The Rural Payments Agency (RPA) must keep its commitment to paying 90% of farmers their full Common Agricultural Policy (CAP) entitlements by December 2016 after failing to meet its payout targets this year, the Environment, Food and Rural Affairs Committee said in its report on Common Agricultural Policy.
New CAP rules this year meant the agency's performance in paying applicants quickly dropped from the 97% achieved in December 2014 to around 51% in December this year.
Around 90% of farmers have now received their payments, but the delay has created cash flow problems and confusion for many.
Farmers 'are struggling with cash flow'
Sleaford and North Hykeham MP Stephen Phillips highlighted a case of one of his constituents, Mrs Musson, who had her payment delayed and had further difficulties contacting the Rural Payments Agency.
"The response I had from the RPA was that the payment would come 'in due course' and that my constituent should call the agency for hardship assistance, yet this is precisely what she had been unable to do."
Truss responded that it had been the first year of implementation of the new common agricultural policy.
"All payments need to be made within the payment window between December and June, and all payments will be made within that window," she said.
"I appreciate that farmers are struggling with cash flow because of this year’s low commodity prices, which is why we have put in place bridging payments for those final few farmers who have not yet received payments.
"All that data are now on the system, so 2016 will be much more straightforward and we should be able to pay farmers much earlier in the payment window."
The Committee said the RPA should consider part-payments in complicated cases if necessary to avoid further hardship.
They also urged Defra to continue working with the EU to reduce the amount of 'disallowance penalties' that are charged as a result of payment errors. The UK has paid more than £642 million in disallowance over the past 10 years – in effect, fines for wrongly apply the CAP rules.
'Extreme hardship'
"Farmers face extreme hardship as prices for produce are low," said Chair Neil Parish, MP.
"Many producers rely on CAP payments to pay their bills so it is unacceptable that farmers are left uncertain over when their payments will arrive.
"The RPA did decide to make bridging payments to unpaid farmers in April, which were welcome, but it is disappointing that it took so long for them to be issued."
Mr Parish also highlighted confusion over communications from the RPA about payments and the length of delays: "Many farmers have struggled to work out what their entitlements are under the new CAP system, and it has been difficult for them to clarify their numbers with the RPA.
"As the RPA now has to take applications for next year at the same time as paying the remaining 2015 claims, it needs to make sure that next year's process is set up to provide good customer service for farmers, and to minimise the fines that will be charged by the EU for any errors in the payment processing.
"We expect a return to 2014's performance levels of 90% payments made by the end of December this year."
IT problems
The Rural Payments Agency has come under repeated criticism from House of Commons Select Committees over the past year for failures in its CAP-D IT project to automate payments of CAP money to farmers and rural businesses.
Due to problems with the RPA's IT system, some farmers have waited over 16 months between payments that should come yearly, and coupled with low farmgate prices for produce this has caused significant hardship for many farmers and farming groups.
The application window for 2016 payments is due to close before the RPA expects to have made all of the payments for 2015, and it is important that claims are made and paid accurately to avoid hefty disallowance fines from the EU.
The Committee held oral evidence sessions with the Chief Executive of the RPA, Mr Mark Grimshaw, and with the Minister for Food, Farming and the Marine Environment, in March 2016.
