1. CAP Reform Workshop
Tuesday 25th March 2014
Rob Wilkinson

2. CAP Reform- Implications for your Farm
• Entitlements
• Greening Measures
• Environmental Stewardship Overlap
• Case Studies
• Degressivity
• Active Farmers & Young Farmers
• 2014 SPS Applications
CAP Reform Workshop

3. Entitlements
CAP Reform Workshop
 New Basic Payment Scheme introduced on 1st Jan 2015
 Single Payment Entitlements ‘rolled over’ in England to Basic Payment
Entitlements
 Need to transfer Single Payment Entitlements by 19th Oct 2014
 Surplus Single Payment Entitlements will be lost
 Basic Payment Entitlements can transfer from 15th Jan 2015 to 2nd April
2015?

4. Entitlements – implications
 Make sure in correct ownership
 If taking on/giving up land in September – act quickly
 Do sums now- sell surplus
 2 year use rule
Cap Reform Workshop

5. Greening Measures
 Will make up 30% of the new annual payment
 Non compliance penalty to rise to 37.5% by 2018
 Ecological Focus Area (i)
 Crop Diversification (ii)
 Permanent Grassland (iii)
CAP Reform Workshop

6. i) Ecological Focus Area (EFA)
 5% of arable area (7% in 2018?)
 Range of options
 Nitrogen fixing crops – Input restrictions
 Landscape Features
 Exemptions: > 75% perm grassland or organic
 Overlap with Environmental Stewardship
Cap Reform Workshop

7. Ecological Focus Area
Source: European Commission
EXAMPLE EFA WEIGHTINGS
Landscape Features Unit Equivalent EFA area Comments
Hedges /m 4.5 Up to 10m
Wooded bank /m 12
Isolated tree /m 30 Crown >4m
Trees in line /m 6 Crown >4m
Field copses /m² 1.5 Overlapping crown <0.3ha
Field margin /m 9 >1m
Ponds /m² 1.5 <0.1 ha
Ditches /m 3 <6m
Fallow /m² 1
Buffer strips /m² 9 >1m
Agro-forestry /m² 1
Forest edges /m² 9 >1m
Short rotation coppice /m² 0.3
Catch crops/green cover /m² 0.3
Nitrogen fixing crops /m² 0.3
CAP Reform Workshop

8. Environmental Stewardship Overlap
 Now closed existing schemes continue to end of term
 No double funding allowed but;
 Pre 2012 Agreements likely to allow options to be used for EFA
 Post 2012 Agreements likely to suffer reduction where conflict with EFA
 Some options can be used for ELS & EFA
 New Environmental Land Management Scheme (NELMS) starts January
2016
CAP Reform Workshop

9. ii) Crop Diversification
 2 crops if over 10 hectares
 3 crops if over 30 hectares
 Main crop up to 75%; 2 main crops together not more than 95%
 Third crop could be EFA but input restrictions
 Exemptions: holding is organic; or
>75% of the holding is permanent grassland and arable area is <30h
>75% of the arable area is grassland/fallow and arable area is <30 ha
> 50% of the arable new and not declared previous year- primarily for specialist cropping
arrangements
CAP Reform Workshop

10. iii) Permanent Grassland
 Defined as grassland- established more than 5 years
 Possibly grass margins?
 2012/15 reference year – 5% tolerance
 Administered at National level
CAP Reform Workshop

11. Case Study 1
80 Hectares CFA Block Cropped
 Pre reform rotation: year one 1st wheat, year two 2nd wheat, year three: OSR
 Basic contractors charge: £250/ha, Farmers first charge £250/ha, 50% divisible surplus
 Greening rotation: 50% first wheat, 45% OSR, 5% fallow + increased contractors charge £275/ha
CAP Reform Workshop

12. Case Study 1
80 Hectares CFA Block Cropped
 Consider opting out of greening
CAP Reform Workshop
Pre CAP Reform With Greening (10%
Increased Contractor
Charge)
Opting out of Greening
(30% Reduction in SP)
Average Arable Output £100,801 £93,960 £100,801
Gross Margin £55,867 £51,440 £55,867
Single Payment
(£200/ha)
£16,000 £16,000 £11,200
Net Margin £38,067 £33,240 £33,267
Divisible Surplus £18,067 £13,240 £13,267
Farmers Return £29,034 £26,620 £26,634
Contractors Return £29,034 £27,520 £26,634

13. Case Study 2
300 Hectares (Combinable) Farmed in Hand
 Pre reform rotation: 1/3 1st wheat, 1/3 2nd wheat, 1/3 OSR
 Greening rotation: 95ha 1st wheat, 95ha 2nd wheat, 95ha OSR, 15ha fallow
CAP Reform Workshop

14. Case Study 2
300 Hectares (Combinable) Farmed in Hand
 Not worth opting out of greening
CAP Reform Workshop
Pre Cap Reform With Greening Opting out of
greening (30%
Reduction in SP)
Arable Output £378,000 £359,000 £378,000
Gross Margin £209,500 £199,025 £209,500
Single Payment
(£200/ha)
£60,000 £60,000 £42,000
Profit (before rent) £134,500 £125,525 £116,500

15. Case Study 3
300 Hectares (High Value Crops) Farmed in hand
 Pre reform rotation: 50% 1st wheat, 1/6 sugar beet, 1/6 onion, 1/6 pots
 Greening rotation: 143ha wheat, 47ha s - beet, 47ha onions, 48ha pots, 15ha fallow
CAP Reform Workshop

16. Case Study 3
300 Hectares (High Value Crops) Farmed in hand
* Rent paid for fallow land £7425, £475/ha (£200/ac)
 Consider renting in ‘green’ area
CAP Reform Workshop
Pre Cap Reform With Greening Opting out of
greening (30%
Reduction in SP)
Renting 15ha
Fallow from 3rd
party*
Arable Output £886,500 £838,425 £886,500 £886,500
Gross Margin £614,200 £580,632 £614,200 £614,200
Single Payment
(£200/ha)
£60,000 £60,000 £42,000 £63,000
Profit (before rent) £404,200 £370,632 £386,200 £399,775

17. Degressivity
 ‘Degressivity’ instead of Capping – obligatory
 5% above €150,000
 Based on Basic Payment element only (not greening)
 Salary offset – not available in UK
 Up to 2275 acres – no deduction
 4000 acres – £4830 deducted
CAP Reform Workshop

18. Other details
 Active Farmer rule:
‘Minimum Level of Agricultural Activity’
‘Negative List’
 Young Farmers’ Scheme:
Under 40 years old; Head of Business
25% top-up, for first 5 years, limited area
Estimate £22,000 over 5 years?
CAP Reform Workshop

19. 2014 SPS Applications- Action
 Entitlements in correct name
 Calculate number of Entitlements – sell excess
 Woods registered
 Online preferred
 Check Crop Coding – grassland and margins in ELS
CAP Reform Workshop

20. Summary
 Basic Payments less
 Greening – Final details to be confirmed
 Simplification?
 Mapping features – changes online – one set maps
 Farm cropping/policy needs review – opt out/rent in
CAP Reform Workshop

21. Contact
Rob Wilkinson
Strutt & Parker,
5 South View
Tinwell Road
Stamford
PE9 2JL
01480 484 040
07711 739 429
rob.wilkinson@struttandparker.com
CAP Reform Workshop