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SFP & Entitlement Trading. IACS Forms

 

 

 

McCrackens have considerable expertise in trading BPS Entitlements. We act for both buyers and sellers to maximise annual payment. All trades of Entitlements are accompanied by contractual documentation.

   

    14th March Trading Report

Trading has been busy over the past two weeks with high value

Entitlements in good demand. Leasing is well ahead of sales as

purchasers go for the safe option. Sales have been slow to come

to the market with vendors price expectation well ahead of the open

market value. Low value entitlements have fallen below a 50/50

split as some vendors try to compete with higher value Entitlements.

This does offer opportunities for better percentage returns and is 

working well for purchasers requiring large lots.

As the health crises worsens we would ask anyone wishing to acquire

Entitlements or complete their SAF forms to do so immediately.

The spread of the Corona virus and the lock down affect which is likely

to materilise could affect DAERA offices. We would urge everyone 

to think ahead, sort out now what you need and don`t put your 2020

Basic Payment at risk.

 

 

  

  2020 TRADING IS NOW IN FULL SWING 

We had a very busy week with many taking advantage of trading

early to acquire high value entitlements.

As usual high value entitlements were in good demand and

in short supply. Similar prices to last year has been achieved

as there has been no shift in the unit value of entitlements from 

last year due to an absence of Government.

It has been difficult to assess how long Entitlements will last and a 

great deal will depend on how and when we in N Ireland exit from

Europe. The purchase of Entitlements would seem to be more of a

gamble with many buyers opting for leasing as a safe alternative.

One thing is certain, there appears to be changes ahead, our advice 

would be, take it one year at a time, there are opportunities to increase

your Basic Payement this year, so.  "make hay while the sun shines"

and dont waste empty hectares!!!

If you have traded entitlements last year do not assume the same 

entitlements will be available this year, our advice has always been

trade early and trade safely!!

 

 

 

 

       

           WE PROVIDE ON LINE

 

 

 

 

BPS SCHEME APPLICATION SERVICE

 

 

 

 

    BOOK YOUR APPOINTMENT NOW

 

 

 

            BREXIT !!!!!

 UNCERTAINTY YES; A CAUSE FOR CONCERN YES

Dont allow it to be a total distraction, focus on what you can

do in the here and now to improve your farm income.

 

                                    2019

ENTITLEMENTS FOR SALE & LEASING  

 Trading for the 2019 year has started get on our list.

 Do not assume last years entitlements will be available

 this year, plan early to maximise your Basic Payement

 

Make sure you know the transfer rules..... No rotation of

entitlements is allowed.

It is important to realise that the same entitlements you

traded last year may not be available this year.

To avoid dissapointment and to make best use of your acerage

available you need to contact this office as early as possible to

secure your deal for the incoming season.

Some transfers do fail !!!! last minute deals are High Risk.

Help us to help you maximise your Basic Payment support.

For advise on all aspects, National reserve, Landlord/Tenant

valuations, Probate etc.

Roy McCRacken MIPAV

 

02882841592/02882840340

 

 

 

 

 

     

 

 

 

BE PREPARED FOR A CHALLENGING THREE MONTHS

As we near the end of January many thought we would be well into the trading of entitlements for the 2016 year. This appears not to be the case, too many loose ends are still to be tied up, active farmers, and who they are, still are causing a problem. 

I cant help but feel this is a problem brought on by DARD themselves mainly because no one could ever define the term "active farmer" in the first place. Clearly when active farmer rules were drafted up no one considered how they were to be applied.

Judging by the many complaints I have been getting, rules appear to be made up as we go along, with little or no information on what is required to make the grade. What is worse, and not acceptable is that when information is requested there is no one at the end of a phone to give any advice. Is our Department of Agriculture becoming just a poorly run administration service? Not good enough from a Department who dont mind throwing the book at the farmer if deadlines are missed or he makes a mistake!!!!!  Yes get it right, but go about it the correct way. Inspections for active farmer status as the very word suggests need to be made on the ground and should have been done in the growing season in 2015. Why has common sense gone out the window.

There are still approximately 4,000 applications to be sorted, we need to forget about the figures being quoted from some sources. I am still getting queries from frantic farmers, some of whom have not had any queries on their application, or not recieved any inspection, who have still to receive their Single FarmPayement, the very lifeline they need to stay in business. 

We provide IACS form filling service.

Are you too busy with the day to day chores down on the farm?

 We can provide advice on the application process and completion of forms.   Our rates are competitive. Tel 02882840340

LOOKS LIKE CAP REFORM WILL SEE THE DEMISE OF THE CONACRE SYSTEM

While the final detail on some crutial points of what is an active farmer have still to be clarified, it very much looks as though conacre lettings as we know them will disappear, especially for those Landowners who anticipate claiming SFP from 2015 onwards. It is important for those Landowners who now find themselves in this position to think seriously about how to cope with the changing situation. We believe there will be scope to work within the leglisation and DARD NI interpretation of the new rules. If a Landowner has previously set his land or part thereof in conacre, and still intends to claim SFP then this will not be seen as working within the new scheme rules.

We believe it is important to have a well documented operational plan as to how you intend to meet the new criteria, you need to plan ahead, and if your plan involves other parties then they need to get involved and their responsibility documented. 

The flexibility of our Conacre system has served the Agricultural community well, it has provided stepping stones for many young farmers joining the industry, it has helped older farmers preserve farms while family members reached a stage where they could join the industry.  We need to make sure that this wheel still turns, to that end we think that a clear defination of the rules on what constitutes an active farmer need to be published.

It is only then can we help create working partnerships which will allow Landowners to claim SFP and offer security and flexibility to manage that land to its full potential, and provide the oportunities for the next generation of Farmers.

If you require any more information please give us a call    Tel  02882840340/02882841592

 

 

EURO CONVERSION RATE FOR 2013/14 SEASON SET AT .836

LANDLORDS / TENANTS WE PROVIDE INDIVIDUAL LEASE/SALE AGREEMENTS TO TRANSFER ENTITLEMENTS

A number of clients have asked us to prepare lease /sale agreements for the transfer of entitlements. These are prepared on an individual basis and reflect what we consider to be a fair assessment of the future options of both the Landlord and Tennant.

Processing of recent transfers.

Because of the large volumes of transfers that were submitted this year processing of recent deals has been delayed. Unfortunately we as stakeholders can not pay out any moneys until a final letter is received, confirming the transfer has taken place.

 

 

 

 

 

                                LATEST ANNOUNCEMENT

 After the most recent announcement on CAP reform from The Minister I feel many farmers and those from within the industry will breathe a sigh of relief.

We will take some time to study the detail but what appears to be a seven year transition in equal steps should not rock the industry too much.

 See summary of decisions announced on 14th March 2014. It should be noted that this is not the finished article and "active farmer " status has still to be clarified clearly. 

 

 

 

 

 

 

                 COOL HEAD NEEDED AMIDST COMPLETE CHAOS

As the trading deadline approaches there is still no clear direction from anywhere as to the final outcome of CAP reform in N. Ireland, discraceful is the only word I would use. Its hard to believe such a fundemental change to the industry could happen amid such a lack of direction and information. Over the past years the major part of farm profits has been SFP clearly this hasn`t sunk in to the decision makers, decisions need to be taken, get on with it and let the industry know what it has to face in the future, that way everyone can plan ahead. 

As expected the market has reacted in a chaotic way although this seems to varie from agent to agent, entitlements still have a value which is not necessarly regulated by supply and demand. Given the uncertainty over the definition of active farming and the opportunity to claim 2014 SFP, we see  no clear reason to drop prices below face value.

We have received an unprecedented amount of telephone calls over the past few weeks, mostly from farmers seeking information. This has meant that some calls have remained unanswered, for which we apologise.

Unfortunately it has just not been possible to answer all the queries or to return all calls.  If you have a querie that you think we may be able to help you with and you do not wish to either buy or sell entitlements please use our email (roy@mccrackens.co.uk) or (roy@agrisales.net) and we will do our best to answer your querie.

As the trading deadline is approaching, hopefully this will free up our phone lines, and enable us to help those who wish to trade their entitlements.                                       

 

AMIDST THE UNCERTAINTY FIVE YEAR AGREEMENTS ARE PROVING POPULAR AND FAIR

There has been a surge of trading over the past few days with Tennants hooking up with Landlords to transfer Entitlements. Finding a fair formula so that no single party can be hauled over a barrell amidst the uncertainty has proved difficult. We have devised a system we think is fair to both parties which sells the Entitlements at well above open market price £370 .00 for 78.33Eu Entitlements bought over five years which is more realistic of their true value. This includes a five year conacre agreement which will allow both parties to get through the new refrecence year of 2015 and not disadvantage either party. The benefit to the Landlord is that he receives a good price of £370/Entitlement (78.33Eu) and the tenant has the security of the land which he has established entitlements on. We advise on land values based over the five year period and to date agreements have been reached. Our agreements have a default clause which again takes into account the uncertainty of the current climate we are trading in. Trading values of higher value Entitlements are based on a template which takes into account the amount recieved for SFP by the Landlord in 2013 and a scaled down during the five year period.

The open market value of entitlements has slipped with many entitlements being quoted at well below their true value, this has been mostly due to an oversupply in the market place and also lack of information on how to calculate their true worth. Based on the latest information from The Minister at the weekend where the Entitlements held and not activated in 2014 will be used to calculate 2015 SFP  we could see the market firm, there are still five weeks of trading left!!!!

 WHAT ARE ENTITLEMENTS REALLY WORTH TO THE ACTIVE FARMER

 This is a question I get asked many times and broadly speaking the answer is the same for everyone, it is the detail which is always different. Firstly I would stress there are still unknowns which could affect returns on ay purchase of Entitlements. The best we can do at this stage is to try and judge the direction we are traveling within CAP reform and the likely outcome the powers that be will arrive at.

I am going to dismiss a default scenarios based on the assumption that no politician would allow this to happen as it would likely mean Political Suiside and the biggest industry in this country would find it difficult to survive the financial shock. The other two considerations are, whether we have a five, or ten year transition period, so far the indications are that it will be more than five and very likely ten.

I am going to illustrate two differing scenarios, a six year period and an eleven year transition period and what you could expect to receive from purchasing Entitlements, I am including 2014 in the calculation.

6 year from 2014 to 2019 and moving to a flat rate of 312Eu one single 78.33 Eu entitlement will accumulate 1141Euros before deductions and taking it through to  2024 it will accumulate 2698Eu.

If it takes 11 years from 2014 to move to a flat rate then a single 78.33 Eu entitlement will accumulate 2027Eu before deductions.

Using the same principal as the above example a 300Eu Entitlementt will earn over 6yrs 1805Eu and through to 2024 it will earn 3362Eu

If it takes 11 years from 2014 to move to a flat rate then a single 300Eu entitlement will accumulate 3289Eu before deductions.

Using the same principal as the above example a 900Eu Entitlement will earn over 6Yrs 3545Eu and through to 2024 it will earn 5102Eu

If it takes 11 Years from 2014 to move to a flat rate then a single 900Eu Entitlement  will accumulate 6597Eu.

It looks to me like you should ask yourself.... why not purchase, see trading as an opportunity to boost your agri support for the next ten years. You should seek plenty of advice from reliable sources and always calculate the risks, cross compliance issues need to be considered, make use of the extra transfer time we have been allocated to do your calculations, you should look at 5 year deals with your Landlord, its another option which helps cash flow, most importantlyl don`t leave your purchase to the last minute things can go wrong.

 

 

 

AGREEMENTS ! !  MAKE SURE YOU KNOW WHAT YOU ARE DOING

At last there are indicators that Landlords and Tenants are starting to think of getting something done regarding SFP and Entitlements. There is however some misunderstanding in some cases of what is actually happening. If you sign a TE1 transfer form it is most likely to be a permanent transfer "A SALE" not a lease as some landowners have believed. If you lease your Entitlements this year they will be lost and will not be able to be established in 2015. If you are a Landowner and you enter into an arrangement with your Tenant who promises to pay you your SFP and not specify how much it is..be careful. After 2014 it will be difficult to calculate the value of your Entitlement as it will be amalgamated with the Tenants, if you have only a verbal agreement I can see plenty of opportunity for disagreement and do not forget your Entitlements have moved permanently!!   For both Landlords and Tenants we would recommend you take advice, make it clear what you have agreed to, formalise any transaction with a written agreement that will carry through to the new system and will include a use of land document (conacre agreement) also.

 LANDLORDS AND TENNANTS DON`T BURY YOUR HEAD IN THE SAND !!!!

CAP reform presents many challenges but burying your head in the sand and hoping it will go away is not an option. We see many farmers within the industry both Landlords and Tennants just not facing up to the reality hoping something will happen that will save their situation. Too many times I have heard "Ah that will never happen!!! They don`t know their arse from their elbo!!  I don`t want to think about it!!!!   Nobody seems to know what`s happening!!!  Thats not fair!!!   Leave well enough alone!!!

Whether you are a Landlord or a Tennant you better believe its happening ...CAP reform is coming and a lot faster than you think!!

Its a major shake up and I would appeal to those who are making decisions .make up your minds and get on with it, so that those within the industry who really matter, can plan their future. Over the past few weeks I have taken hundreds of phone calls from totally confused farmers of one kind or another not knowing where to turn, totally reliant on press articles for information.This is not good enough!!!!

It seems to me that if you are in a Landlord Tennant situation you need to get talking. I believe there are opportunities for both, if first of all you agree that one is not out to take advantage of the other. Unfortunately our conacre system in some cases has left us with a legacy of one side feeling it was their right to take advantage of the other, flexible maybe but not always fair!

If you keep looking back at how it was done, then I believe you will regret it. Landlords we are moving to a flat rate system where the active farmer will recieve the support, the changeover period will be challenging, I would  suggest that you pick your tennant carefully  and invest in him, if you have an Entitlement to sell then your best bet may be the Tenant over a period of years. To the Tennants I would say look at the long term, if a Landlord offers to sell you Entitlements and lease you land to claim them on, see this as a vote of confidence in you, and an opportunity for you to increase and stabalise your farm business. If you purchase the entitlements from the Landlord don`t see it as a way of making a quick buck! because I believe in the future, avaliability of land will become more important in the grand scheme of farming.

Our advice is at the very least  START TALKING THE END OF MARCH IS ONLY ROUND THE CORNER!!!!

 

C.A.P. REFORM "DIRECTION YES" BUT STILL UNCLEAR WHERE WE WILL END UP!!!

Over the past few days a lot of information has come forward about the direction we are travelling within CAP reform.   This has to be welcomed, but for many farmers there is still too much uncertainty to make any real decisions about how to move forward into the new agri. support system.  The definition of an active farmer has been painted with a very broad brush, and is likely to be misinterpreted by many, after the 2nd April its too late to do anything about it.  The advice is "do not push the boundaries of the definition"...  difficult I know when the definition is so unclear. You need to make sure that if you are to claim active farmer status, you are able to prove by your actions, you have taken the finantial risk and made the management decisions.    A few reciepts in a back pocket, or sham marriages, will not work.   Remember the onus is on you to prove your claim.  We still see a lot of soul searching and anger between Landlord and Tennant in many cases neighbours who had a good relationship before this debacle,which is now threatning to spoil friendships within local areas, something I believe to be the very important within rural communities.  

When a family and farm business future is at stake we need clear direction, not grey areas and moveable boundaries within the regulations under the guise of "Cross Complience Issues". This only serves to cause confusion, and a likely loss of a great deal of money.  What is really frustrating, by 2016 the new system will have a great deal more flexibility within a Landlord and Tennant relationship. We believe there are many deals being done at the moment between Landlord and Tennant under forced circumstances because neither parties have a clear understanding of what needs to take place.                       Because entitlements have differing values, both parties need to examine their options carefully and build in safeguards which will achieve the best deal for both, we would advise that any deal should be backed up with the appropriate contracts/agreements.  Over the past week we have taken hundreds of calls from Landlords and Tennants asking for direction and advice. Unfortunately there is no simple template for any agreement and we must examine each one individually.

Do not forget all the above could be in vain if the Politicians do not agree the final points !!!!        On the horison there is still the possibility of all entitlements starting with the same value in 2015.

Its hard to believe the single largest industry in N Ireland, which needs so much forward planning to survive could be asked to tolerate such a situation!!!!!!!

 

S.F.P. AND THE INACTIVE FARMER...... BE CARE FULL WHAT YOU WISH FOR!

This clearly is a complex issue which seems not to be progressing at any great speed, this I don`t mind, provided the best decision for "NI Agriculture" is arrived at in the end. What is disturbing is, there seems to be a body of opinion who are showing total disregard for the contribution Landlords (inactive farmers) play in the grand scheme of things within agriculture in Northern Ireland. What must be remembered is, we have had the current system for a number of years and if we make sudden drastic changes, land values of both sale and conacre is likely to be affected and could leave a lot of individual farmers worse off. I believe this would be harmfull especially to young farmers who are entering the industry and depend on sensible land prices to survive. Yes the active farmer needs support, but if we take away SFP from the Landlord totally then I believe land prices especially conacre will rise dramatically. Worse still, conacre might not exist at all as I believe the landlord with a reasonable SFP will try to maintain his position by half heartedly farming the land.

At many of the recent meetings I attended on CAP reform, it was clear there was a strong voice against support for inactive farmers, however I do believe there is a silent majority out there who need to speak out so that a clear message can be sent to our political leaders and farmers groups/ represantatives lest they fight for a cause on the basis of those who shout the loudest!! 

It is clear that it is not easy to please all sides within the constraints of what Europe expects. In the past all types of farmers had an important role to play within agriculture in N. Ireland whether they be full time, part time or even sofa farmers, we have a unique association with land, probably like no other part of Europe. It might be best not to rock the boat too much!!

  

 
 
 

 

CAP PILLAR I DIRECT PAYMENTS – SUMMARY OF DECISIONS

Final decisions

All existing entitlements will be cancelled at the end of 2014 and new entitlements will be allocated in 2015.

2

SUMMARY OF DECISIONS ANNOUNCED ON 9 APRIL 2014

2. ELIGIBLE LAND

The definition of land eligible for future direct payments will differ little from that under the current system.

Final decisions

Land which can be grazed and forms part of established local practices where grasses and other herbaceous forage are traditionally not predominant in grazing areas will be included in the definition of permanent grassland. In Northern Ireland, this means that grazed heather will continue to be eligible.

3. MINIMUM ALLOCATION OF ENTITLEMENTS AND CLAIM SIZE

The Direct Payments Regulation contains an option to set a minimum size of holding for which the initial establishment of entitlements may be requested. This can be set at a level no greater than 5ha. In addition, there is a mandatory requirement to set the minimum claim size each year at either 1ha or €00. These latter values can be increased up to 5ha or €00.

Final decision

Set both: (i) the minimum area for which the establishment of entitlements can be requested in 2015, and; (ii) the minimum claim size

3

 

(number of entitlements that must be activated each year before any payment can be made) at

3ha.

4. SIPHON ON ENTITLEMENT TRANSFERS

The Direct Payments Regulation provides Member States and regions with the option to siphon off up to 30% (or 50% in the first 3 years) of the unit value of entitlements when they transfer between claimants without a corresponding transfer of land. The amount taken off would be placed in the regional reserve and could be used to meet regional reserve allocations.

Final decision

No siphon will be applied in Northern Ireland when payment entitlements are transferred without land.

5. ALLOCATION OF BASIC PAYMENT SCHEME ENTITLEMENTS TO FARMERS WHO PRODUCED, REARED OR GREW AGRICULTURAL PRODUCE ON 15 MAY 2013 BUT NEVER HELD SFP ENTITLEMENTS

The default provision in the Direct Payments Regulation is that only those farmers in receipt of a direct payment (SFP) in the 2013 scheme year (prior to the application of any penalties) will have an automatic right to establish entitlements under the new Basic Payment Scheme. However, there is an option which would enable Member States and regions to allocate entitlements in 2015 to farmers who never held SFP entitlements previously but who can submit verifiable evidence that on 15 May 2013, they produced, reared or grew agricultural products. This option would allow those businesses that commenced farming after 2005 but which would not qualify as new entrants under the regional reserve to receive entitlements under the Basic Payment Scheme. There is also an option to add additional eligibility criteria regarding appropriate skills, experience and/or education for such allocations.

4

Final decisions

Those who have never held SFP entitlements will be allocated Basic Payment Scheme entitlements under the new regime if they can provide verifiable evidence of production activity on 15 May 2013.

6. REGIONAL RESERVE

The Department intends to establish a regional reserve which will be financed and operated independently of other regional reserves. It will be financed initially by reducing the funds available for the Basic Payment Scheme. The percentage reduction to be applied to create the initial regional reserve cannot be higher than 3%, except if required to meet the needs of young farmers, new entrants or, if so decided, farmers in areas subject to restructuring in 2015. The actually percentage reduction applied to create the regional reserve will be set by the Department based on demand.

The regional reserve must be used to allocate payment entitlements to new entrants and young farmers.

Final decisions

The regional reserve will not be used to allocate entitlements to farmers in order to prevent land from being abandoned, including in areas subject to restructuring or development programmes relating to a form of public intervention.

5

7. GREENING

Farmers who participate in the Basic Payment Scheme must, where applicable, adhere to three greening measures (i.e. crop diversification, permanent grassland retention and provision of Ecological Focus Areas - EFAs) which produce beneficial outcomes for the climate and the environment. Under the Direct Payments Regulation, 30% of the direct payments budget ceiling must be devoted to the greening payment.

The three requirements under greening are1:

1 Note that the requirements described here reflect only the main elements of greening and do not include some of the more technical and complex aspects of the requirements and exemptions.

 Retention of permanent grassland. Permanent grassland is defined as grassland which has not been part of an arable rotation in the previous five years. The agreement requires that the ratio of permanent grassland to total agricultural area shall be maintained and that this ratio shall not decrease by more than 5% compared with the ratio in 2012. The ratio can be monitored at national, regional or sub-regional level. Member States/regions can decide to apply an obligation to maintain permanent grassland at individual holding level in order to ensure that the overall ratio does not fall by more than 5%.

 When the obligation is monitored at the regional level, a decrease of permanent grassland of more than 5% would mean that individual farmers would be required to convert land back to permanent grassland (with the exception of land previously converted to forestry).

 Member States/regions are also required to designate permanent grasslands that are environmentally sensitive and which fall within areas covered under the Habitats and Birds Directives. These designated permanent grassland areas will be subject to a ploughing and conversion ban. There is an option to extend this ban to sensitive permanent grasslands in other areas falling outside of those covered by the Habitats and Birds Directives.

6

 

 Ecological Focus Area (EFA). Farms with more than 15ha of arable land must maintain at least 5% of this area as an EFA. There is an exemption from this requirement for farms comprising more than 75% grassland (or where more than 75% of arable land is in grass/fallow/legumes), providing the remaining arable land on these farms does not exceed 30ha. The 5% requirement for EFA will be reviewed by the EU Commission in 2017 and if deemed appropriate, an increase to 7% may be proposed.

 Member States and regions have a choice of the land uses and features that can be used by farmers to count towards their EFA obligation.

 Under the Direct Payments Regulation, there is an option to use a conversion matrix to apply conversion and weighting factors when calculating the contribution of the individual EFA features to meeting the total EFA obligation at farm level. Instead of directly measuring the area occupied by these features, the matrix could be used to convert, for example, the length of a feature (such as a hedge) into an

Crop diversification. This applies to arable land (defined as land which has been cropped within the previous five years). Claimants with less than 10ha of arable land are exempt from crop diversification. Those with between 10ha and 30ha of arable land, must grow at least two crops, with no one crop accounting for more than 75% of the arable land. Those with 30+ha of arable land must grow at least three crops, the main crop not exceeding 75% of the area and the two main crops together not exceeding 95%. Grass counts as a crop type, with winter and spring crop varieties counting as separate crop types. There is an exemption from this requirement for farms comprising more than 75% grassland (or where more than 75% of the arable land is in grass/fallow), providing the remaining arable area on these farms does not exceed 30ha.

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equivalent area which reflects its ecological benefit and contribution to the environment. The use of the conversion matrix is mandatory in the case of catch crops, green cover, nitrogen fixing crops and strips of eligible hectares along forest edges (where production is allowed).

 There is an option to permit a group of not more than 10 farmers whose holdings are in close proximity to fulfil their EFA requirement on a collective basis, provided their EFA is contiguous. Individual participants in this arrangement would have to ensure that at least 50% of their EFA obligation is in, or is adjacent to, the arable land declared by them. Member States and regions may designate the geographical areas on which collective implementation is possible and impose further obligations on the participating farmers or groups of farmers.

 There is a further option to implement up to 50% of the EFA obligation at regional level in order to obtain adjacent EFA areas. Member States and regions have to designate the geographical areas and the obligations for participating farmers or groups of farmers.

 There is an option which permits Member States/regions to allow or require farmers to use ‘equivalent practices’ to qualify for the greening payment rather than adhering to the three standard greening requirements outlined above. Under this option, farmers could meet their greening requirements through participation in agri-environmental schemes and/or national environmental certification schemes where the practices required of farmers under these schemes are deemed to deliver a level of benefit for the climate and the environment that is equivalent to, or higher than, the standard greening requirements. This would require such schemes to be developed with suitable adjustments to ensure that double funding does not occur.

Final decisions

The ‘equivalence’ option will not be used.

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 At this stage, the ploughing/conversion ban will not be extended beyond the areas of permanent grassland within areas designated under the Habitats and Birds Directives. However, this option will be kept under review and considered for activation if required and if it is shown to represent a viable solution to loss of environmentally sensitive grasslands (should this emerge as a significant problem).

 The option to allow groups of farmers to use collective arrangements for up to 50% of their EFA obligation will not be implemented.

 The option to implement up to 50% of the percentage points of the EFA at regional level will not be used.

 The EFA conversion matrix will be used for the purposes of determining the area of land which counts as EFA.

 The following features and areas will be used as EFA

- Land lying fallow;

- Landscape features required to be retained under cross compliance (which will in any event include hedges, ditches and stone walls);

- Areas of agro-forestry;

- Areas with short rotation coppice with no use of mineral fertiliser and/or plant protection products;

- Afforested areas which were used to claim SFP in 2008; and

- Areas with nitrogen fixing crops.

NB. All the above features must be on or adjacent to arable land with the exception of short rotational coppice and afforested areas.

 The following features and areas will not be used as EFA

- Terraces;

- Buffer strips;

- Strips of eligible hectares along forest edges; and

- Areas with catch crops or green cover.

Permanent grassland will be monitored at regional level rather than individual farm level.

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8. REDISTRIBUTIVE PAYMENT

The Redistributive Payment is an optional measure permitting a flat rate payment to be granted to farmers on hectares activated under the Basic Payment Scheme, up to a maximum limit of 54ha per holding in the case of Northern Ireland.

Final decision

The Redistributive Payment will not be used.

9. SMALL FARMERS’ SCHEME

Up to 10% of the direct payment support budget can be used to operate a payment scheme for small farmers. Participants in the Scheme would receive a single payment that would replace all of the other direct payments that they might otherwise receive. They would also be exempted from both the cross compliance and greening requirements. Farmers would be able to opt into the Small Farmers’ Scheme before the deadline of 15 October 2015 or, alternatively, all farmers receiving less than €,250 could be automatically opted in to the Scheme. However, farmers would have the right to opt out at any stage and participate instead in the standard schemes.

Since the consultation on ‘Policy Options arising from the Reform of the Common Agricultural Policy (Pillar I Direct Payments)’ was launched, clarity has been received on the active farmer issue, which means the actual number of participants in the Small Farmers’ Scheme is likely to be considerably lower than first anticipated - perhaps around 2,400. This would reduce further by 2019 - to perhaps less than 1,000 - as a result of the progression towards flat rate support (which would prompt individuals to leave the Small Farmers’ Scheme as and when their payments under the standard schemes exceeded €,250).

The EU Commission has also confirmed that it will not be possible automatically to opt farmers out of the Scheme once their payments under the standard schemes exceed €,250. Therefore, the Department would need to

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establish a notification mechanism to inform farmers that they should opt out of the Scheme otherwise their payments will be capped at €,250. Inevitably, not all will do so at the appropriate time.

In summary, the Small Farmers’ Scheme no longer offers the prospect of significant simplification (and could even increase the administrative burden given the notification requirement).

Final decision

The Small Farmers’ Scheme will not be implemented.

10. ACTIVE FARMER TEST

The Direct Payments Regulation includes a compulsory active farmer test for those businesses that also operate railway services, airports, waterworks, real estate services or permanent sporting and recreational facilities (this is the so-called negative list). These types of businesses will be prohibited from receiving direct support payments unless they can show that these receipts equate to at least 5% of their non-agricultural receipts, or that their agricultural activities are not insignificant, or that their principal business or company objects consist of exercising agricultural activity. A minimum claim threshold must also apply to this test (i.e. those businesses claiming below this threshold would not be subject to the test). This threshold must not be higher than €,000, but could, in theory, be as low as zero (i.e. at zero there would be no exemption from the test for businesses on the negative list).

There is an option to add similar non-agricultural businesses or activities to the negative list defined above. However, any additions must be made on the basis of objective and non-discriminatory criteria.

There is a further option to exclude any claimant (not just those on the negative list) from receiving payments if their agricultural activities

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