Carter Jonas
Carter Jonas

Unexpected consequence from ‘one-off’ rule

Farmers should be aware of one unexpected consequence of the introduction of the new Basic Payment Scheme (BPS) which seems inherently unfair and results from a “one off” rule that will be implemented this year only.

Under the new scheme farmers will be allocated “entitlements” which they need to use to claim against their land. One entitlement will need to be matched against one hectare of qualifying land in order to make an effective claim. The new BPS entitlements will be derived from the old Single Payment Scheme (SPS) entitlements that a farmer already holds.

Under the old scheme, farmers were able to hold more entitlements than land; they could not claim on the spare entitlements but provided they used them every other year they could hold on to them. However in the first year of the BPS any “spare” entitlements will be confiscated without compensation which is unlikely to have significant impact for most farmers.

For those farmers who take on extra land in 2016 this may be a problem if they are not able to acquire the matching number of entitlements from the outgoing farmer because the supply of spare entitlements will be restricted to those farmers who can no longer claim on all or some of their own land next year. This may be because they have built a solar park on their land or sold land for development for example.

But there is one group of farmers where the new rule will have an unexpected consequence - those whose land may be affected by an infrastructure project in 2015. Such projects are often temporary in nature and may involve a water company installing a new sewer or water pipe for example. Here land will be temporarily taken out of production along the route of the pipe and where contractor’s compounds or pipe stores are required.

In such instances farmers will generally not be allowed to claim on the affected land because it will not comply with the myriad of “cross compliance” rules which are a feature of the both the old SPS and BPS. However, if this land cannot be claimed on in 2015 the farmer will permanently lose the matching entitlements even though the loss of land has only been temporary and has been at the behest of a third party out of the farmer’s control.

It is not permitted for these circumstances could be considered as “force majeure” thereby exempting a farmer from losing entitlements. Therefore farmers affected by schemes that will result in a temporary loss of land this year will incur a permanent loss of the equivalent number of entitlements. This will not happen in future years because the ongoing rules allow entitlements to be used every other year.

There are solutions for farmers likely to be affected by such a scheme, please contact Carter Jonas for advice.

James Stephen

James Stephen

Partner

James is a partner who heads up Carter Jonas’ South West rural operation, managing the teams in the four offices of Marlborough, Bath, Taunton and Truro.  He primarily works out of the Taun...

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