Details of New Basic Payment Scheme

ihatewinter

From FJ website

With the balance of payments of the Single Farm Payments paid this week, farmers are starting to look at the impact of the new Basic Payment Scheme in 2015.
What will actually happen to my payment next year? This has been a common question this week. It is as if the arrival of the balance of the last ever Single Farm Payment (BPS) has flicked a switch in farmers. It has made them realise that big changes to their direct payment are actually going to happen.

On 31 December 2014, all the SFP entitlements will be extinguished. Farmers will be allocated new basic payment entitlements when they submit their basic payment application on 15 May 2015.

We can divide these into three groups – the winners, the losers and the hopefuls. The winners are the farmers who had low-value entitlements in the past. They will get an increase in payments up to 2019. The losers are farmers who had entitlement values over the national average – they will see cuts to their direct payments in five steps up to 2019. The hopefuls are new entrants who plan to get entitlements from the national reserve or farmers who farmed in 2013 but did not have any entitlements. They are looking to the Scottish derogation to allow them into the new system.

What will actually happen to my payment next year?

Most farmers need three pieces of information to work this out

1 The value of entitlements owned by the farmer on 15 May 2014. In most cases, this will be what the farmer got paid this year. However, some farmers had more entitlements than hectares in 2014, so it could be higher. The 2014 Grassland Sheep Scheme payment is also added into the pot.

2 The area in hectares you submitted on your Single Farm Payment application in 2013. This determines the maximum number of entitlements you can establish in 2015.

3 The area in hectares you plan to submit for the 2015 basic payment application by 15 May 2015. This only has an impact if it is less than the land you submitted in 2013. The reason is that the two years are compared, with the lower number taken and used.

To explain, let’s take the example of one farmer I talked to this week. He owns 30ha and has rented another 10ha on conacre for the last 10 years. He has 40 entitlements valued at €300 each, giving him an SFP of €12,000 this year. He was ringing to know if he would be better dropping the conacre.

Farm 40ha in 2015

Firstly I brought him through what would happen if he farmed 40ha in 2015, the same as in 2013. He has €12,000 in his pot, but to establish his basic payments only 65.67% is taken into account, or €7,880. This is because 30% is put into the greening pot, which he gets back if he fulfils the requirements of the greening payment. The other 4.33% is used to establish the national reserve and Young Farmers Scheme.

The reduced pot of €7,880 is divided by 40ha to give him an initial basic unit value of €197/ha. As his unit value is above the national average of €171.82/ha, he will see cuts to his payments each year until 2019. In 2015 the cut reduces it slightly to €194.77/ha. The greening payment is added to this, giving him another €88.58/ha to bring the payments per hectare to €283.36/ha. So he would get €11,334 in 2015. His payment drops to €10,791 in 2019. By 2019 the farmer’s basic payment entitlement value is cut to €185/ha and with greening added he gets €270/ha. It means his payment drops to €10,791 in 2019, €1,200 less than this year.

Farm 30ha in 2015

What happens if he decides to drop the 10ha of rented land in 2015? His pot of money is the same, so you divide the €7,880 (after the deductions) by 30ha (not 40ha). This gives him a higher initial value of €262.68 for his 30 entitlements. As it is higher, he now suffers a greater cut each year due to convergence. In 2015, each entitlement will be €254/ha; with the greening top-up it would be €370/ha. This would give him €11,112 in 2015, €222 less than if he farmed the 40ha. However, he suffers greater cuts each year and by 2019 his payment is €9,643, over €1,000 less than if he kept farming the land. “I should stay renting the land,” was his immediate reaction. My reply was: “Are you actually making money farming it?” The decision to discontinue renting land is an option in 2015, but it will affect payments. Farmers must start looking beyond 2015. The reason is that if the farmer establishes 40 entitlements in 2015 and then loses the land in 2016, he would have to rent another 10ha to draw his full payment. The only other options are to sell 10 entitlements or lease them out without land (a new option).

Low-value entitlements

One sheep farmer I talked to farmed 20ha and had entitlements valued at €100/ha. He was also expecting to get €400 from the Grassland Sheep Scheme. This brought the pot of money to €2,400.

To work out his initial basic payment entitlement value, we take 65.67% of the money or €1,576. As he plans to farm 20ha again in 2015, it works out as €78.80 per entitlement (€1,578/20).

He gets a lift from convergence to €84 and with the greening top-up he gets €122/entitlement, or €2,440 in 2015, slightly up on last year. His payment will continue to rise each year, and by 2019 will be €3,028. A winner but “not as much as I thought” was his reply.

C4d78

Anybody know if the 3% of payment held over has been paid yet or is due to be paid soon.

whelan2

C4d78 wrote: »

Anybody know if the 3% of payment held over has been paid yet or is due to be paid soon.

Not paid yet, was paid 18th June last year and they said it would be earlier this year. Said in journal it would be paid at the end of april

C4d78

whelan2 wrote: »

Not paid yet, was paid 18th June last year and they said it would be earlier this year. Said in journal it would be paid at the end of april

As efficient as always...

djmc

C4d78 wrote: »

As efficient as always...

Yes along with glas part payment for last year supposed to be paid in may and tams approval to be granted by march April may ??? Still waiting
Lucky milk prices aren't on the floor or we would be in a bad way.

theaceofspies

djmc wrote: »

Yes along with glas part payment for last year supposed to be paid in may and tams approval to be granted by march April may ??? Still waiting
Lucky milk prices aren't on the floor or we would be in a bad way.

Have no fear; apparently the IFA are chasing this 24/7 with the Department - after all they had it as one of the press releases a couple of weeks ago. Any day now it should be paid.:D
Seriously though the amount owed is roughly €50million. That's a lot of interest made by the powers that be bushing back the payment by days, weeks, months
This carry on happens every year it just seems to get worse with every passing year.