UK: Proposed New CAP Regulations

Recent articles in the press have commented on leaked drafts of the new single farm payment regulations. The proposed regulations were published officially by the European Commission this week and unsurprisingly are not that different from the leaked documents.

It is up to individual countries to decide exactly how the regulations are to be implemented and so much of the practical detail will not be clear until domestic regulations are produced.

Flat rate payment system continues from 1 January 2014

New entitlements will be issued based on the number of eligible hectares being farmed to those claiming on at least one entitlement in 2011. However the payment will be at a flat rate and not related to the number of entitlements held previously.

There will be a national reserve for new claimants. In allocating entitlements from the reserve, individual countries must give priority to new entrant farmers under 40 and may choose to favour areas of the country where farmers are disadvantaged.

As a result, careful thought will need to be given to any restructuring of farming businesses which might change the identity of the entitlement claimant between 2011 and 2014, as it is by no means certain that claims made to the national reserve will be as successful as claims made by existing entitlement holders. The provisions may also disadvantage those who bought land this year with a contract stating that the outgoing seller can claim the 2011 payment, if the buyer has not claimed against entitlements on other land this year, as all 2011 claims have already been made.

It will be possible to transfer the right to claim the new entitlements in a contract of sale/agreement for lease to one farmer only. It is not clear how this would operate where land is being sold in lots. It would be sensible to seek to vary 2011 contracts so that as far as possible any benefit is transferred to an incoming buyer even though the 2011 claim has been made by the seller, where the buyer has not claimed against any entitlements in 2011.

Eligible hectares can include land also used for non-agricultural uses, as long as those uses 'can be exercised without being significantly hampered by the intensity, nature, duration and timing of the non-agricultural activities'.

Additional environmental payment

An additional payment will be made for environmentally friendly farming practices. As currently drafted, these are obligatory and there will be no opt-out for a farmer who wants to claim the SFP. Organic farms do not have to comply.

  • no reduction in permanent pasture and no conversion to permanent pasture constituting more than 5 per cent of the farmer's eligible hectares
  • farmers must grow at least three crops on arable land, none of which must account for >70 per cent or <5 per cent of the arable area. This is likely to be a problem for specialist growers and arable farmers particularly in areas such as East Anglia, who will need to make unsatisfactory adjustments to their crop rotations if they are to comply
  • maintenance of an 'ecological focus area' of at least 7 per cent of farmland which can include landscape features, fallow land, forested areas and buffer strips. This is a more stringent requirement than at present, particularly since the abolition of setaside. It is also likely that there will have to be yet another rethink of this country's agri-environmental schemes as a result.

One piece of good news is that there will be a simplification of the current cross-compliance regulations.

New rules to prevent payments being made to inactive farmers

No payments to be made where:

  • income from the single farm payment is less than 5 per cent of the 'total receipts' from non-agricultural activities in the past year (will not apply to farmers who receive a SFP of less than 5,000 euros/annum); or
  • the farmer fails to engage in 'agricultural activity', which means the rearing or growing of agricultural products including breeding and keeping animals, milking and harvesting, maintaining the land in a condition suitable for grazing or cultivation, or carrying out a minimum level of activity as set by the individual countries.

This provision has caused considerable concern amongst those who receive the SFP but also happen to have other more lucrative business interests. Much will depend on how 'total receipts' is interpreted in the domestic legislation and whether this relates to turnover or profit.

Those clients who have decided to reduce their exposure to financial risk on their land by doing only what is required for cross compliance purposes and no more will also have to ensure that they meet the new requirements in respect of minimum farming activity.

Capping of maximum SFP

The maximum payment is to be capped at 300,000 euros/annum with a 70 per cent reduction for the part of any payment above 250,000 euros, 40 per cent reduction from 200,000 to 250,000 and 20 per cent reduction from 150,000 to 200,000 euros.

Before the cap/reduction is calculated, it will be possible to deduct salary costs for the previous year including NI and tax where these relate to employment. It will be up to individual countries to decide how this is implemented in practice. There is no further detail on whether this will require employees to be actively involved in the agricultural operations or just part of the overall farming business, and whether workers employed seasonally or part-time for agricultural work as well as other work will qualify. Past UK court cases suggest that, for example, gamekeepers are unlikely to be agricultural workers.

On the face of it, it seems unlikely that payments to contract farmers will be deemed to be deductible. Farmers' co-operatives such as the limited liability partnerships which have been set up to pool machinery and workers may also suffer.

New entrant young farmers scheme

New farmers under 40 years can apply to receive an extra 25 per cent on top of the basic payment for five years after starting up (which can be retrospective). The payment is to be capped at the average farm size for that country and the claimant must be a person rather than a legal entity such as a trust or partnership.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions