Basic Payment Scheme (BPS) advance payments are now being issued to farmers and will reach bank accounts in the coming weeks, the Rural Payments Agency announced today.
Payments will be made in two instalments each year for the remainder of the agricultural transition period to help farmers with their cashflow.
Around 50% of the overall payment will be issued from July with the remaining balance expected from December.
With agricultural commodities closely linked to global gas prices, farmers are facing rising costs for inputs including manufactured fertiliser, feed, fuel and energy.
Due to heightened worldwide demand as the global economy reawakened following Covid, by February the price of gas had quadrupled on the previous year.
And with the instability caused by Russia's invasion of Ukraine, that price has increased even further.
Paul Caldwell, chief executive of the RPA said: "I’m pleased to confirm that we have started to make advance BPS payments to farmers, and expect to issue the majority of payments by the end of July.
“These twice-yearly instalments are a permanent change to bring BPS in line with what will be a more regular payment system under the new environment land management schemes.”
The RPA said it expected the large majority of farmers to receive their BPS advance in the coming weeks, but a small number of claims would require additional checks, which would take longer to process.
Advance payments would be approximately 50% of the total, and Lump Sum Exit Scheme applicants who had claimed BPS in 2022 would also receive an advance payment.
The RPA added that the proportionate amount of progressive reductions would be applied to both the advance and balance payments.
Defra Secretary George Eustice said the payments would give farmers some additional cashflow earlier in order to provide some confidence.
“While increasing farm gate prices may mean that farm profitability remains stable, we recognise the short term pressures on cash flow," he said.
“We have decided to bring forward half of this year’s BPS payment as an advance injection of cash to farm businesses from the end of this July."