Single Payment Scheme
Encyclopedia
On 26 June 2003, EU farm ministers adopted a fundamental reform of the Common Agricultural Policy
(CAP) and introduced a new Single payment scheme(or Single Farm Payment, SPS) for direct subsidy payments to landowners.
The system of subsidy applies throughout the European Union
according to rules agreed between the member states. However, exact details of implementation and grants vary from country to country within the outline rules. Transitional rules also apply for new member states which joined the EU in 2004 and more recently. States have a choice of whether to introduce the new scheme at once, or to phase it in over a period from 2005–2013. The UK Government decided to be one of the first countries in Europe to introduce the Single Payment Scheme and decided to start to phase it in from 2005. Introduction in the UK was strategically coordinated via DEFRA, with devolved responsibility to England, Wales, Scotland and Northern Ireland to independently implement the scheme.
The new scheme was intended to change the way the EU supported its farm sector by removing the link between subsidies and production of specific crops. This reform focused on consumers and taxpayers, while giving farmers the freedom to produce what the market wanted. Member States have the choice to maintain a limited link between subsidy and production to avoid abandonment of particular production. Current payments to farmers continue to reflect historic patterns of production for different crops in countries where the scheme has yet to be introduced, or as a proportion of the total payment where the scheme is being introduced over a period of years.
The Single Farm Payment is linked to meeting environmental, public, animal and plant health and animal welfare standards and the need to keep land in good agricultural and environmental condition.
payments from production. This was in response to criticism from other World Trade Organisation (WTO) countries (mainly the US), that the EU was unfairly subsidising farmers and providing an unfair competitive advantage. Under the SPS the farmer is no longer paid different amounts according to the crop he produces, but a set amount per hectare of agricultural land maintained in cultivateable condition. The intention is that choice of crop is based purely on market driven forces and not on production based grants. Decoupling of payments has allowed them to be categorised under the so-called blue box
for the purpose of WTO negotiations, ensuring the legality and compliance of international obligations.
To gain funds from the SPS the Farmer has to cross comply – that is, to farm in an environmentally friendly
way, with careful use of pesticide
s and fertilisers. The farmer also had to set aside (not farm) 8% of their productive land annually, in addition two metres on the perimeter of each field must be left uncropped to become overgrown. However, the requirement for set aside was suspended for one year in Autumn 2007 following sharp increases in prices for certain crops, and in consideration of the aim to grow more crops for biofuel production.
Another stated goal at the outset was to simplify the existing process including applications. Eleven existing schemes were replaced by the SPS. The reality appears to be however that the SPS is much more complicated than what went before. However, we can see that the SPS has given more legitimacy to the EU's farmer support system, as a ceiling has been introduced, limiting the future increase of payments due to farmers.
Implementation of the payments in England has been impaired by problems at the Rural Payments Agency
. Payments under the scheme were intended to be made by around January 2006, but by December 2006 some 2% of claims still remained unsettled. Payments amounted to £1.5 billion distributed amongst 115,000 claimants, though most of the money went to relatively few of the claimants (according to the size of their holdings). Difficulties in implementation included double the number of expected claimants, as rules of the new scheme allowed many more people with relatively small areas of land to claim.
Applications are made annually by completion of the SP5 form, which requires claimants to declare all the land under their control, the land they wish to claim payment on and whether they are subject to Statutory Management Requirements (SMR) or Good Agricultural and Environmental Conditions (GAEC). In February 2008 RPA began accepting electronic applications via third party software. The first application was submitted 27 February 2008 through Single Payment Supervisor by Paul Holliday Software. Following the success of the project to accept electronic applications via third party software RPA took the next logical step and in March 2010 began allowing submissions directly through their own Whole Farm Approach website. There is speculation within the agricultural industry that paper forms will be withdrawn in an attempt to reduce costs.
The scheme replaced eleven previous subsidy schemes which were based on the production of crops and/or livestock e.g. dairy premium and arable area payments scheme. Initially the payments had a bias towards paying producers who historically received the highest subsidies. The payment bias works on a sliding scale with a move away from historic payments towards land based payments with payments in 2012 having no historic element.
Implementation of the Single Payment Scheme in Wales was the responsibility of the Welsh Assembly Government. Payments totaling £250m were paid to more than 98% of eligible farmers between 1 December 2005 and 30 June 2006, including £110m to about 75% of Welsh farmers on the first possible day, which made them amongst the first in Europe to receive the new payment.
In order for farmers to qualify for payments under the scheme, they have to follow certain conditions and rules;
• their holdings must be at least 0.3 hectare and used for an agricultural activity;
• their land must be at their disposal for a period of ten months;
• they may have to set-aside a proportion of their land depending on their holding size and crops grown; and
• they must meet Cross Compliance standards. These cover environment, food safety and animal health and welfare law (and good practices). The two main areas are:
– Statutory Management Requirements (SMRs) set out in EU legislation --> for a list of the 18 requirements, using Scotland as an example, see
– keeping land in Good Agricultural and Environmental Condition (GAEC)
SPS is managed under IACS (Integrated Administration and Control System), the EC (European Community) system for administering schemes to prevent fraud. The total amount that can be paid for SPS is set at EU Member State level and is called the National Ceiling. A percentage of the National Ceiling is removed to make up the National Reserve. All payments then have a further amounts taken off (EU modulation and national modulation) which are set at the European and national levels respectively. For EU modulation, the rates are 3% in 2005, 4% in 2006 and 5% from 2007 onwards. All farmers have the first €5,000 of their payments exempted from EU modulation. Calculation of payment to each applicant is complicated by the fact that the total fund value is set and must be divided amongst all the applicants. Thus no payment can be calculated until all claims have been verified.
Common Agricultural Policy
The Common Agricultural Policy is a system of European Union agricultural subsidies and programmes. It represents 48% of the EU's budget, €49.8 billion in 2006 ....
(CAP) and introduced a new Single payment scheme(or Single Farm Payment, SPS) for direct subsidy payments to landowners.
The system of subsidy applies throughout the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
according to rules agreed between the member states. However, exact details of implementation and grants vary from country to country within the outline rules. Transitional rules also apply for new member states which joined the EU in 2004 and more recently. States have a choice of whether to introduce the new scheme at once, or to phase it in over a period from 2005–2013. The UK Government decided to be one of the first countries in Europe to introduce the Single Payment Scheme and decided to start to phase it in from 2005. Introduction in the UK was strategically coordinated via DEFRA, with devolved responsibility to England, Wales, Scotland and Northern Ireland to independently implement the scheme.
The new scheme was intended to change the way the EU supported its farm sector by removing the link between subsidies and production of specific crops. This reform focused on consumers and taxpayers, while giving farmers the freedom to produce what the market wanted. Member States have the choice to maintain a limited link between subsidy and production to avoid abandonment of particular production. Current payments to farmers continue to reflect historic patterns of production for different crops in countries where the scheme has yet to be introduced, or as a proportion of the total payment where the scheme is being introduced over a period of years.
The Single Farm Payment is linked to meeting environmental, public, animal and plant health and animal welfare standards and the need to keep land in good agricultural and environmental condition.
History
It was an intention of the scheme to 'decouple' grantGrant (money)
Grants are funds disbursed by one party , often a Government Department, Corporation, Foundation or Trust, to a recipient, often a nonprofit entity, educational institution, business or an individual. In order to receive a grant, some form of "Grant Writing" often referred to as either a proposal...
payments from production. This was in response to criticism from other World Trade Organisation (WTO) countries (mainly the US), that the EU was unfairly subsidising farmers and providing an unfair competitive advantage. Under the SPS the farmer is no longer paid different amounts according to the crop he produces, but a set amount per hectare of agricultural land maintained in cultivateable condition. The intention is that choice of crop is based purely on market driven forces and not on production based grants. Decoupling of payments has allowed them to be categorised under the so-called blue box
Agreement on Agriculture
The Agreement on Agriculture is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995....
for the purpose of WTO negotiations, ensuring the legality and compliance of international obligations.
To gain funds from the SPS the Farmer has to cross comply – that is, to farm in an environmentally friendly
Environmentally friendly
Environmentally friendly are terms used to refer to goods and services, laws, guidelines and policies claimed to inflict minimal or no harm on the environment....
way, with careful use of pesticide
Pesticide
Pesticides are substances or mixture of substances intended for preventing, destroying, repelling or mitigating any pest.A pesticide may be a chemical unicycle, biological agent , antimicrobial, disinfectant or device used against any pest...
s and fertilisers. The farmer also had to set aside (not farm) 8% of their productive land annually, in addition two metres on the perimeter of each field must be left uncropped to become overgrown. However, the requirement for set aside was suspended for one year in Autumn 2007 following sharp increases in prices for certain crops, and in consideration of the aim to grow more crops for biofuel production.
Another stated goal at the outset was to simplify the existing process including applications. Eleven existing schemes were replaced by the SPS. The reality appears to be however that the SPS is much more complicated than what went before. However, we can see that the SPS has given more legitimacy to the EU's farmer support system, as a ceiling has been introduced, limiting the future increase of payments due to farmers.
Implementation of the payments in England has been impaired by problems at the Rural Payments Agency
Rural Payments Agency
The Rural Payments Agency is an executive agency of the UK Department for Environment, Food and Rural Affairs .The RPA was created on 16 October 2001 from the amalgamation of the Intervention Board for Agricultural Produce and the Defra Paying Agency as a single paying agency for most Common...
. Payments under the scheme were intended to be made by around January 2006, but by December 2006 some 2% of claims still remained unsettled. Payments amounted to £1.5 billion distributed amongst 115,000 claimants, though most of the money went to relatively few of the claimants (according to the size of their holdings). Difficulties in implementation included double the number of expected claimants, as rules of the new scheme allowed many more people with relatively small areas of land to claim.
Applications are made annually by completion of the SP5 form, which requires claimants to declare all the land under their control, the land they wish to claim payment on and whether they are subject to Statutory Management Requirements (SMR) or Good Agricultural and Environmental Conditions (GAEC). In February 2008 RPA began accepting electronic applications via third party software. The first application was submitted 27 February 2008 through Single Payment Supervisor by Paul Holliday Software. Following the success of the project to accept electronic applications via third party software RPA took the next logical step and in March 2010 began allowing submissions directly through their own Whole Farm Approach website. There is speculation within the agricultural industry that paper forms will be withdrawn in an attempt to reduce costs.
The scheme replaced eleven previous subsidy schemes which were based on the production of crops and/or livestock e.g. dairy premium and arable area payments scheme. Initially the payments had a bias towards paying producers who historically received the highest subsidies. The payment bias works on a sliding scale with a move away from historic payments towards land based payments with payments in 2012 having no historic element.
Implementation of the Single Payment Scheme in Wales was the responsibility of the Welsh Assembly Government. Payments totaling £250m were paid to more than 98% of eligible farmers between 1 December 2005 and 30 June 2006, including £110m to about 75% of Welsh farmers on the first possible day, which made them amongst the first in Europe to receive the new payment.
Scheme Details
The Single Payment Scheme (SPS) pays farmers for the land that they manage or own. Farmers can submit a claim for each year based on their land and their entitlements. Entitlements are the farmer’s ‘right’ to claim. In order to gain these rights, farmers had to make a successful claim during the first year of SPS or purchase them from another farmer.In order for farmers to qualify for payments under the scheme, they have to follow certain conditions and rules;
• their holdings must be at least 0.3 hectare and used for an agricultural activity;
• their land must be at their disposal for a period of ten months;
• they may have to set-aside a proportion of their land depending on their holding size and crops grown; and
• they must meet Cross Compliance standards. These cover environment, food safety and animal health and welfare law (and good practices). The two main areas are:
– Statutory Management Requirements (SMRs) set out in EU legislation --> for a list of the 18 requirements, using Scotland as an example, see
– keeping land in Good Agricultural and Environmental Condition (GAEC)
SPS is managed under IACS (Integrated Administration and Control System), the EC (European Community) system for administering schemes to prevent fraud. The total amount that can be paid for SPS is set at EU Member State level and is called the National Ceiling. A percentage of the National Ceiling is removed to make up the National Reserve. All payments then have a further amounts taken off (EU modulation and national modulation) which are set at the European and national levels respectively. For EU modulation, the rates are 3% in 2005, 4% in 2006 and 5% from 2007 onwards. All farmers have the first €5,000 of their payments exempted from EU modulation. Calculation of payment to each applicant is complicated by the fact that the total fund value is set and must be divided amongst all the applicants. Thus no payment can be calculated until all claims have been verified.
Future
The EU are currently considering further reform of the CAP member states are currently assessing the options. For example, an ongoing Scottish study is evaluating the consequences of calculating SPS using an area-based scheme with payment rates linked to a classification of land quality.External links
- Future Agricultural Support for Scotland The future of the Single Farm Payment from a Scottish perspective
- http://www.fwi.co.uk/Articles/2006/06/01/95603/Single+Payment+Scheme+special+report.htmlEssential information for farmers applying for their Single Farm Payment Scheme subsidies from Farmers WeeklyFarmers WeeklyFarmers Weekly is a magazine aimed at the British farming industry. It provides news; business features; a weekly digest of facts and figures about British, European and world agriculture; and Livestock, Arable and Machinery sections with reports on technical developments, farm sales and analysis...
interactive (FWi)] - http://www.defra.gov.uk/farm/capreform/index.htm UK government DEFRA website
- http://www.defra.gov.uk/corporate/ministers/statements/dm061107.htm Government statement on implementation problems
- http://www.rpa.gov.uk/rpa/index.nsf/UIMenu/1E9FDDF611E3C81680256FCE002CB70E?Opendocument RPA information bulletins
- http://new.wales.gov.uk/splash Welsh Assembly Government
- http://ec.europa.eu/agriculture/index_en.htm European Commission – Agriculture and Rural Development
- http://www.agriculture.gov.ie/schemes/single_payment/sps_TERMS_CONDITIONS.pdf Department of Agriculture, Fisheries and Food (Ireland) Single Payment Scheme (SPS) Helpsheet 2005