Changes to the Single Payment Scheme
The Single Payment Scheme was introduced in 2004 (although didn’t start until 2005) and intended to be reviewed/replaced in 2013. Due to changes within the EU the likelihood is that the successor Scheme will not be implemented until 2014 at the earliest (and should last until 2020. The new Scheme will not amend the Single Payment Scheme, but rather be a ‘root and branch’ replacement.
The current draft proposals are complex and if enacted as they currently stand, could have significant ramifications for farm businesses – particuarly those that have diversified.
To apply for the new Scheme only those that claimed at least 1ha of entitlements in 2011 (although this may change to 2012) will be eligible. This will be the ‘reference period’. For those that didn’t claim in the chosen reference period, alternative arrangements may need to be considered.
For those that are eligible, (in effect now hold is what is commonly being called the ‘golden ticket’), they then need to comply with set criteria. In this respect they need to be an ‘active farmer’ carrying out an “agricultural activity” on “eligble land”.
Whilst the current definition of “agricutural activity” is relatively straightforward, “active farmer” is less so. To be an “active farmer” will require annual direct payments under the Scheme to account for at least 5% of total (gross) receipts obtained from non-agricultural activities in any one year.
It would seem that this definition is an intention to enhance the role of CAP payments in supporting incomes. The consequence however, if enacted as it currently stands (and such a proposal will be difficult if the RPA are to implement and monitor) could see many farm businesses losing the payment.
In this instance alternative structures may need to be considered if the payment is to be retained. For some, it may be worth considering how important the current payment is to the business, and whether or not to retain it. In considering this it should also be borne in mind that as budgets are squeezed in the EU and the CAP pot has to be spread further, the successor scheme may not pay quite as highly as is currently received.
It is still early days in the process – details may change as the legislation is debated. It is therefore too early to recommend making changes but for farm businesses it will be worth considering these aspects.