The Common Agricultural Policy has been reformed yet again

The Common Agricultural Policy (CAP) has been reformed yet again and at midnight on 31st December 2014 it was out with the old, as the Single Payment Scheme (SPS) ceased and in with the new, as the Basic Payment Scheme (BPS) was introduced. This is the mechanism through which farmers will receive support payments via the EU.

The new scheme is also meant to be at the forefront of the Government’s drive for “digital by default”; the idea being that in the first instance every farmer was meant to be able to verify their identity online. But in reality it appears the BPS has come too soon for this online verification process which is causing frustration to the farmers who have been invited to register so far.

This must be a big headache to the Rural Payments Agency (RPA) which is tasked with implementing the BPS. Therefore the RPA has decided to open up its helpline to allow farmers to verify their identity over the telephone which will then enable the RPA to allow farmers to access their online BPS system.

Having now done this with a few clients myself I am pleased to report that the telephone verification system appears to be working well and is reasonably easy although whether the RPA will be able to cope with the volume of calls that are now likely to flood in over the coming weeks remains to be seen.

Once farmers have then accessed the RPA’s online BPS system they need to check their business details are correct, that the appropriate people are registered against the business and that the plans of their land are up to date. At present there is not much else that can be done online but with only 4 months to go until the application deadline, there is clearly still a lot of work to be done to ensure the system becomes functional in time for farmers to be able to make their claim.

Memories of the disastrous implementation of the SPS back in 2005 are etched into the memory of many a farmer and thus there is nervousness that the faltering start to the online identity verification process may be a prelude of much worse to come. However, I do hope that this time the RPA will have learnt from the mistakes of the past.

The fact that they have organised a telephone identity verification system at relatively short notice is to be commended and I just hope the RPA’s new BPS software will be similarly user friendly.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Quietly confident about the introduction of the BPS

DEFRA has recently published its latest update on the CAP reform rules which surround the introduction of the new Basic Payment Scheme (BPS) next year.

It is ironic that farmers are being urged by DEFRA not to delay registering themselves for the new Basic Payment Scheme (BPS), and yet the registration rollout programme itself has been delayed. With the memories of the disastrous introduction of the Single Payment Scheme (SPS) back in 2005 still heavily imprinted on the mind of most farmers and land agents, one hopes the current delay is not a portent of things to come.

However, a DEFRA spokesman has commented, “We have learned a lot of lessons from the past. What happened in 2005 is still in everyone’s mind – but that is not going to happen again”. Indeed having met a number of the senior Rural Payments Agency team myself earlier in the year, I genuinely think they have a much better grasp of what is required than was the case back in 2005.

Therefore I am quietly confident that the introduction of the BPS will go better than its predecessor scheme, but equally farmers should not underestimate the time that may be required getting registered on the new system and then learning how to use the online mapping tools and the new application process.

The most important initial step will be for farmers and land agents to verify their identity on line. This will involve logging on to the Gov.uk Verify website where your identity will be verified by one of five third-party identity assurance providers.

In order to do this farmers will be asked a number of questions about their personal circumstances and finances and to make this process go smoothly you will need either a current driver’s licence or passport and details of at least two of the following; bank account/credit card, personal loan or mortgage, gas or electricity bill, mobile phone contract or voter registration information.

It is understood that if you have all the necessary information to hand the registration process can be relatively simple and will only take 10 minutes or so but if not you will be directed to a telephone helpline and in extremis you will be able to contact a digital support centre, the nearest of which in this area is currently in Exeter.

However, unlike when the SPS was introduced in 2005, DEFRA has recognised the importance of the professional advisors who for many years have played a vital role in assisting farmers complete their application forms. Thus, with everything now having to be submitted online, DEFRA is encouraging professionals, such as land agents like myself, to help farmers get set up for the new digital era which is upon us whether we like it or not.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Single Payment Scheme payments: the lowest in 7 years

The value of this year’s Single Payment Scheme (SPS) payments was set last week at 77.7 pence per Euro which is the lowest rate for 7 years. The Single Payments, which are defined in Euros, are converted to Sterling in order to be paid to British farmers, based on the Euro/Sterling exchange rate on 30th September.

This will come as unwelcome news to farmers who are already facing difficult trading conditions as wheat prices have plummeted to around £100 per tonne while milk prices continue to fall with most dairy farmers now being paid below 30 pence per litre for their milk and some as little as 25 pence per litre. At these prices farmers will be losing money and with European support payments also falling farmers are facing a tough year ahead.

It is estimated the Single Payment received by farmers this year will be approximately 12% less than last year which is in part due to the exchange rate referred to above but also due to other deductions.

These other deductions include 10% compulsory modulation and a 12% transfer from direct payments (Pillar 1) to rural development (Pillar 2). Together these total 22% which is 3% higher than the deductions imposed in 2013. In addition there is also a 1.6% cut in the UK CAP budget and the European Commission’s Financial Discipline Mechanism (FDM) will also be imposed on those farmers receiving more than 2000 Euros. The FDM rate is currently proposed to be 1.3% although this could vary up or down.

NFU vice-president Guy Smith commented, “For many farmers, looking at increasingly tight cashflow projections in the face of plummeting commodity prices, news that SPS payments are also going to be down will feel like another unwelcome turn of the financial screw.

“Farmers should always be wary of crying ‘wolf’ too early but many of us are getting nervous that there might be some serious financial difficulties on the horizon at the moment,” he said.

So, farmers are definitely feeling the pinch and this was evident at the Dairy Show held at the Bath and West showground on 1st October. Although the show itself appeared to be a great success there were definitely a lot of worried dairy farmers around although opinion appeared to be divided as to how to deal with the falling milk prices. Some favoured direct action while others seemed resigned to the fact that world commodity prices have fallen sharply and this was the primary driver as to why prices have fallen sharply.

However I think all were agreed that they need to be treated fairly by the various milk purchasers so as to ensure farmers are not taking an unfair proportion of the burden imposed on the whole industry by the fall in world commodity prices. It is clarity on this particular point which I think needs to be sorted urgently.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk