Northern Ireland Entitlements – simple summary and background – January 2020

The Basic Payment Scheme provides an income support network to farmers in the form of a payment based on the number of entitlements held by the farmer. To claim, a farmer must “have at his disposal” (i.e. either own or lease) a hectare of eligible land for each entitlement that is being claimed, and use it for agricultural activity. The minimum area that can be claimed is 3 hectares.

In 2015 the Common Agricultural Policy (CAP) reformed the Single Payment Scheme to the Basic Payment Scheme (BPS). The idea was to simplify payments and using a convergence model, result in farmers being paid a national average per entitlement rather than the significantly varied amount they received historically. This would be achieved using a phased redistribution of payments between those who hold high value entitlements and those holding low value. In Northern Ireland all land was classified as being in a single region, and the number of entitlements allocated to each farmer was based on the number of eligible hectares declared in 2013 or the number declared in 2015, whichever was the lowest figure. The value of entitlements held by applicants in 2014 determined the value of those allocated to them in 2015.

Convergence

Historically the level of direct payments for each farmer was based on previous production linked support schemes. These were all combined into the BPS entitlements allocated to farmers in 2015, and this resulted in large differences in unit value paid per entitlement for different farmers. The decision to gradually transition the value of the entitlements to a common Flat Rate rather than have an abrupt change was taken to minimise the impact on the agricultural industry. The rate of transition to a flat rate was decided to take place over a period of 7 years from 2015. This would involve an increase in equal annual steps of the unit value of entitlements below the regional average by 71.4% of the difference between their initial value in 2015 and the regional average by 2021/22. Entitlements with a value above the regional average would have a linear decrease to the difference between the initial 2015 value and the regional average, thus providing the funds for the increase in lower value entitlements. The phasing out of historic payments in favour of a flat rate is due in the 2021/22 season.

How to claim

From 2019 entitlements are claimed online via the Single Application Form (SAF) available on the DAERA website. A Government Gateway account must be used/created to check all details of land claimed upon are up to date. You can use this service to see the quantity of entitlements you possess, the unit value and total value of your claim. To activate an entitlement, you must declare on your SAF an equivalent area of eligible land which is in your possession and is being used for appropriate farming activity on the 15th of May of the claim year. When claiming you must comply with Greening requirements on all eligible agricultural land within your holding, whether it is part of your BPS application or not. This will provide you with the ‘Greening payment’ part of your claim. Failing to comply will result in this part of your claim being reduced. The Single Application and any required documentation must be submitted by 15th May of the claim year. Applications received after this date but before 10th June are accepted but subject to a late claim penalty. After this date they will no longer be accepted.

Obtaining entitlements

Entitlements are available for purchase and lease using the online Transfer Service. To use this you will need the Business ID and Entitlement Transfer ID of the person you are transferring entitlements to. The transfer deadline is 2^nd of May (or the next working day if it falls on a weekend) of the year you wish to claim for. If you wish to use an agent they must be authorised and given online access to complete your application. This requires an ‘Authorisation for an agent to access Basic Payment Scheme (BPS) Entitlements Online Service’ form available from the DAERA website. If you are transferring entitlements due to inheritance or business change then a paper TE1 Form must be used.

The other means of obtaining entitlements is through the Regional Reserve available only to ‘New Entrants’ and ‘Young Farmers’. To do this you must complete a paper Young Farmers Payment/Regional Reserve Form in addition to the SAF, with all supporting documents and submit it to your local DAERA Direct Office by 15th May. An applicant can only successfully apply once to the RR under either category.

A Young Farmer is defined as someone who is head of a holding and no more than 40 years of age in the year of submission of their first BPS application. A New Entrant must be an ‘active’ farmer on the date of their application, with at least 3 ha of eligible land and carrying out an agricultural activity. They must not have commenced any agricultural activity in their own name in the 5 complete calendar years preceding this activity, nor had control of a legal person exercising agricultural activity. Both types of applicant must have a Level II qualification in agriculture.

Young Farmers Payment

If qualifying as a young farmer then you are eligible for a ‘Young Farmer Payment’. This top up payment is limited to the first 90 hectares and is based on 25% of the regional average of the direct payment element per hectare multiplied by the number of entitlements activated in a claim. The YFP is made up of 2% of the Northern Irish Regional ceiling and if necessary the rate per hectare will be scaled back depending on numbers of applications. Once an YFP is approved then the applicant is eligible to claim it for 5 years including the initial year.

Trading Value/Market Report

As discussed, Northern Irish entitlements still have varying values based on a historic element in 2020. In 2020 Mid–value entitlements had an average payment value of €227 plus greening leading to a predicted payment of £290-300 per entitlement. Demand was strong, with entitlements trading at close to face value with lower values (which will be increasing in value) achieving slightly higher multipliers. These high trading prices created a stronger than usual leasing market with high to mid value entitlements going for half of their activated claim value. In the last few weeks of trading, prices dropped as Regional Reserve entitlements were released to new/young farmers who subsequently sold them.

BPS Transition

There are provisions within the Agriculture Bill for Northern Ireland to create their own system. Like all regions DAERA have announced a simplification of Greening measures.

• For 2021 DAERA have confirmed that previous ‘Greening measures’ are no longer required.
• This includes w3 crop rule and EFA.
• BPS Permanent Pasture rule to reinstate if ploughed is maintained.
• The Greening percentage for the 2020 Scheme year is 43.647186%.
• The 2020 Young Farmers’ Payment will be paid at the rate of £77.04 per hectare. This is an increase from 2019 rate of £44.68. Young Farmers’ Payment is made on a per hectare basis up to a limit to 90 hectares.