Single Farm Payment

Single Farm Payment 2005

The European Commission’s mid-term review of the CAP agenda was the subject of negotiation over several years.  Ultimately, in 2003, the Council of Ministers agreed to a  fully decoupled Single Payment Scheme. The livestock premia and arable aid schemes which formerly applied were decoupled from production so that entitlement was no longer linked to the extent of production.

The following former schemes were replaced by the Single Payment Scheme in 2005.  A dairy premium was introduced which was decoupled from milk production in 2005 and added to the Single Payment Scheme.

The purpose of decoupling production from the payment was to enable farmers to focus on market requirements rather than on compliance with the requirements of particular schemes.

Around 26,000 farmers are paid an average of €10,000 per annum under the scheme in Ireland.

Entitlements

Generally, the SPS applies to farmers who actively farmed during the years 2000, 2001 and 2002 and were paid livestock and/or arable aid premia in those years and who continue to farm in 2005.  The payment is based on the average number of animals or hectares on which payments were made in the reference years. Farmers were entitled to claim on the basis of circumstances beyond their control that their entitlement should be based on reference years other  than the above three years

The entitlements are established for a farmer who farmed during the relevant period.  Each farmer was obliged to submit a valid area aid application and apply for the Single Payment Scheme in 2005.  In order to claim support,each farmer had to establish an eligible hectare of land for each entitlement.  If a farmer established a hundred entitlements but held 70 hectares he is paid only on 70 hectares.  The gross number of entitlements were reduced by up to 3 percent to create a national reserve to be spent on rural development matters.

The principal condition of entitlement is the maintenance of holdings in good environmental and agricultural condition and compliance with the statutory management requirements. There is no obligation to work the land.

A holding must be at least  0.3 hectares and used for agricultural activities.  Payments under the first scheme continue until  2013.

Eligible Land

Eligible land includes forage area, arable area and set aside. From 2008, this includes areas under potatoes, fruit and vegetable. Forestlands may be eligible in the future.

Farmers in receipt of disadvantaged area payments must maintain minimum stocking levels per hectare for three months.

There are requirements for the country as a whole, not to significantly reduce the area under permanent pasture.  However, in practice, a significant increase in the national tillage area would have a marginal effect on permanent pastures.

Standard entitlements have been established by the vast majority of tillage and livestock farmers who claimed for the reference this period and receive direct payments.  The overall value is based on the average amounts received for livestock and arable premium in the reference years subject to deductions.

Farmers who claimed arable aid in excess of 15.13 hectares in any year were obliged to put 10 percent into set-aside. Special set-aside entitlements could be claimed.

The set-aside obligation no longer applies. Provided that they continue to drawdown set-aside entitles, they were obliged to declare sufficient land eligible for set-aside.

Special Entitlements

Special condition entitlements are those established by farmers who receive direct payments but had little, no land or relatively a small number of eligible hectares so that a unit value would have exceeded €5,000 per hectare.  In this case, the payments during the reference period to the extent that they would exceed €5,000 per hectare are deemed special entitlements.  They are treated differently and subject to conditions including that at least 50 percent of the agricultural activity exercised in the reference period must be maintained in livestock units.

If the special entitlements are transferred the transferee may continue the obligations of continuity of production undertaken in order to receive the payment or have a eligible hectare for each payment entitlement.  Special entitlements may be converted into standard entitlements if the eligible land is declared in respect of them.

After 2006, a scheme of compensation for sugar beet growers was incorporated into the single payment scheme.  Growers are granted entitlements in accordance with acreage grown in the reference years 2001, 2002 and 2004.  The value is determined by the average contractual tonnage during the reference period divided by the number of hectares multiplied by the rate of compensation per ton.  This establishes a sum for entitlements.

Certain farmers may be eligible for payment entitlements from the national reserve.  See below.

Entitlements per Hectare

Entitlements attach to the farmer rather than the land.  However, a hectare is required for each entitlement which need not necessarily be the same as that farmed in the reference year.  A single payment application must be made in each year and declared by 31st May.  The land must be maintained in good agricultural and environmental condition in the period 1st April to 31st December.

The hectares declared must be available in the period April to December of the relevant year.  The land may be owned rented in or leased in.  It must be maintained as agricultural land during this period.  If land is being used at any point during the nine-month period for non-agricultural purposes, such as afforestation, it is excluded.

There is provision for consolidation or stacking entitlements.  This may apply where the number of acres farmed during the reference period is no longer available.  In this case, the entitlements may be surrendered to the national reserve in exchange for a lower number of entitlements with a higher unit value.

Concession & Consolidation

The farmer must continue to have at least 50 percent of the number of entitlements allocated. He may apply for the concession provided he continues to have at least 50 percent.  The concession is not available if the land has been disposed off by way of sale other than a sale to a public authority for non-agricultural use.

The following are eligible for the concession.

• farmers who have afforested some of their land since the beginning of the period.
• farmers who have disposed of land to a public authority for non-agricultural use.
• farmers who have leased land during the reference period, but the rental agreement has expired.
• farmers whose land has been reduced due to participation in a farm waste management scheme.

Certain entitlements may not be consolidated including

• set-aside entitlements.
• special condition entitlements,
• entitlements acquired by purchase or lease of land.

A farmer who has fewer hectares than those declared in the reference years may not consolidate.

Entitlements cannot be leased or transferred except by way of inheritance, for five years from the year of allocation.  The farmer must use the entitlements himself each year for a period of five years.

Forestry may be an attractive option as farmers may receive the forestry premium and single payment.

National Reserve

Certain categories of persons are entitled to allocation from the national reserve. Farmers who inherit lease or receive a holding free of charge or for nominal consideration where it was leased to third-parties during the reference period.

The farmer from whom the land is obtained must have retired or died prior to May 2005.  The land must be acquired free of charge or for a nominal amount by inheritance, permanent transfer or lease for a minimum period of five years.

Where the applicant has entitlements, whose value is less than the regional average they may be topped up to the regional average subject to conditions including that

• land is declared under single payment application form.
• the applicant is required to submit a copy of the lease confirming the land was leased to a third-party during the reference period and
• land must have been declared by the third-party under his area aid application.
• proof of the acquisition of the land or the five-year lease must be given.

New Entrants

A new entrant is a farmer who did not pursue agricultural activity in his own name or at his own risk in the five years preceding the commencement of new activities.

Applicants must furnish details of their age farm income, non-farm income and qualification.  New entrants who’ve leased or rented land were eligible for allocation provided they could demonstrate a genuine commitment to farming.

The lease agreement must have been in place prior to submission of the 2008 area aid application. The land must have been declared on each of the previous year’s applications.

Copies of the leases or rental agreements must be furnished.

Other evidence is required for new entrants including

• evidence of income tax return.
• total off-farm income not exceeding certain levels.
• total income of the applicants not exceeding certain levels for chosen year of declaration.
• applicants under 35 must have obtained certain qualifications in farming or completed a Teagasc approved course of at least 180 hours.
• applicants over 35 must have at least five years practical experience in farming.
• the maximum allowance is €10,000, although in practice, has not exceeded half this amount.

Sale or Lease

Entitlements may be leased but must be accompanied by an eligible number of eligible hectares. The lease must be in place before the closing date for the annual application.  The number of entitlements may  not be higher than the number of hectares being leased.

Entitlements may be sold or transferred with or without the land, subject to conditions.  Entitlements may be sold with the land.  Set-aside entitlements require the purchaser to continue to set aside land and must claim the set-aside entitlements first.

Entitlements may be sold without the land if the farmer has  used 80 percent of all entitlements in the previous year. Entitlements may be sold with the land at any time. The farmer who wishes to sell entitlements and has not activated at least 80 percent of his entitlements in a calendar year, must first surrender unactivated entitlements to the national reserve.

Entitlements may be sold without land if the farmer activates at least 80 percent of entitlements in any one year.  If he does this, he may sell 100 percent of entitlements.  Entitlements received from the national reserve are not saleable for five years.

Where an  entire holding is sold, the transferor is no longer entitled but the transferee may succeed to the entitlement.  A transfer of entitlement form should be completed and filed with the Department of Agriculture.  Where the application has been made and all the conditions complied with before the transfer, the payment is made to the transferor.

Annual Applications

Annual applications may be made online.  Maps must be submitted with applications showing the boundaries of each land and parcel.  A new plot must be identified and numbered.

• There is a national ceiling for Ireland for each year.   The national reserve is a percentage of this ceiling designed to cater for situations where
• farmers were disadvantaged by reason of an interruption or change during the reference period.
• farmers who made investments in the period 2000-2003 which result in increased production capacity.  This may include purchase of long-term lease of land.
• farmers who sold their milk quota into our restructuring scheme in that period and convert it to a farming sector for which a direct payment would have been payable in 2000 to 2002.

Modulation involves a reduction in the single payment by a set percentage in each year from 2005. Up to 80 percent of the funds generated through modulation are retained for spending in rural development measures within Ireland.  Rural development measures may be introduced in the area of food quality and animal welfare standards.

Sale & Clawback

The sale of entitlements is only permitted where at least 80 percent of entitlements have been used in 2005.  Claw backs apply to sales as follows.

• sale of entitlement without  land 30 percent;
• sale of entitlement with lands where part of the holding is held, 5 percent;
• sale of entitlements with an entire holding, 2.5 percent.

No claw back applies  to

• transfer of entitlements by gift or gift within families or inheritance.
• lease of entitlements, rental agreements in respect of entitlements.
• sale of entitlements to new entrants with qualifying age, income and educational qualifications.
• sale of entitlements without land where the farmer used at least 80 percent of entitlements in 2005 and did not apply to consolidate and is  selling entitlements not used in 2005.

Each entitlement is equal to one eligible hectare of land. Each parcel is allocated a unique land parcel number (LPIS) which is a reference area.  Where land is acquired from a predecessor at the relevant reference number must be obtained and entered in the application form.  All parcels of land within the holding must be declared.