheme options. It may be that you can use an option for both your EFA and your stewardship – however if this is the case the stewardship payment could be reduced. It’s still not known whether DEFRA will allow double counting and how they would then apply the reduction in payment.

What is important, during this time of ‘limbo’ is to start to really understand what you have on your farm. What area is classed as arable (that includes fallow, temporary grass etc.)? What is permanent grassland on your holding? What temporary grass do you have? Do you have permanent crops? Until you know how many hectares you have of each – which could change from year to year, it is difficult to know whether the EFA applies to your farm and how much land is required for it and whether you need to have 2 or 2 crops..

There has been guidance released by DEFRA in the past months on “Cap Reform in England: What you need to know now” and “An introduction to the new Common Agricultural Policy schemes in England”. With the release of this guidance it would be hopeful to think that the full detail is finally emerging, however this is not the case. It did add definition to the Crop Diversification rules, possible exemptions and how to apply for them.

The 3 crop rule has caused much consternation for those that it will affect. For those already growing more than 3 crops, the 3 crop rule is of limited concern; however for those with block cropping, 2 crop rotations and contracts which restrict change, the 3 crop rule may require significant adjustments to rotations, agreements, cash flow and probably the bottom line.

Exemptions for the EFA’s and Crop Diversification may be applicable, but it is crucial to understand what is classed as arable and what is not. The exemptions are precise and the hectarage of permanent grassland, fallow, temporary grassland and cropped land will all come into play in assessing whether an exemption can be applied for or not. Without wishing to generalise most arable and mixed farms with more than 30 ha of cereal cropping will not be exempt. If you think you may be able to apply for an exemption it is wise to take advice before applying.

George F White are holding a series of free roadshows across the North East to offer guidance on the Basic Payment Scheme and the opportunity to discuss specific queries at the following locations:

Alnwick Rugby Club (Wed 28th May 6.00pm)

Ramside Hall Hotel (Thurs 29th May 6.00pm)

Driffield Rugby Club (Mon 2nd June 8.00am)

Thirsk Auction Mart (Wed 4th June 8.00am).

Email David Wilson or telephone 01665 600168 to book your place.

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