CAP reform update December 2013

CAP reform update

The 10 draft delegated acts containing the final EU regulations for the reform were presented on 11 March 2014 for approval. We also include the latest on the Greening payment, Entitlement Trading and the payment regions in England.

 

1. Penultimate Stage Agreed

The 10 draft delegated acts (legislative detail to proposals) containing the final EU regulations for the reform were presented on 11 March 2014 by the Commission to MEPs and member states (national agricultural ministers) for approval, or otherwise.

While the MEPs and member states had two months to approve the acts, and the possibility of another two-month extension, the acts have now been accepted by both parties. However, the acts are unlikely to be published in the Official Journal, and thereby pass into law, until the end of the formal consultation period on 11 May 2014.

2. Greening Payment

Nitrogen Fixing Crops

In order to obtain agreement the contribution of Nitrogen fixing crops to the Ecological Focus Area (EFA) requirement has been increased so that 1ha of Nitrogen fixing crops is now equivalent of 0.7ha of EFA (rather than 0.3ha as originally stated).

Final Stage

Member states (e.g. Defra) still have to select which EFA options will be made available and for some of these options the implementation details. However, it would be expected that as a result of the early agreement to the EU legal texts, member state decisions will be made very soon after publication on 11 May 2014.

The qualifying EFA options have to be equivalent to 5% of the arable area. The options and weightings available to member states from the EU are shown in the table below:

Table 1: EFA Options and Weightings - click to view

According to Defra crops may comply simultaneously with the EFA and Crop Diversification.

The most significant decision will be the minimum width of buffer strips and field margins. The width would have important implications for the relationship of the EFA with cross compliance and stewardship. Double funding with stewardship is not permitted but a 1m strip would substitute for the current cross compliance strip alongside hedges and water courses and consequently not result in double funding.

The requirement will need to be in place by January 2015 and therefore this autumn for most arable farmers. This will involve a lot of measuring and mapping.

Penalties for the Non-fulfilment of Greening

The delegated acts confirm that the maximum penalty for not meeting one of the greening requirements , such as crop diversification or EFA, is 50% of the 30% greening payment i.e. 50 % of about £60-70/ha. This means that the loss might be no more than making a poor management decision on, say marketing wheat.

For smaller contract farming agreements crop diversification may not be worthwhile but it is important that both parties (farmer and contractor) agree.

3. Entitlement Trading

The main marketing year for entitlements has now ended. The £300/entitlement promoted by some, proved not only illogical but incorrect and prices stabilised well below this.

In England, the trading window for next year (2015), in England, will be closed from 17 October until mid-January. This is partly due to software upgrades and in part because entitlements in the new regime can only be sold to “active farmers”.  Active farmers exclude those operating airports, railway services, waterworks, real estate services and, permanent sport and recreation grounds unless re-admitted into the scheme as a consequence (of for example) the scale of their farming activity.

However, entitlements will be held by non-active farmers but these bodies (individuals, companies etc) will not be able to claim. It is likely that some bodies will move in and out of eligibility.

4. English Payment  Regions

The payment regions in England will reduce from three to two leaving the Non-SDA (main region) and the SDA combined with the moorland region.

Moorland farmers will receive about £26 per ha more than currently under CAP payments from next year bringing their payments up to about £56-£60 (€70) per hectare. Net payment rates in the main Non-SDA region are likely to be slightly lower than now at, say, €260/ha.

 
 

Key contacts

Andrew Wraith

Andrew Wraith

Director
Food & Farming

Savills Lincoln

+44 (0) 1522 508 973

+44 (0) 1522 508 973