CAP Reform Direct Payments – 3 sections An Introduction to the Basic Payment Scheme, Greening Payment and Young Farmers’ Payment

CAP Reform – Pillar 1 Eligibility of the LAND Eligibility of the PERSON Eligibility to establish and hold ENTITLEMENTS

Part 1. The Basic Payment Scheme

The Basic Payment Scheme Goodbye Single Farm Payment Scheme Hello to the Basic Payment Scheme, a Greening Payment and a Young Farmers’ Payment. The LAND - Entire holding must be declared including land taken in conacre. Non-declaration of land can lead to penalties. The PERSON - Active farmer only will have the right to establish entitlements and receive payments for it. The Basic Payment (excluding greening and the young farmers’ payment) will be capped at €150,000 per annum.

Basic Payment Scheme Eligibility Criteria To be eligible for the Basic Payment Scheme, applicants will need to comply with all of the eligibility criteria. These include: Person - Active farmer; Land - at least 3 hectares of eligible land at their disposal on 15th May 2015 (land claimed must also be eligible throughout the calendar year); Entitlements - they must be eligible to establish at least 3 entitlements.

Land Eligibility Criteria - Overview To be eligible for the Basic Payment Scheme, declared land needs to meet all of the eligibility criteria. Fields must : have an eligible area of at least 01.ha have eligible vegetation and be in agricultural use be kept in a state suitable for grazing or cultivation and have agricultural activity carried out over the entire area being claimed on a significant and consistent basis in the calendar year of the claim. CLAIM CAREFULLY! Declaring land for BPS Recommended to claim all the eligible land they are farming into the Basic Payment Scheme. Farmers will only be paid BPS and Greening on areas that they claim and are eligible. This area will be used to calculate and check compliance with nitrogen loading limit under the NAP Regulations Under declaration penalties will be applied if they do not declare all the fields they are farming. No difficulty in reducing the area declared below the MEA for fields where additional areas are ineligible or there is doubt about their eligibility.  It is also permissible not to claim on fields where there is doubt about the eligibility of its entire area or where it is intended not to carry out any agricultural activity in the future.  Indeed farmers are strongly advised not to claim on these areas. If we find more eligible area than that actually claimed on, reductions or penalties may apply if entire fields containing eligible area have not been declared, or the greening requirements have not been met when the entire eligible area is taken into account.

Cross compliance rules will still have to be adhered to. There will be some changes and renumbering of the current rules, but they will be broadly similar. Nitrates Action Plan measures have also been updated from 1 January. There are some changes so you should check what these are. There will be new guidance for 2015.  

Entitlements An entitlement is a right to claim aid under the Basic Payment Scheme when associated with a hectare of eligible land It is attached to the person/business not the piece of land Establishing entitlements on an area of land does not mean that you will always be able to claim entitlements on it In future claims the land used to claim the Basic Payment can be completely different to the land that was originally used to create the entitlements. It can be owned, leased or taken in conacre

Establishing entitlements in 2015 Existing entitlements were cancelled at the end of December 2014 Farmers can establish new entitlements in 2015 if they: were in receipt of SFP in the 2013 scheme year (prior to the application of any penalties) enabling them to activate at least €100 of payment entitlements; are the Active farmer; have at least 3 hectares of eligible land at their disposal on 15th May 2015 (land claimed must also be eligible throughout the calendar year).

Land let under conacre arrangements The person who is taking the land in conacre will be the one eligible to establish entitlements and claim payments on this land in 2015. If there are exceptional circumstances which lead the landlord to believe that he or she can meet the active farmer requirement even though the land is let out, then it will be up to the landlord to demonstrate these circumstances. Generally it will be the case that if a landowner receives a conacre payment for their land, the person taking that land in conacre will be the one who meets the key conditions outlined above. To advise that the ANC clamant will also be the Basic Payment claimant. Landowner tells tenant that they can’t claim Landowner’s who are not themselves farming or claiming BPS, may tell their tenants that they can’t claim under the BPS. Providing the tenant meets all of the eligibility requirements for BPS, they will not be excluded from applying to the Scheme.

Alternative ways to establish entitlements Farmers not in receipt of SFP in the 2013 scheme year can also establish entitlements in the following scenarios: If they never held SFP entitlements but can provide verifiable evidence of agricultural production activity on 15th May 2013; By applying to the Regional Reserve; By using a Private Contract Clause. It should be noted that there will be no further trading of entitlements until the 2016 scheme year.

Alternative ways to establish entitlements If they never held SFP entitlements but can provide verifiable evidence of agricultural production activity on 15th May 2013; Claimants will have to provide some information about the type of farming they are undertaking, for example, Beef Dairy Sheep Other - In this case, additional evidence will have to be provided It should be noted that there will be no further trading of entitlements until the 2016 scheme year. Evidence of Production activity on 15 May 2013 If farmers had  a beef, dairy or sheep enterprise on 15 May 2013, we will cross check this information against APHIS/other DARD records . If farmers did not beef, dairy or sheep enterprise on 15 May 2013, then they will have to provide documentary evidence with their 2015 SAF to reach us no later than 15 May 2015.  Documentary evidence that they could provide include: Seed receipts, sales receipts, evidence of belonging to a quality assurance scheme, reports or other relevant documentation .

Private Contract Clause Private contracts allow farmers, in certain circumstances, to enter into a legal agreement to either: allocate the right to establish BPS entitlements to another farmer that they have leased or sold land to; or transfer the corresponding BPS entitlements where they have sold land to farmer Further details are available on the Q and A on the DARD website: www.dardni.gov.uk/qa-for-farmers-landowners-on-changes-to-sfp-from-2015-revision-11.pdf If you have bought leased, or taken in conacre land from someone who claimed SFP in 2013 and will have this land at your disposal on 15th May 2015, you can apply under a PCC for the 2013 allocation right to be transferred to you. This would allow you to also be eligible to establish entitlements in 2015. In order for a PCC to be valid, both the transferor and transferee must meet the definition of a farmer in 2015. Transferors will be regarded as a farmer in 2015 if in 2013 or 2014 they submitted a valid application for SFP or LFACA and they have land at their disposal during some part of 2014 and 2015. Draft application forms and guidance are currently being prepared and these should be available in early February. Applications will have to submitted by 15 May at the latest along with the SAF.

What will an Entitlement be worth? The value of new entitlements allocated in 2015 will be derived from the value of SFP entitlements held on 15th May 2014 (i.e. those held for the 2014 scheme year), including any entitlements purchased prior to 2nd May 2014. Various reductions will be applied and the resulting total value of entitlements will be divided by the eligible area declared in 2015 to give the initial unit value. The 2014 entitlement statement will show the value of the entitlements that will be used as the starting point in the calculation of the initial unit value of any new BPS entitlements.

Entitlement Value UP The initial unit value of entitlements below the regional average will be increased by 71.4% of the difference between their initial unit value in 2015 and the regional average by 2019. DOWN For entitlements above the regional average, a linear decrease will be applied to the difference between the initial unit value in 2015 and regional average by 2019. The size of the linear decrease is likely to be close to 71.4%. The transition between 2015 and 2019 will take place in equal annual steps and is consistent with achieving a flat rate payment by 2021, i.e. a seven year transition period.

Active Farmer – Negative List EU legislation stipulates that from 2015, no direct payments shall be granted to those who operate: airports, railway services, waterworks, real estate services, permanent sport and recreational grounds. This is also known as the negative list. These types of businesses will be prohibited from receiving payments unless they can submit evidence to demonstrate their eligibility for payment on or before 15 May 2015. This requirement does not apply to businesses which received direct payments (SFP) not exceeding €5,000 (prior to the application of penalties) in the 2014 scheme year.

Active Farmer their agricultural activities are not insignificant (agricultural activities are not insignificant if the eligible agricultural area of the farm business, as declared on the application form, is at least 26 ha) their principal business or company objects consist of exercising agricultural activity (agricultural activity will be considered as the principal business or company object if receipts from agricultural activities represent at least 40% of total receipts of the business in the most recent fiscal year for which evidence is available) A minimum claim threshold of €5,000 has been set when applying the test (i.e. those businesses claiming below this threshold for the previous year would not be subject to the test).

Active Farmer - make sure Decision making power, benefits and financial risks in relation to the agricultural activity on the land being claimed for; DARD wrote to all SFP claimants in March 2014 to highlight this requirement for 2015; Extended the entitlement trading deadline – some 12000 trades; Issued a further letter to 7200 claimants whose DARD records indicate that they may not be able to meet the active farmer requirements for 2015; Compliance checks will be carried out in 2015 and all subsequent years Ongoing publicity.

Basic Payment - Controls The Department will continue to carry out inspection controls to ensure compliance with the rules. These include; On the Spot Checks Control with Remote Sensing A range of Administrative checks

Basic Payment – key points to remember New entitlements - Under the basic payment scheme a new set of payment entitlements will be allocated to farmers who apply to and meet the eligibility conditions of the scheme. Active farmer - one of the key conditions is that entitlements will allocated only to the person having decision making power, benefits and financial risks in relation to the agricultural activity on the land for which such allocation is requested. Land eligibility – generally similar to SFP and requires close checking of LPIS maps Many current claimants who are landowners with their land let out will not be eligible to establish entitlements in 2015.

Part 2. Young Farmers’ Payment An educational qualification provides both an incentive and a reward for young farmers and will assist in the development of a well skilled and professional industry.

Young Farmers’ Payment The Young Farmers’ Payment provides a top-up payment to the Basic Payment for those qualify who as a young farmer. The Regulations define young farmers as those who: Are setting up for the first time an agricultural holding as head of the holding, or who have set up such a holding during the five years preceding the first submission of an application under the Basic Payment Scheme; and Are no more than 40 years of age in the year of first submission of their application. i.e. A farmer who turns 41 at any time during 2015 will not be eligible.

Young Farmers’ Payment The Young farmer must be Head of Holding, exercising effective and long-term control over the business in terms of decisions related to management, benefits and financial risks. Young farmers must have established and activated payment entitlements under the Basic Payment Scheme. Young farmer applicants must also have at least a Level II qualification in agriculture (or a related subject containing at least a farm business management module). CAFRE have in place an education package over the period September 2014 – March 2015 to allow those who don’t have the qualification to acquire it. Qualification: Evidence that the educational qualification has been achieved must be submitted by 15 May 2015.  Evidence submitted after 15 May and before 09 June 2015 will attract a late claim penalty.  If you cannot provide evidence that you achieved the qualification by 09 June 2015 at the very latest, you will not be eligible for Young Farmer Payment in 2015. It is not sufficient to have simply completed the course.  You must be able to demonstrate that you achieved the qualification. Head of Holding Evidence: You must be able to provide evidence which shows that you are the Head of Holding.  Some examples are: a letter from your bank confirming that you can solely make payments and transfer money from the business bank account you must be one of the customer names associated with the Business ID. Guidance outlining all the evidence required will be issued by the end of January.

Young Farmers’ Payment Single member businesses – Head of Holding is the member Multi member businesses or 50:50 partnerships - between a young farmer and a person(s) who is/are not a young farmer will only be acceptable if it is clear that the young farmer can make decisions without veto from the other partner(s). Where 50:50 partnerships currently do not meet this requirement, it is possible for the partners to agree to modify the partnership to either include a provision whereby the young farmer can take decisions without veto or increase the share of the young farmer above 50%.

Young Farmers’ Payment The Young farmer will be regarded as head of holding for the purposes of the Young Farmers’ Payment from the date at which the partnership complies with the requirements. Where there are several young farmers and other persons involved in the business, then it must be clear that young farmers can control the business – only 1 payment per business. The top-up payment will be for a maximum period of 5 years but that period will be reduced by the number of years elapsed between the setting up as head of holding and the first year of application. The top-up payment will be based on 25% of the total direct payments regional average per hectare. The payment will be made on the number of eligible hectares used to activate entitlements, up to a maximum of 90 hectares.

Young Farmer Payment – key points to remember Young farmer requirements – Age Educational qualification Head of Holding - it is essential that young farmers meet the head of holding criteria Basic Payment Scheme - must be eligible to establish and activate payment entitlements under the Basic Payment Scheme Qualification: Evidence that the educational qualification has been achieved must be submitted by 15 June 2015.  Evidence submitted after 15 May and before 09 June 2015 will attract a late claim penalty.  If you cannot provide evidence that you achieved the qualification by 09 June 2015 at the very latest, you will not be eligible for Young Farmer Payment in 2015. It is not sufficient to have simply completed the course.  You must be able to demonstrate that you achieved the qualification. Head of Holding Evidence: You must be able to provide evidence which shows that you are the Head of Holding.  Some examples are: a letter from your bank confirming that you can solely make payments and transfer money from the business bank account you must be one of the customer names associated with the Business ID. Guidance outlining all the evidence required will be issued by the end of January.

Young Farmer Payment - Controls DARD will; Put robust controls in place to prevent the creation of artificial conditions to gain access to this support Have a penalty system in place which can be used where fraudulent activity is identified.

Regional Reserve The Regional Reserve will be used to allocate entitlements to the following groups: young farmers, new entrants, and those that were prevented from being allocated entitlements as a result of force majeure or exceptional circumstances. Young Farmers/New Entrants must also apply to the BPS if applying to the Reserve Specific Reserve applications will not be required where force majeure or exceptional circumstances are being claimed. Applicants should apply in accordance with the specific scheme requirements and make DARD aware of any force majeure circumstances in accordance with the general guidance which will be available on this. Where force majeure claims are upheld and entitlements cannot be provided under the scheme applied to, the Reserve may be used.

Regional Reserve Young Farmers/New Entrants must – have a Level II Qualification Young Farmers must – be under 40 years of age be setting up or have set up in the last 5 years as head of holding New Entrants must – have commenced activity in 2013 or later have applied to BPS/Reserve within 2 years of commencing not have had any activity in own name/risk in previous 5 years Young Farmers / New Entrants need to have - at least a Level II qualification in agriculture (or a related subject containing at least a farm business management module). 2. Young Farmers must – (a) be no more than 40 years of age in the year of first application to the BPS / reserve, and (b) be setting up for the first time, an agricultural holding, as head of holding or have already done so in the 5 years preceding their first application to the BPS. New Entrants must – (a) have commenced agricultural activity in 2013 or a later year, (b) have submitted an application to the BPS / Reserve not later than 2 calendar years from when commenced their agricultural activity, and (c) not have had agriculture activity in their own name / risk nor had control over a business exercising agriculture activity in the 5 years preceding start of their agriculture activity. NOTE: Evidence requirements for YF/NE still being finalised.

Regional Reserve Evidence required to support applications from Young Farmers/New Entrants is likely to be similar to that required for the Young Farmers’ Payment except New Entrants will not have to provide evidence of age. Young Farmers/New Entrants can apply for allocation of entitlements or to have the value of existing entitlements increased to the regional average value. Young Farmers/New Entrants can only apply once to the Reserve Further information to be available at the end of this month 1. Further information is available in: DARD Press Release dated 24 Sept 2014, the Winter Fair leaflet and the DARD Internet Q&A on CAP Reform. 2. Further clarification on eligibility and evidence requirements to be available at the end of this month - booklet. 3. A separate Reserve application form will be available, to be completed in hardcopy, and taken to local DARD Direct office with supporting evidence. 4. Application period is to be the same as for the BPS, with evidence to be provided before the closing date The Regional Reserve is scheduled to be open for 5 years.

Part 3. Greening Greening forms an integral part of CAP reform focusing on introducing farming practices that are beneficial for the climate and the environment.

Greening From 2015, it will be mandatory for applicants to the Basic Payment Scheme to comply with greening requirements. If farmers do not establish any Basic Payment Scheme entitlements, they will not receive the Greening Payment. In Northern Ireland, the vast majority of applicants will meet their greening requirements either : through having less than 10 hectares of arable land (be aware of how conacre land was classified in the past); or, having at least 75% of their eligible agricultural area in permanent grassland or temporary grassland.

Greening Payment Greening payment calculated as a percentage of the total value of entitlements activated by claimants each year. For the first two scheme years (2015 and 2016), sanctions for non compliance with greening requirements will result in a reduction in the greening payment which may be substantial.  From 2017, additional penalties will be applied. CHECK YOUR GREENING REQUIREMENT AND UNDERSTAND WHAT YOU NEED TO DO TO COMPLY  Over time, the value of the greening payment per hectare will move towards a flat rate payment at the same pace as the movement of the Basic Payment.

Proposed Areas of Natural Constraint (ANC) Scheme to replace LFACA Scheme Similar eligibility conditions as the current LFACA Scheme but no cattle bonus – subject to EU Commission approval Proposed that only SDA will be eligible for payment from 2015 If agreed, will initially last for two years Payments must be degressive (i.e. the rate paid per hectare falls as the area of eligible agricultural land claimed increases) Intention to have phase out payment to DA in the first year A one year transition phase out payment (TPDA) to claimants in Disadvantaged Areas Review of the arrangements in 2017.

Environmental Farming Scheme (EFS) Three levels are planned: A targeted level – primarily for land in environmentally designated sites; A wider level – to deliver benefits across the countryside, outside of environmentally designated areas; and A group level – to support co-operative action by farmers in specific areas such as a river catchment or commonages. This new scheme is being developed, with the aim of opening the Wider level in the second half of 2015, subject to budget availability. Existing agri-environment agreements will continue

Proposed Farm Business Improvement Scheme (FBIS) The scheme will provide education, knowledge and skills and capital investment to improve the competitiveness of the agri-food industry. Early focus will be on making advice and support available to farmers to help them identify their needs clearly and make the right decisions about developing their business. Targeted capital support to farmers to invest in their farm businesses to improve profitability. FBIS – an important part of draft RDP 2014-2020 DARD will bid for funding of up to £250m, subject to industry demand

Further information Further information on CAP reform is available on the DARD website on www.dardni.gov.uk If you have a specific query you can call the DARD Grants and Funding Helpline number: 0300 200 7848 If you have queries regarding Greening you can contact DARD by using the following email address: greeninghelpline@dardni.gov.uk

Basic Payment – Apply online. Although you can still apply on paper from 2015, we would much prefer to receive your application online You can help us by using our Single Application online service Why use online? Its easy to use, safe, fast, provides access to the most up to date information we hold, no queuing or posting, instant receipt of application. You will also have access to our improved map service so you can view, print and report any map changes to us.

DARD Public Consultation on primary communication channel. DARD are carrying out a Public Consultation on the proposal to move to the use of online as the primary channel for communicating and transacting with its customers. We want to know what you think about our proposals, how they affect you and the best way we can do this. Adverts will appear in your local press and in your local DARD Direct Offices in February and March and we would welcome your views and feedback on this proposal and how it affects you. DARD Public Consultation on the proposal to move to the use of online as the primary channel for communicating and transacting with the Department of Agriculture & Rural Development’s (DARD) Customers. In the coming years DARD need to reduce costs due to budgets constraints and become more efficient and accessible to our customers and intend doing this by: Reducing the amount of paper and postage we use; Make the application process easier for everyone by improving the online applications; Transacting with customers primarily through the use of emails, online responses and reduced face to face contact.

CAP Reform – Pillar 1 Thank you and remember CAP Reform – Pillar 1 Thank you and remember... Eligibility of the LAND Eligibility of the PERSON Eligibility to establish and hold ENTITLEMENTS