Welsh Entitlements – simple summary and background – January 2020

The Basic Payment Scheme (BPS) was introduced in 2015 as a replacement for the Single Payment Scheme when the EU reformed the Common Agricultural Policy in 2013. Under the BPS one Entitlement allows you to claim a subsidy for one hectare of eligible land. The payment  is split into two components; a direct payment to farmers per hectare claimed plus the ‘greening payment’ which is an additional payment based on meeting greening rules, usually around 30% of the direct payment. Initially in 2015 the direct payment element of each Welsh entitlement was comprised partly of ‘historic value’ and partly of a flat rate, with the historic element being reduced and the flat rate being increased until all entitlements have the same flat rate. From 2019 onwards the value is based purely on the flat rate leading to all entitlements in Wales possessing the same value, the whole of Wales being considered a single payment region. In addition, in Wales a claimant also receives a ‘redistributive payment’ on the first 54 hectares of each claim. As with English and Scottish entitlements, a claimant can apply for a ‘Young Farmer’ top up of 25% of the direct payment element up to 25 ha. They must be aged 40 or under and can claim the top up each year for up to 5 years after their first young farmer claim. Over any two year period a claimant must activate (use) all of their BPS Entitlements in at least one scheme year otherwise they will be lost to the National Reserve.

How to claim

To receive BPS payments you must have at least 5 hectares of eligible agricultural land at your disposal on the 15th May of the year you wish to claim and own or lease at least 5 entitlements. You must be an ‘active farmer’ undertaking agricultural activities, which includes the production, rearing or growing of agricultural products including harvesting, milking, breeding animals and keeping animals for farming purposes. You must maintain an agricultural area in a state suitable for grazing or cultivation. The minimum activity required is that the area is grazed to a minimum average annual stocking density of 0.01 to 0.05 livestock units per hectare with the control of non-native invasive weeds and scrub.

If you satisfy the above criteria you must submit an online Single Application Form (SAF) by the 15th of May deadline (or the next working day if this is a weekend). To claim a young farmer top up use the ‘Young Farmer Details – National Reserve and Payment’ section of the SAF. The form also contains the ‘BPS National Reserve – New Entrant’ section allowing new entrants to farming to be allocated entitlements as discussed below.

Obtaining Entitlements

Young farmers and New Entrants

You will only get paid for the number of entitlements you possess. If you have additional qualifying land and wish to gain entitlements for it there are several options. The first applies only to Young farmers and New Entrants, who can apply for an allocation for free from the national reserve.  A Young Farmer must be 40 years of age or less in the claim year and setting up for the first time as head of holding or have control of a partnership/Legal Person (e.g. Limited Company) for the first time on 1 January 2015 or later. This could be setting up a new business or taking over an existing business. A Director of a legal company may qualify, however, for a partnership to qualify the ‘Young Farmer’ must own capital in the business and their decisions cannot be vetoed by other members of the partnership. A New Entrant cannot have had any agricultural activity in their own name/at own risk in the 5 years before the start of the current farming activity. This farming activity must have started within two years of the currant application. Both types of claimant must use the online SAF, their respective sections being ‘Young Farmer Details – National Reserve and Payment’ and ‘BPS National Reserve – New Entrant’. It is worth mentioning that in the case of cross border holdings an applicant would, in addition, need to apply through the respective country’s forms. This is a onetime allocation for each applicant so all potential entitlements should be claimed.

Sale, gift or lease

BPS Entitlements may be acquired or relinquished by sale, gift, lease or inheritance via an online transfer application up until midnight 30th April of each claim year. This can occur with or without land, albeit can only be claimed if having the correct land available. The recipient of the entitlements must meet the Active Farmer requirements at the time of transfer however this does not apply to entitlements transferred via Inheritance. As with elsewhere in the UK, entitlements that have been established in Wales, England, Scotland or Northern Ireland can only be used to claim payment in that country (or region within that country). The transfer process is only available online, accessed via an RPW Online account. If using an agent for the transfer and you want them to be able to submit it for you, you will need to confirm through your RPW Online account that you are giving them the necessary authority to do this. Transfer applications must be submitted to the RPW by 30th April if the entitlements are to be claimed in that year.

Key differences between Welsh Entitlements and other regions of the UK

In Wales there is one single region with all entitlements having the same payment value regardless of land quality. England and Scotland each have three different types with different values for differing quality of land. Northern Ireland has one region but different values for each entitlement based on a ‘historic value’.

The Young Farmer payment is limited to the first 25 ha as opposed to 90 ha.

Wales uniquely offers a redistributive payment on the first 54 hectares of each claim. The value of this is increasing annually with the BPS entitlement value being scaled back to fund this. In 2019 the average payment was £92/ha.

The transfer application deadline of 30th April is earlier than England’s 15th May but later than Scotland’s 2nd April.

Payments in wales have a cap on higher values. They apply a 15% reduction on amounts between €150,000- €200,000, a 30% reduction between €200,000 – €250,000, 55% on £250,000 – €300,000 and 100% when over €300,000. The proceeds are used to fund the ‘Rural Development Programme’ by the Welsh Government.

Trading Value 2020

The average price achieved was £65 per unit.

BPS Transition

The Welsh Government have published a white paper for the Agriculture (Wales) Bill. The Bill is expected to be published in 2022 with the legislative framework coming into effect from 2023.

The Welsh Government will treat the transition differently to England:

• Payment for 2021 and 2022 will be made in full.
• At present there are no details for 2023 claim values,
• Transition from BPS to a ‘Sustainable Farming Scheme’ will then begin in 2024.
• RPW have confirmed that moving forward there will be no ‘three crop rule’ as part of the Greening Payment
• Rules for permanent grassland and ecological focus areas under cross compliance must still be followed.