BIM55128 - Farming: Single Payment Scheme: Explanation of terms

Agricultural Property. Agricultural land or pasture and includes woodland and any building used in connection with intensive rearing of livestock or fish if the woodland or building is occupied with agricultural land or pasture and the occupation is ancillary to that of the agricultural land or pasture; and also includes such cottages, farm buildings and farmhouses, together with the land occupied with them, as are of a character appropriate to the property.

Cross Compliance Conditions. These set out standards and requirements that farmers have to meet as a condition of receiving their Single Farm Payment. They are divided into:

• Statutory Management Requirements (SMR), involving compliance with a range of some 18 European regulatory requirements covering the environment, food safety, animal and plant health and animal welfare, and
• Good Agricultural and Environmental Conditions (GAEC). These are a set of criteria developed by individual member states and vary slightly between England, Scotland, Wales and Northern Ireland.

Eligibility A claim can only be made by matching PE against an equivalent area of qualifying agricultural land that is:

• at the claimant’s disposal (now only on May 15th but until 2007 for a ten month period, see below)
• in agricultural use for the calendar year (2008 onwards - previously for the 10 month period).

Breaches of the eligibility rules can lead to significant penalties and even exclusion from the scheme.

Farmer. For SP purposes this is defined in Regulation (EC) No 1782/03 as someone who exercises an agricultural activity and this covers a wide range of farming activities (including growers of fruit and vegetables) but also keeping the land in good agricultural and environmental condition. The definition should also be taken to include growers of fruit and vegetables

Farming. For income tax purposes this is defined as the occupation of land wholly orf mainly for the purposes of husbandry, but does not include market gardening which has a separate definition

Financial Discipline. The process by which from 2007 EU Farm Ministers will determine what percentage reductions are required to keep EU spending within budget.

Historic Basis. The method used to compute the value of PE based on the average of actual claims during the reference period of the person farming.

Modulation. The mechanism whereby a percentage of direct aid (subject to a lower threshold limit) is removed and recycled into Rural Development spending. UK regions will be subject to EU compulsory and member state voluntary modulation.

National Envelope. Is a sum of money taken from the reference amount and set aside to support a particular sector of farming. The only region to use the national envelope is Scotland and it is used there to support the beef industry.

National Reserve. As a consequence of the transition to the Single Farm Payment, farmers in certain situations may have found themselves at a disadvantage for a variety of reasons. The National Reserve, funded by a percentage cut in all farmers’ PE is a fund that was used for 2005 to supplement PE to those disadvantaged or allocate PE to new entrants. Where PE granted in this way had an award of additional payment value amounting to more than 20 per cent of their value, they were classed as national reserve entitlements with restrictions as to use and transfer.

Negative list crops (or FVP). The negative list crops are strictly the products referred to in Article 1(2) of Regulation (EC) No 2200/96 and potatoes, other than those intended for manufacture of potato starch. In this guidance the term has been used to denote fruit, vegetables and potatoes (FVP) and the terms are interchangeable.

Payment Entitlement (PE). PEs are a requirement to participate in the SPS. They do not grant any automatic right to payment. A farmer with PE applying to join the SPS is further obliged to satisfy certain conditions before payment can be made and indeed full payment is subject to cross compliance. Originally, in 2005 there were a number of different types of entitlement. The basic or ordinary PE is amended to become:

• Set aside entitlement. Converted to normal entitlements from 2009, these had to be used before other entitlements could be claimed. From 2005 to 2007, that land had to be managed in accordance with set-aside management rules though organic farmers were exempted. During 2008 the set aside entitlement remained in existence but the rules governing its role in the SPS were suspended.
• National Reserve entitlements. These are entitlements that were either converted from the national reserve or had their payment value augmented by more than 20 per cent from the national reserve. Such entitlements had to be actually claimed on each year or the award would be lost and they were not transferable (except by inheritance) unless that award had been so lost. Under the 2008 Health Check reforms, they will simply become normal entitlements with no distinction with effect from 2009 and thereafter.
• Special entitlement. Are given to farmers with no eligible land or if the PE (arising from certain, mainly livestock based of the historic schemes) is more than 5000 euros. Unlike ordinary entitlements, special entitlements have a production criterion.
• Authorised entitlements. Were allocated only to farmers in England and Northern Ireland who have grown negative list crops in the reference period and allowed SP to be paid when land is used for growing FVPfvp until converted to normal entitlements for 2008.

With further changes applying from 2009 (the ‘Health Check’), there should then only be normal entitlements and a very limited number of entitlements outside of the ordinary vanilla entitlement..

Reference Period. The base period used for assessing pre SPS subsidy claims as a starting point for calculating the value of PE - usually the 3 year period consisting of calendar years 2000 to 2002.

Region. A geographical area within the EU within which the SPS is administered. There are 6 in the UK. Scotland, Wales and N. Ireland are one each and England has been divided into 3. Land already categorised as severely disadvantaged (SDA) above the moor line, SDA below the moor line and the rest.

Regional Average or Flat Rate basis. The method used to compute the value of PE based on the average of claims made by all farmers within a member state in the reference period divided into the total area registered in 2005.

Single Payment (SP). A payment to farmers under the Single Payment Scheme

Single Payment Scheme (SPS). The Single Payment Scheme introduced by EU regulation 1782/2003.

Ten Month Period. For claims made in the years 2005 - 2007 this was the continuous period for which the land, against which the farmer is claiming SP was at the farmer’s disposal. It could commence at any time between 1 October prior to the year of claim and 30 April within the year of claim: if the farmer did not elect a specific period, the base period was taken to run from 1 February to 30 November in the year of claim. It was not possible for the base periods for two consecutive years of claim to overlap - that would have been treated as a dual claim and be a breach of the eligibility rules. Initially a farmer had to have a single period for the whole farm but this was later relaxed to allow a farmer to allocate his land to two different ten month periods. These rules were changed from 2008 so that land only has to be at the farmer’s disposal for a single day (15 May in the UK).