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18/03/2004
Will CAP reform mean a free range windfall?
By BFREPA secretary Peter Chignell
Many free range producers will be grateful that they have not had to master the intricacies of the Common Agricultural Policy (CAP) or fill in the myriad of forms associated with the claiming of subsidies. Poultry and egg production, together with the pig industry, have largely existed in a market unencumbered with these complications. However, things may be about to change.
As many will have noted from the reams of information in the agricultural press, the payments made to farmers are to be ‘decoupled’ from production and will be known as Single Farm Payments (SFP). The scheme will be introduced across the UK from 1st January 2005 and is potentially of great interest to free range producers.
At present, payments to farmers are dependent on their land being registered in the Arable Area Payment Scheme (AAPS), and the crops—principally cereals, proteins and oilseeds—being eligible for subsidy. Crops such as temporary or permanent grass do not qualify for any subsidy and therefore, even if grown on eligible land, cannot be claimed upon. Likewise, many of the major livestock enterprises receive support based on quota or headage payments. However, the SFP will change all this.
In simplistic terms, the pot of money that was the sum of all the different agricultural production subsidies, whether arable, sheep, beef etc, will be divided by all the eligible agricultural land and a single payment made to each farmer based on their area of eligible land. The farmer will be free to pursue whatever agricultural enterprises he chooses, notwithstanding that such activity meets the requirements of ‘cross-compliance’ (more of this later). So where does the free range producer fit into this picture?
Since both temporary and permanent grass are eligible crops under the SFP, any free range producer should be able to enter their ranging land into the scheme and receive an annual payment on it, for little more effort than registering their land and then filling in the necessary claim form each year. Since it is estimated that, at current exchange rates, this payment will eventually amount to between £210 -£230 per hectare (£85-£93 per acre), it is an opportunity not to be missed. However, a few notes of caution.
The major hurdles that need to be jumped should not be difficult for most producers. You must be a farmer (can be an individual, partnership etc) and therefore have a holding number. You must also ensure that any eligible land is at your disposal for a 10 month window between September 2004 and December 2005 (exact dates yet to be decided). Significantly, areas of forestry or woodland will not qualify as eligible land, so careful thought needs to be given to any plans you might have for tree planting schemes. We have yet to receive information about the exact definition of woodland, but it is quite possible that many of the existing plantings on free range units will prevent those areas from being eligible for SFP. However, it is worth noting that payments made under the rural development programmes, such as agri-environment schemes, are unaffected by the SFP.
In due course all registered holdings will receive detailed information about the SFP and how to register eligible land. Registration forms should be available early in 2005 and it is essential that these are completed and returned within the registration window. This will be a one-off opportunity and failure to register will prevent any future claims. The next vital deadline will be the 15th May, 2005, by which time your application for the SFP for 2005 must be in the hands of DEFRA.
There are also some potentially significant hurdles hidden within the interpretation of the basic rules that make up the scheme. Not least of these is the area of cross-compliance mentioned earlier. Put simply, this means that any land that is to qualify for the SFP must not only be used for agriculture but must also comply with all the codes and regulations applicable to good agricultural and environmental practice. For example, an activity that breached allowable levels of nitrate deposition on land within an Nitrate Vulnerable Zone would make that land ineligible for the SFP.
The cross compliance rules are still under consideration within DEFRA but it seems reasonable to expect that the use of land as part of a properly run free range or organic egg production operation should not breach them. However, anything could yet happen, so ‘cautious optimism only’ is advised at this stage.
In England there is to be a transition period of 8 years between the current system and the full SFP. Producers who were not registered for subsidy payments in the 2000-2002 reference years will find their entitlement to the SFP will start at 10% of the regional flat rate in 2005 (say £22/ha), rising to 100% in 2012 (say £220/ha). Producers who were in receipt of arable or livestock subsidies in the reference years will retain an entitlement to these subsidies (‘Historic payments’) over the transition period, reducing at the same rate as the SFP increases.
Inevitably, the gross rates of SFP quoted here will be subject to various influences, most of which will have a negative effect. Principal among these will be so called ‘modulation’, whereby a percentage of the payment is deducted to finance other rural schemes etc.
In conclusion, there is the potential for producers to improve returns by around 20p/bird, or a little under 1p/dozen for no outlay other than an hour or two in the office once a year. However, with much of the detail still to be announced, we will do our best to keep you informed as more information comes to hand.
Many free range producers will be grateful that they have not had to master the intricacies of the Common Agricultural Policy (CAP) or fill in the myriad of forms associated with the claiming of subsidies. Poultry and egg production, together with the pig industry, have largely existed in a market unencumbered with these complications. However, things may be about to change.
As many will have noted from the reams of information in the agricultural press, the payments made to farmers are to be ‘decoupled’ from production and will be known as Single Farm Payments (SFP). The scheme will be introduced across the UK from 1st January 2005 and is potentially of great interest to free range producers.
At present, payments to farmers are dependent on their land being registered in the Arable Area Payment Scheme (AAPS), and the crops—principally cereals, proteins and oilseeds—being eligible for subsidy. Crops such as temporary or permanent grass do not qualify for any subsidy and therefore, even if grown on eligible land, cannot be claimed upon. Likewise, many of the major livestock enterprises receive support based on quota or headage payments. However, the SFP will change all this.
In simplistic terms, the pot of money that was the sum of all the different agricultural production subsidies, whether arable, sheep, beef etc, will be divided by all the eligible agricultural land and a single payment made to each farmer based on their area of eligible land. The farmer will be free to pursue whatever agricultural enterprises he chooses, notwithstanding that such activity meets the requirements of ‘cross-compliance’ (more of this later). So where does the free range producer fit into this picture?
Since both temporary and permanent grass are eligible crops under the SFP, any free range producer should be able to enter their ranging land into the scheme and receive an annual payment on it, for little more effort than registering their land and then filling in the necessary claim form each year. Since it is estimated that, at current exchange rates, this payment will eventually amount to between £210 -£230 per hectare (£85-£93 per acre), it is an opportunity not to be missed. However, a few notes of caution.
The major hurdles that need to be jumped should not be difficult for most producers. You must be a farmer (can be an individual, partnership etc) and therefore have a holding number. You must also ensure that any eligible land is at your disposal for a 10 month window between September 2004 and December 2005 (exact dates yet to be decided). Significantly, areas of forestry or woodland will not qualify as eligible land, so careful thought needs to be given to any plans you might have for tree planting schemes. We have yet to receive information about the exact definition of woodland, but it is quite possible that many of the existing plantings on free range units will prevent those areas from being eligible for SFP. However, it is worth noting that payments made under the rural development programmes, such as agri-environment schemes, are unaffected by the SFP.
In due course all registered holdings will receive detailed information about the SFP and how to register eligible land. Registration forms should be available early in 2005 and it is essential that these are completed and returned within the registration window. This will be a one-off opportunity and failure to register will prevent any future claims. The next vital deadline will be the 15th May, 2005, by which time your application for the SFP for 2005 must be in the hands of DEFRA.
There are also some potentially significant hurdles hidden within the interpretation of the basic rules that make up the scheme. Not least of these is the area of cross-compliance mentioned earlier. Put simply, this means that any land that is to qualify for the SFP must not only be used for agriculture but must also comply with all the codes and regulations applicable to good agricultural and environmental practice. For example, an activity that breached allowable levels of nitrate deposition on land within an Nitrate Vulnerable Zone would make that land ineligible for the SFP.
The cross compliance rules are still under consideration within DEFRA but it seems reasonable to expect that the use of land as part of a properly run free range or organic egg production operation should not breach them. However, anything could yet happen, so ‘cautious optimism only’ is advised at this stage.
In England there is to be a transition period of 8 years between the current system and the full SFP. Producers who were not registered for subsidy payments in the 2000-2002 reference years will find their entitlement to the SFP will start at 10% of the regional flat rate in 2005 (say £22/ha), rising to 100% in 2012 (say £220/ha). Producers who were in receipt of arable or livestock subsidies in the reference years will retain an entitlement to these subsidies (‘Historic payments’) over the transition period, reducing at the same rate as the SFP increases.
Inevitably, the gross rates of SFP quoted here will be subject to various influences, most of which will have a negative effect. Principal among these will be so called ‘modulation’, whereby a percentage of the payment is deducted to finance other rural schemes etc.
In conclusion, there is the potential for producers to improve returns by around 20p/bird, or a little under 1p/dozen for no outlay other than an hour or two in the office once a year. However, with much of the detail still to be announced, we will do our best to keep you informed as more information comes to hand.
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