Bye Bye BPS, Hello Delinked Payments
As we all remember, the UK left the EU on the 31st January 2020 and after 47 years of membership the UK is now setting its own farm policy. In England, as part of Defra’s Agricultural Transition Plan direct farm subsidy will end in 2027 as a direct result of the implementation of the Agriculture Act 2020. This year marked the last Basic Payment scheme application and those of us who first completed IACS applications, then Single Payment and finally Basic Payment are looking forward to enjoying a May Bank Holiday not in the office.
Due to the policy of ‘Progressive Reduction’ farmers have seen the BPS payment reduce from 2021 with each succeeding year and this reduction will continue until the final payment in 2027. However, 2024 will see another change with the introduction of Delinked Payments which will involve the removal of the link between the payment and the land. Payment henceforth will be sent to any person or business who claimed BPS during 2020, 2021 and 2022 (now known as the reference years) but only provided they also made a claim in 2023. If these criteria are met, future payments will be made irrespective of the area of land they now or subsequently hold. Later this year the Rural Payments Agency (RPA) will send claimants an information statement showing the reference amount. The reference amount will be multiplied by annual percentage reductions to arrive at the delinked payment each year. It is important for the claimant to check this statement when it arrives.
There will be problems for farms that have either not made claims in any of 2020, 2021 and 2022, or did not claim in 2023. One example is where a farm was purchased in 2023, neither the previous owner or the new owner will be eligible for the direct payments as one will have the reference amount and the other the eligible claim year. Other examples could be where businesses have restructured and changed their SBI. Fortunately the RPA assure us that, claimants will be able to transfer some or all of their reference amount to one or more other businesses during a transfer period in early 2024. This does of course rely on the two parties being willing to cooperate.
As these payments are being phased out the next question is will the £1.65bn being paid to 85,000 claimants in 2020 be redistributed to farmers in the form of ELMs payments (Sustainable Farming Incentive, Countryside Stewardship and Landscape Recovery schemes) and grant – aid schemes such as productivity and animal welfare grants? The jury is out but the answer is almost certainly no. Most farms were already receiving environmental payments as well as BPS and will find it difficult to significantly increase their commitment to these schemes without affecting production. In any case the Government only pledged to maintain the total agricultural subsidy level throughout the current parliament and with the next election that sum is likely to be reviewed. Historically, close to 50% of farms have not been profitable without BPS so that this reduction in payments will certainly have an enormous effect on the industry and many farmers are already making plans to try and bridge the shortfall.
If you would like to discuss any of the grant applications available or have a more general discussion as to how to make your farm business fit for the future do give us a call on 01256 389253.