Cap reform workshop presentation 25th march

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Cap reform workshop presentation 25th march

  1. 1. CAP Reform Workshop Tuesday 25th March 2014 Rob Wilkinson
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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