BIM55126 - Farming: Single Payment Scheme: Overview

The Common Agriculture Policy (CAP) of the European Union (EU) underwent major reform effective from the start of the 2005 calendar year. From this point financial support for farmers was “decoupled” from production and in practice meant that a farmer could cease to produce agricultural products altogether and still receive financial support, though few have yet to adopt this strategy.

To qualify for SP a farmer must have Payment Entitlements (PE) matched against eligible land (broadly land used for agricultural purposes), the application must be submitted by 15th May in the scheme year, the land must be declared as available to the claimant for a specified 10 month period (this requirement was removed for the 2008 scheme year onwards, see BIM55140) and the farmer must ensure that all Cross Compliance Conditions (CCC) have been satisfied.

There was a one off opportunity in 2005 to apply for and be allocated PE (though a further minor opportunity will arise in 2009 for some specialist horticultural and fruit growers) - as at December 2008 some of the original 2005 allocations have not yet been fully determined. After 2005 anyone who has not established entitlement but wishes to receive SP will be forced to buy, lease or otherwise acquire PE from another farmer. PEs are fully tradable but only within a region (of which there are 6 within the UK, England having been divided into three separate regions) with Scotland, Wales and Northern Ireland making up the other three.

The SPS has a number of features that mean payments may go to people other than farmers (in the traditional sense). For example:

• PEs are tradable. Original allocations generally went to the tenant but landlords have at times been able to acquire them from their tenants but a landlord can only claim on them if he qualifies as a farmer (for SPS purposes) and has land at his disposal; and
• the EU definition of farmer (minimum requirement is someone who keeps land in “good agricultural and environmental condition”) would allow someone to claim SP for grazing horses or other uses which, may not be a farm in the traditionally accepted sense of the word.

It is worth noting that no PE is linked to any particular parcel of land, beyond its use in any one claim year. For those with land it is one of the components that allow entry to the SPS. For example the PE may be matched against land owned by the farmer in year one and a different parcel of land in year 2 which, could even be land rented in. If a farmer had more PEs than eligible hectares the farmer can keep all the PEs by rotating them as long as they are used at least once every 3 years. PEs may be sold or otherwise traded with or without land (the latter subject to certain restrictions). Note there is a requirement that when PE is being leased it is leased with land.