Basic Payment Scheme

Table of Contents

The Basic Payment Scheme

The Basic Payment Scheme replaced the Single Farm Payment in 2016. It represents an ongoing step in the evolution of the farm support regime. Over the period 2014 to 2020, the apportionment of support is expected to become less historically based and more uniform in application.

The basic scheme entitlement is based on the monetary value of entitlements in 2014 and the lesser of the land areas submitted in 2013 and 2015. The unit value being the payment per hectare is the monetary value (2014) divided by the base value (lesser of 2013 and 2015). Whether the unit value is below or above the national average will determine to what extent the payment will fall or rise over the periods 2020.

Young trained farmers having FETAC level 6 or equivalent qualification and being under 40 years of age, and new entrants trained but not yet commenced farming or commenced farming since 2014 may qualify for payments from the National Reserve subject to meeting certain criteria.

The 2015 application activates the new payment, with the new base area being the lower of that submitted in 2013 or 2015. The Basic Payment’s unit value is as set out above.

Screening and cross-compliance obligations apply. New entrants may qualify for a base monetary value from the National Reserve, approximately €250 per hectare. New entrants must not have farmed previously. There is no age limit for new entrants. The Young Farmer Scheme provides for a top-up, maximum top-up.

Retargeting

A feature has been the retargeting of direct payments to farmers. The results are necessary to take into account the accession of 13 new Member States and address challenges in relation to climate change and environmental protection. The Scheme seeks to give priority to young farmers both in terms of allocation of entitlements from the National Reserve and by providing additional payments through the Young Farmer Scheme.

Under the Single Farm Payment, the level of support per hectare is granted to farmers based on the historical reference years of 2002 to 2004. Ireland has undertaken a convergence model which initially retains the current link with the Single Farm Payment but gradually moves all farmers towards a national average value in the period to 2020.

It gives effect to a gradual distribution of payments between those holding high-value entitlements and those holding low-value entitlements. It seeks to do so gradually to avoid the sudden and significant change in income support to individual farmers.

The national ceiling for the amount allocated to each state for direct payments is fixed by the EU 2013 regulations. It decreased gradually from €1,315,003,000 in 2015 to €1,211,066,000 in 2019. The previous Single Farm Payment expired in 2014. Thereafter, the Basic Payment Scheme took effect.

Schemes

Ireland must introduce a payment for agricultural practices beneficial to the climate and the environment or so-called Greening. Up to 30% of the national ceiling is allocated to greening each year. Farmers who participate in the Basic Payment Scheme have also implemented greening provisions.

The Young Farmer Scheme provides an additional payment to those who are eligible. Priority for entitlements from the National Reserve is given to young farmers and those who commence agricultural activities after 2013. A coupled support for protein crops is made available.

In 2015 there were four basic schemes under direct payments so that there is no longer a single payment; All eligible farmers receive the Basic Payment Scheme and Greening. Some may also qualify for Young Farmer Scheme and coupled support for protein crops.

The total payment is based on a combination of entitlements and Greening and other schemes in which the farmer participates. Every eligible farmer receives a payment from the Basic Scheme and a payment from Greening, which is calculated as a fixed percentage of the entitlement value.

Initial Declaration

A new set of entitlements is allocated to farmers under the Basic Payment Scheme if they make a Basic Payment Scheme application in 2015 and meet the relevant eligibility requirements. An application will be required in each year, declaring all the land and specifying which hectares are eligible for payment.

A farmer must declare one eligible hectare for each entitlement. Any unused entitlement for two consecutive years will revert to the National Reserve. Entitlements do not attach to the land but to the person and become his property. 2016 entitlements may be transferred with or without the land. Direct payments are not made where the amount due is less than €100.

Entitlements will converge towards the national average. The maximum amount that can be granted under the Scheme is €150,000. This does not affect the payments received under the Greening heading.

There is no option to consolidate entitlements under the Basic Payment Scheme. 2015, the farmer’s value is to be allocated across eligible hectares.

Entitlements

The initial unit value of each entitlement and its value over the subsequent five years is calculated at the time of initial allocation and notified to the farmer. Where the entitlement is transferred, it should change its original unit value with its convergence path towards 2019. Where a farmer leases an entitlement with an initial value above 100% of the Basic Payment Scheme national average, it is decreased over the five years the scheme.

For an automatic entitlement to farmer must have been eligible to receive a direct payment in 2013. The number of entitlements allocated in 2015 is based on the number of eligible hectares declared in 2013 and 2015, whichever is less.

The total value of entitlements, whether held or leased out by a farmer under the Single Payment Scheme in 2014 are the basis of calculating entitlements in 2015. A percentage of each farmer’s 2014 value is carried forward to calculate the initial unit value in 2015. The basic Payment Scheme is a percentage of the 2014 value and is carried forward calculating 2015 entitlements.

There are, accordingly three reference points, 2013 establishes the direct payment allocation right, 2014 establishes the value, and 2013 or 2015 establishes the number of entitlements.

In order to participate in the Basic Payment Scheme and related schemes, the person must be an active farmer as defined. He must carry on an agricultural activity such are the rearing or growing of agricultural products, including harvesting, milking, breeding animals and keeping animals for farming purposes.

GAEC

Persons who do not engage in the above activities must, at a minimum, maintain their land in good agricultural and environmental condition, where land can be described as an area naturally kept in a state suitable for grazing or cultivation (marginal land). Each state must establish a minimum level of activities.

The state must exclude from direct payment persons and entities which operate certain services including permanent sports and recreational grounds. They may be admitted providing they can show that farming constitute a significant part of their economic activities.

Persons who never held entitlements but who are actively farming in 2013 are entitled, may be able to establish entitlements under a derogation. As of the date of publication, this had not been determined whether to use this so-called Scottish derogation. The allocation right transfers with the land.

Transfers

If the original farmer did not have an allocation right, then the transfer does not transfer — the allocation right does not pass to the transferee. A transferee beneficiary under inheritance or gift may claim the entitlements in 2015 corresponding to the number of hectares transferred as if the farmer originally managed the holding (2013). A change in status, such as incorporation, does not affect the number and value of entitlements (in the reference period 2013-2015).

Where a farmer sells or leases part of his holding, he may transfer an allocation right, where the land transferred to the purchaser or lessee, sells or leases. This is of relevance only where the buyer/lessee does not have an allocation right of his own.

The transferred allocation right applies to the number of hectares which have been purchased or leased and permits the purchaser lessee to establish entitlements in 2015 is not given allocation right for any other land. The seller must have an allocation right and be an active farmer in 2015, submit the basic scheme application in 2015 establishing at least one entitlement in his own right.

The purchaser must be an active farmer and submit a valid application under the Basic Payment Scheme.

Entitlements may be transferred within a Member State. Other than in the case of gift or inheritance, they may be transferred only to persons who meet the definition who are active farmers. The entitlements may be eased with or without the land.

National Reserve

Priority under the National Reserve is given to persons who qualify as young farmers or new entrants. National Reserve is used to allocate new entitlements on land, free of entitlements and to give a top-up to existing entitlements. Where land entitlements whose value is below the national average entitlement value, each scheme has separate conditions.

A percentage (to be fixed in 2015) of the entitlements held under the Single Farm Payment and the value of any payment received under the Grassland Sheep Scheme, carried forward to be calculation of total value of entitlements under the Basic Payment Scheme.

Convergence

Under the convergence arrangements, farmers who hold entitlements with an initial unit value above the Basic Payment Scheme national average will have their entitlements decrease over the five years of the scheme, while those with an initial value below 90% of the basic national average will see their entitlements gradually increase over the five years of the Scheme. Those with initial unit value between 90% and 100% of the basic scheme will see no change.

The initial unit value is the basis of subsequent convergence calculations. The initial unit value is the value carried forward from 2014 spread over the number of entitlements. All farmers must reach the minimum entitlement of 60% of the Basic Payment Scheme national average by 2019 in addition to the above criteria. If they do not do so, under the above convergence, then the value of entitlements will be increased in equal steps to ensure that by 2019 this level is reached.

By 2019, no farmer may receive a payment per hectare (basic payment and greening of more than €700 upwards downwards convergence will be applied). The carry forward percentage in 2014 to 2015 should be checked, 60%?

Greening Measures

Farmers who participate in the basic scheme must implement three standard Greening measures:

Crop diversification;
permanent grassland;
ecological focus area.

In some cases, the land is automatically considered green, and no further obligation to implement greening standard measures arises. The most significant is where

the land is subject to organic farming practices.
holdings, where more than 75% of the eligible agricultural area is permanent grassland or is used for the production of grasses or other herbaceous forage provided the remaining arable area does not exceed 30 hectares;
land within the scope of the Natural Habitats Conservation Directive and the Wild Birds Conservation Directive.

Implementing Greening

Greening measures must be implemented to the extent compatible with the Directive. 30% of the ceiling is applied to Greening. National ceiling, this amounts to €364,500,000.

The Greening Payment is an annual percentage of the value of entitlements activated by all farmers. It reflects the bulk of the reduction in the value of 2014 entitlements.

Crop diversification is required. Land of more than 30 acres requires three crops. The main crop is to be not more than 75% of arable land. The main crops together not more than 95% of arable land.

Holdings between 10 and 30 hectares must have at least two crops. The main crop must not cover more than 75% of the arable land. Lands less than 10 hectares must have no crop diversification requirement.

There are exemptions from the diversification requirement where more than 75% of the arable land is used for the production of grasses or other herbaceous forage or arable land laying fallow or a combination, providing the remaining land does not exceed 30 acres;

where more than 75% of the eligible land of the holding is permanent grassland used for the production of grasses and other herbaceous forage or a combination, provided the arable area not covered does not exceed 30 acres;
where more than 50% of the areas under arable land was not declared by the farmer in its aid application of the previous year and where all arable land is being cultivated with a different crop compared to that of the previous year;
land subject to organic farming practices automatically fulfills the requirements.

Crops include standard crops. It includes arable land laying fallow and temporary grasses and herbaceous forage. Inter-crop being cropped are distinct crops for this purpose.

Permanent grassland is land that has not been included in the crop rotation of a holding for five years or more other than as a whole must ensure the ratio of permanent grassland to total agricultural area is maintained and shall not decrease by more than 5% relative to 2012. Land converted to forestry is exempt and does not impact in the calculation of the ratio of permanent grassland to total agricultural area.

Ecological Focus Area

Farmers whose holding include more than 15 acres of arable land must ensure at least 5% is allocated to ‘Ecological Focus Area’. This may be increased over the period of the current scheme.

Ecological Focus Area may include:

arable land laying fallow;
terraces;
landscape features (hedges with a width of up to 10 meters, ponds of a maximum of 0.1 hectares, ditches with a maximum of six meters width, trees in a line or in a group, field margins, traditional stone walls;
buffer strips, strips of eligible acres along forest hedges; land covered by agroforestry, areas of short rotation coppice with no use of mineral fertiliser; areas which catch crops or green cover, established by planting and germination of seeds using a mixture of crop species by under-sowing grass in the main crop;
areas within nitrogen-fixing crops.

Ecological Focus Areas must be located on the arable area with the exception of landscape features and buffer strips which may be adjacent to the arable land.

Exemptions to Ecological Focus Area:

holdings where more than 75% of eligible agricultural land is permanent grassland or is used for the production of grass or other herbaceous forage provided the remaining area does not exceed 30 hectares;
holdings where more than 75% of the arable land is used for production of grass or other herbaceous forage, is arable land lying fallow is cultivated with leguminous crops or a combination of these uses, provided the remaining arable land does not exceed the 30 hectares;
land that is subject to organic farming practices automatically fulfills the greening requirements. This exemption only applies to that part of the holding farmed organically.