Farm Subsidy: Reasons For Optimism Up The Hill This Christmas

11th December 2013

Many farmers reading this will already have received their SPS payments in the 1st week of December, making this probably the most punctual subsidy payment that anybody can remember. The general feeling is that after several difficult years, the RPA have finally got the hang of it.

Indeed there is a feeling expressed by some that we are currently enjoying better times, at least as far as subsidy is concerned – the Euro to Sterling exchange rate is favourable, everybody understands what is expected of them in order to claim and the Euro value of entitlements has now stabilised, with only a marginal variation from last year. The preference of many people seems to be to let sleeping dogs lie.

But, as most readers will be aware, there has been protracted discussion among EU governments about reform of the system from January 2015. This has caused much speculation and no little concern about costly reductions in payments, and new layers of complication in order to remain eligible for support. Thankfully, the fog is now beginning to clear, and the view from the hills could be worse.

Let’s cut to the chase; what most of us want to know is, “will we be getting more or less support?” which is of course the critical point in any business planning. Well the exact sums are still being decided at the moment, but clues are emerging. One option being seriously considered is to “push money up the hill” by nearly doubling moorland payment rates, and to make SDA and Non-SDA payments worth the same. All this would be paid for by a small reduction in Non-SDA payment values.

The figures being debated suggest (using this year’s high Euro rate) that the payments would work back to roughly £80/acre for Non-SDA and SDA, and £21/acre for Moorland, compared with payments this year of approximately £86.26/acre for Non-SDA land, £69.34/acre for SDA and £12.25/acre for Moorland.

There is already talk of SDA entitlements being valued more highly than previously in the marketplace in the hope of their claim value climbing when they are rolled forward into the new scheme.

We also expect, in an exercise in common sense, that the Greening requirement not to reduce permanent pasture by more than 5% will be applied nationally, rather than at individual farm level at the moment. As this is the only element of Greening that will affect many upland livestock farmers, there is a feeling that this is something most can probably live with.

There is also a changing picture for environmental stewardship after 2015, this time possibly not all for the good. Incredibly, after years of pushing to try and increase numbers of farmers in stewardship, DEFRA’s stated aim is now nearly to halve the area of land under environmental management.

The new schemes are still being designed but we are told there will be no more universally available ELS style scheme, although an equivalent to HLS is to be offered for sites of high ecological value. In addition, there will be a scheme which, rather vaguely, will be focussed on offering “landscape scale agreements” whereby multiple agreement holders would sign up to the wider management priority in their area. It is easy to see how both of these new schemes could be expected to fit well in upland areas.

All in all, whilst the sleeping dog may have been disturbed, in the uplands at least it may well be content to curl up by the fire again by next Christmas on the eve of the new subsidy regime.

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