cap reform workshop presentation 25th march
TRANSCRIPT
CAP Reform Workshop
Tuesday 25th March 2014
Rob Wilkinson
CAP Reform- Implications for your Farm
• Entitlements
• Greening Measures
• Environmental Stewardship Overlap
• Case Studies
• Degressivity
• Active Farmers & Young Farmers
• 2014 SPS Applications
CAP Reform Workshop
Entitlements
CAP Reform Workshop
New Basic Payment Scheme introduced on 1st Jan 2015
Single Payment Entitlements ‘rolled over’ in England to Basic Payment Entitlements
Need to transfer Single Payment Entitlements by 19th Oct 2014
Surplus Single Payment Entitlements will be lost
Basic Payment Entitlements can transfer from 15th Jan 2015 to 2nd April 2015?
Entitlements – implications
Make sure in correct ownership
If taking on/giving up land in September – act quickly
Do sums now- sell surplus
2 year use rule
Cap Reform Workshop
Greening Measures
Will make up 30% of the new annual payment
Non compliance penalty to rise to 37.5% by 2018
Ecological Focus Area (i)
Crop Diversification (ii)
Permanent Grassland (iii)
CAP Reform Workshop
i) Ecological Focus Area (EFA)
5% of arable area (7% in 2018?)
Range of options
Nitrogen fixing crops – Input restrictions
Landscape Features
Exemptions: > 75% perm grassland or organic
Overlap with Environmental Stewardship
Cap Reform Workshop
Ecological Focus Area
Source: European Commission
EXAMPLE EFA WEIGHTINGS
Landscape Features Unit Equivalent EFA area Comments
Hedges /m 4.5 Up to 10m
Wooded bank /m 12
Isolated tree /m 30 Crown >4m
Trees in line /m 6 Crown >4m
Field copses /m² 1.5 Overlapping crown <0.3ha
Field margin /m 9 >1m
Ponds /m² 1.5 <0.1 ha
Ditches /m 3 <6m
Fallow /m² 1
Buffer strips /m² 9 >1m
Agro-forestry /m² 1
Forest edges /m² 9 >1m
Short rotation coppice /m² 0.3
Catch crops/green cover /m² 0.3
Nitrogen fixing crops /m² 0.3
CAP Reform Workshop
Environmental Stewardship Overlap
Now closed existing schemes continue to end of term
No double funding allowed but;
Pre 2012 Agreements likely to allow options to be used for EFA
Post 2012 Agreements likely to suffer reduction where conflict with EFA
Some options can be used for ELS & EFA
New Environmental Land Management Scheme (NELMS) starts January
2016
CAP Reform Workshop
ii) Crop Diversification
2 crops if over 10 hectares
3 crops if over 30 hectares
Main crop up to 75%; 2 main crops together not more than 95%
Third crop could be EFA but input restrictions
Exemptions: holding is organic; or
>75% of the holding is permanent grassland and arable area is <30h
>75% of the arable area is grassland/fallow and arable area is <30 ha
> 50% of the arable new and not declared previous year- primarily for specialist cropping
arrangements
CAP Reform Workshop
iii) Permanent Grassland
Defined as grassland- established more than 5 years
Possibly grass margins?
2012/15 reference year – 5% tolerance
Administered at National level
CAP Reform Workshop
Case Study 1
80 Hectares CFA Block Cropped
Pre reform rotation: year one 1st wheat, year two 2nd wheat, year three: OSR
Basic contractors charge: £250/ha, Farmers first charge £250/ha, 50% divisible surplus
Greening rotation: 50% first wheat, 45% OSR, 5% fallow + increased contractors charge £275/ha
CAP Reform Workshop
Case Study 1 80 Hectares CFA Block Cropped
Consider opting out of greening
CAP Reform Workshop
Pre CAP Reform With Greening (10%
Increased Contractor
Charge)
Opting out of Greening
(30% Reduction in SP)
Average Arable Output £100,801 £93,960 £100,801
Gross Margin £55,867 £51,440 £55,867
Single Payment
(£200/ha)
£16,000 £16,000 £11,200
Net Margin £38,067 £33,240 £33,267
Divisible Surplus £18,067 £13,240 £13,267
Farmers Return £29,034 £26,620 £26,634
Contractors Return £29,034 £27,520 £26,634
Case Study 2
300 Hectares (Combinable) Farmed in Hand
Pre reform rotation: 1/3 1st wheat, 1/3 2nd wheat, 1/3 OSR
Greening rotation: 95ha 1st wheat, 95ha 2nd wheat, 95ha OSR, 15ha fallow
CAP Reform Workshop
Case Study 2 300 Hectares (Combinable) Farmed in Hand
Not worth opting out of greening
CAP Reform Workshop
Pre Cap Reform With Greening Opting out of
greening (30%
Reduction in SP)
Arable Output £378,000 £359,000 £378,000
Gross Margin £209,500 £199,025 £209,500
Single Payment
(£200/ha)
£60,000 £60,000 £42,000
Profit (before rent) £134,500 £125,525 £116,500
Case Study 3
300 Hectares (High Value Crops) Farmed in hand
Pre reform rotation: 50% 1st wheat, 1/6 sugar beet, 1/6 onion, 1/6 pots
Greening rotation: 143ha wheat, 47ha s - beet, 47ha onions, 48ha pots, 15ha fallow
CAP Reform Workshop
Case Study 3300 Hectares (High Value Crops) Farmed in hand
* Rent paid for fallow land £7425, £475/ha (£200/ac)
Consider renting in ‘green’ area
CAP Reform Workshop
Pre Cap Reform With Greening Opting out of
greening (30%
Reduction in SP)
Renting 15ha
Fallow from 3rd
party*
Arable Output £886,500 £838,425 £886,500 £886,500
Gross Margin £614,200 £580,632 £614,200 £614,200
Single Payment
(£200/ha)
£60,000 £60,000 £42,000 £63,000
Profit (before rent) £404,200 £370,632 £386,200 £399,775
Degressivity
‘Degressivity’ instead of Capping – obligatory
5% above €150,000
Based on Basic Payment element only (not greening)
Salary offset – not available in UK
Up to 2275 acres – no deduction
4000 acres – £4830 deducted
CAP Reform Workshop
Other details
Active Farmer rule:
‘Minimum Level of Agricultural Activity’
‘Negative List’
Young Farmers’ Scheme:
Under 40 years old; Head of Business
25% top-up, for first 5 years, limited area
Estimate £22,000 over 5 years?
CAP Reform Workshop
2014 SPS Applications- Action
Entitlements in correct name
Calculate number of Entitlements – sell excess
Woods registered
Online preferred
Check Crop Coding – grassland and margins in ELS
CAP Reform Workshop
Summary
Basic Payments less
Greening – Final details to be confirmed
Simplification?
Mapping features – changes online – one set maps
Farm cropping/policy needs review – opt out/rent in
CAP Reform Workshop
Contact
Rob Wilkinson
Strutt & Parker,
5 South View
Tinwell Road
Stamford
PE9 2JL
01480 484 040
07711 739 429
CAP Reform Workshop