Select Committee on Agriculture Minutes of Evidence


Annex B

ARABLE AREA PAYMENTS SCHEME

INTRODUCTION

  The Arable Area Payments Scheme (AAPS) was introduced in 1993, following the 1992 reform of the Common Agricultural Policy (CAP), to compensate farmers for a reduction in support prices for cereals. The following crops are eligible for aid: wheat, durum wheat, rye, barley, oats, maize, sorghum, buckwheat, millet, canary seed, soya beans, rapeseed (but not fodder rape), sunflower seed, peas for harvesting dry, field beans, sweetcorn, sweet lupins and linseed. All of these can be grown for grain, seed or fodder. Areas used for growing cereals for fodder can be claimed either as arable crops under AAPS, or as forage area under one of the livestock schemes, but not both. Area payments can only be claimed on land eligible under the AAPS (broadly speaking land in an arable rotation on 31 December 1991). The IACS area aid declaration serves as the application for arable payments.

LEGISLATION

EC

  Council Regulation No 1251/1999, as amended, established the support system for certain arable crops known as the Arable Area Payments Scheme. Council Regulation No 1672/2000 establishes a support system for producers of certain arable crops including flax and hemp. Commission Regulations 2316/1999 and 2461/1999, as amended, lay down detailed rules for applying the Council Regulation. Other Community legislation on the Integrated Administration and Control System also applies.

UK

  The Arable Area Payments Regulations (SI 1996 No 3142), as amended; the Integrated Administration and Control System Regulations (SI 1997 No 1148), as amended,

SET-ASIDE

  To qualify for area payments part of the area on which aid is claimed has to be set aside, unless the total area claimed is 15.6 hectares or less, in which case there is an exemption from the requirement for set-aside. In 2,000, the obligatory set-aside rate is 10 per cent.

  Discussions within the EU, and initiated by the UK, resulted in the adoption at the June 1994 Agriculture Council of provisions enabling eligible arable land entered into the Habitats Schemes, Nitrate Sensitive Areas and the Forestry Schemes after 1 July 1995 to count against a farmer's set-aside obligation under the Arable Area Payments Scheme.

REGIONALISATION

  Arable area payments have been fixed on a regulation basis using historic average yields, calculated on the basis of cereals yields over the five years 1986-87 to 1990-91, excluding the years with the highest and lowest yields.

  The UK yield regions are :

    —  England

    —  Wales LFA (less favoured area)

    —  Wales non-LFA

    —  Scotland LFA

    —  Scotland non-LFA

    —  Northern Ireland LFA

    —  Northern Ireland non-LFA

  From the 1994-95 harvest year the method of calculating average regional yields was modified to take account of structural differences between UK yield regions. The revised method weighted regional cereal yield in the proportions 60 per cent regional average yield and 40 per cent UK average yield.

  In addition to the yield regions the UK has been divided into regional base areas. These were determined on the basis of the average areas down to eligible crops and/or fallowed under publicly funded set-aside schemes in 1989, 1990 and 1991. From 2000, there are four regional base areas for the UK:

    —  England (with sub-divisions for maize and for other crops)

    —  Wales (with sub-divisions for maize and for other crops)

    —  Scotland

    —  Northern Ireland

  If the total area claimed in a region in any year exceeds the base area, the area on which claims are paid in that region must be reduced by an equivalent amount.

INFORMATION FOR FARMERS

  The 2000 edition of the AAPS Explanatory Guide has been posted free of charge to all arable and mixed arable/livestock farmers in England. This replaced the 1997 Guide and the updates issued for 1998 and 1999. It includes all the changes to the scheme rules which apply from 2000 and reflects the Agenda 2000 reforms. The Guide enabled farmers to apply for crop subsidies and set-aside payments in 2000. An update for 2001 is to be issued to all arable and mixed arable/livestock farms in England.

  Staff in Regional Service Centres supplement this information with information and explanation of the rules free of charge. This may take the form of face-to-face contact, particularly during the period when farmers submit AAPS application forms.

AAPS STATISTICS FOR 1999

  In 1999, in England there were 44,786 claims received and expenditure totalled £963 million. Approximately 4.3 million hectares (ha) of arable land was claimed under the main scheme in the UK, of which around 2.9 million ha was in cereals, 404,000 ha in oilseeds, 197,000 ha in proteins and 220,000 ha in linseed. Set-aside accounted for approximately 586,000 ha. Nearly 204,000 ha of land was claimed under the simplified scheme.

  As maize claims in 1999 were substantially over the base area for England, payments for maize and set-aside associated with the maize area were reduced to 33.15 per cent of the area claimed. In 1999, the base area of 3,761,400 ha for other crops was also overshot but only by a small amount. Payments for crops other than maize (and the associated set-aside) were reduced to 99.06 per cent of the areas claimed.

  The table below gives the payment rates for England, in Sterling and in Euros per hectare for 1999 and 2000.
1999
£/hectare
1999
Euro/hectare
2000
£/hectare
2000
Euro/hectare
Cereals (including maize)208.06 320.06217.27345.57
Durum Wheat Supplement90.29 138.9087.33138.90
Oilseeds367.77565.75 308.66490.93
Proteins300.53462.31 268.49427.03
Linseed402.41619.04 326.85519.85
Set-aside263.54405.41 217.27345.57


BEEF SPECIAL PREMIUM SCHEME

  The Premium is fully funded by the European Union and the premium is payable on male cattle only. It operates on a calendar year basis.

LEGISLATION

EC

  Council Regulation (EC) No 1254/1999 establishes the common organisation of the market in beef and veal. Commission Regulation (EC) No 2342/1999, as amended[1], lays down the detailed rules for the application of the beef regime. Both include specific provisions on the Beef Special Premium. Other Community legislation on animal identification and on the Integrated Administration and Control System also applies.

UK

  The Beef Special Premium Regulations (SI/1996/3241), as amended[2], the Integrated Administration and Control Regulations (SI 1993/1317), as amended[3].

GENERAL PROVISIONS

  Premium can be claimed up to twice in the lifetime of steers. The first application can be made on steers at least seven months old and under 20 months, the second on steers at least 20 months old. Bulls are eligible only once in their life and must be at least seven months old when the application is made: there is no upper age limit. No producer can be paid on more than 90 animals in each range in any one year. Producers may submit no more than 12 claims each year. Payment is conditional on cattle being retained on a holding for two months after a claim is made, and on stocking density restrictions. There is also a limit on the number of animals which may be claimed on in each Member State.

2000 SCHEME PAYMENTS

  Bulls: £100.27

  Steers: £76.45

  Recipients of BSPS under the 2000 Scheme will also receive a further payment to compensate for fluctuations in the Euro/£ exchange rate during 1999. The rate of compensation will be announced later. Rates will be dependent on the actual number of animals claimed under the 2000 Scheme, but the advance rates being paid are £4.30 for steers and £3.30 for bulls.

CLAIMS AND EXPENDITURE

  In 1999, there were 113,035 claims received and expenditure totalled £127 million.

SUCKLER COW PREMIUM SCHEME

  The scheme is fully funded by the European Union and pays subsidy on female cattle forming part of a suckler breeding herd used for rearing calves for meat production. Heifers may form 20 per cent of the claim; for claims for between two and four cattle, one heifer is permitted.

LEGISLATION

EC

  Council Regulation (EC) No 1254/1999 establishes the common organisation of the market in beef and veal. Commission Regulation (EC) 2342/1999 lays down the detailed rules for the application of the beef regime. Both contain specific provisions on the Suckler Cow Premium. Other Community legislation on animal identification and on the Integrated Administration and Control System also applies.

UK

  The Suckler Cow Premium Regulations 1993 (SI 1993/1441), as amended[4].

  The IACS Regulations (SI 1997 No 1148). The Sheep Annual Premium and Suckler Cow Premium Quotas Regulations 1997 (SI 1997 No 2844).

GENERAL PROVISIONS

  Scheme payments are limited by individual quotas and by stocking density. Small dairy producers who hold no more than 180,000 kg (174,810 litres) of milk quota can also apply under the Scheme. All payments are conditional on cattle (or eligible replacements) being retained on a holding for a six-month period after the submission of an application. Applications for premium may be made between 1 July and 6 December each year.

PAYMENT RATES AND TIMETABLE

  An advance of 60 per cent of the payment is made from 16 October. The balance of 40 per cent is made between April and June the following year.

2000 SCHEME PAYMENTS

  The payment rate for 2000 is £102.15 per eligible animal. This will be paid in two stages—an advance of 60 per cent in November 2000 with the balance payment due by the end of June 2001. Recipients of SCP under the 2000 scheme will also receive an additional payment to compensate for the fluctuations in the Euro/£ exchange rate during 1999. The rate for the additional payment will be dependent upon the actual number of animals for which SCP is paid in 2000. Since this number will not be known until early March 2001 the rate cannot be set until then, however, an advance of £4.60 per eligible animal will be paid from November 2000. There is also a further payment from the Beef National Envelope (BNE). The BNE is a Community funded system providing additional support to beef producers. It gives member states some discretion as to how payments can be made. In Great Britain for 2000 the BNE will be paid as an additional payment to SCP recipients, but this may not be the case in subsequent years. The BNE 2000 payments will also depend on the number of animals for which SCP is paid so, again, the final rate will not be known until early March 2001, but it is estimated that it will be around £8 per animal. An advance of £4.69 will be made with the advance payment of SCP.

CLAIMS AND EXPENDITURE

  In 1999, there were 21,924 claims and expenditure totalled £97 million.

EXTENSIFICATION PAYMENTS

  These payments are fully funded by the European Union. They are made as additional payments to farmers who receive Beef Special Premium or Suckler Cow Premium and who meet specific stocking density levels.

LEGISLATION

EC

  Council Regulation 1254/99 lays down the general rules governing the beef regime. Commission Regulation 2342/99 lays down the detailed rules for the application of the beef regime. Both contain specific provisions on the extensification payments. Other Community legislation on animal identification and on the Integrated Administration and Control System also applies.

UK

  A Statutory Instrument is in preparation.

GENERAL PROVISIONS

  Prior to the year 2000, extensification payments were made automatically to farmers claiming SCPS and BSPS if the stocking density on their holding was within the qualifying range. As part of the Agenda 2000 changes to the beef regime, the criteria for calculating stocking densities and hence eligibility for extensification payments have to be assessed separately.

  A producer must claim extensification payments at Section 5 of form IACS 2 (2000) or Section 4 of form IACS 2 (F) (Forage) (2000) for forage-only farmers. Claims are assessed on the basis of all bovine animals aged six months or over on farm, plus the sheep claimed under the Sheep Annual Premium Scheme. Under the Standard Scheme option, in order to ensure that the stocking density is maintained on average throughout the year, claimants are assessed at six dates throughout the year; these dates are announced retrospectively. Alternatively, claimants may opt for the "simplified" scheme, signing an undertaking to stay within the required stocking density for every day of the year.

2000 SCHEME PAYMENTS RATES

  £41.36 per animal for holdings where the stocking density is at or below 1.6 livestock units per hectare; £20.86 per animal for holdings were the stocking rate is above 1.6 but below two livestock units per hectare.

PAYMENT TIMETABLE

  Payments are made between April and June of the year following eligibility when details of Suckler Cow Premium and Beef Special Premium payments can be confirmed. Recipients of extensification payments under the 2000 scheme will also receive a further payment to compensate for the fluctuations in the Euro/£ exchange rate during 1999. The rate of compensation will be announced later. The rates cannot be determined until early 2001.

SHEEP ANNUAL PREMIUM SCHEME

  The premium is fully funded by the European Union and the premium is paid on breeding ewes in order to guarantee producers a common level of support.

LEGISLATION EC

  Council Regulation (EEC) No 2467/98 establishing the common organisation of the market in sheep meat and goat meat contains general provisions on the Sheep Annual Premium. Council Regulation (EEC) No 3493/90, (as amended)[5] 5 and Commission Regulation (EEC) No 2700/93 (as amended)[6] lay down further rules for the application of the premium. Other EC legislation on animal identification, producer groups, less favoured area supplement and the Integrated Administration and Control System also applies.

UK

  The Sheep Annual Premium Regulations 1992 (SI 1992 No 2677) (as amended)[7] . The Sheep and Goats Identification (England) Order 2000.

GENERAL PROVISIONS

  The premium is paid as a headage payment on female sheep which have given birth or are at least one year old at the end of the retention period, (in GB midnight on 15 May except on a leap year when it is midnight on 14 May). Applications may be made between 4 December and 4 February. Producers must keep sufficient eligible sheep to cover their claim throughout the 100 days (the retention period) after the end of the application period. Payment will be made only on those sheep for which the producer has the correct quota (see Livestock Quotas) and each producer must claim on a minimum of 10 sheep. Farmers claim individually, as sole producers, or as members of a producer group according to their status. A lower rate of premium is paid for sheep kept for milking and additional supplements are paid for those kept in Less Favoured Areas (LFAs).

PAYMENT RATE

  The actual rate of premium to be paid in the 2000 marketing year cannot be determined until market prices throughout the EC for the whole of the marketing year (which begins on the first Monday in January and ends on the day preceding that day in the following year), are known. The premium is the difference between the average EC market price and a guide price determined each year by the Council of Ministers.

  1999 Scheme Payments:
£
Basic premium13.58
LFA supplement4.16
Milk ewe premium10.86
LFA milk ewe supplement3.74


  Rates for the first advance payment for 2000 were agreed on19 May. These are:
£
Premium3.35
LFA supplement3.74
Milk ewe premium2.68
LFA milk ewe supplement3.37

PAYMENT TIMETABLE

  As the final premium cannot be determined until a year after applications are made, two advances of premium are paid. The first is normally in July/August after applications are submitted and is 30 per cent of the estimated level, normally made by the Commission in May, of the premium. The second advance is normally paid in November/December of that year and is again 30 per cent of a revised estimate of the premium. The rate of premium for the year is finalised early the following year (usually during February) and normally paid during April of that year. Producers receive a final balance payment equal to the difference between the definitive rate for the year less the two advances.

  The LFA supplement is paid in two instalments. 90 per cent is paid with the first advance of the premium, usually in July/August, and a final balance payment is made with the final balance of the premium, normally in the following April. The LFA supplement is a fixed rate, currently 6.641 Euro.

AGRIMONETARY COMPENSATION

  As a result of the introduction of the Euro, agrimonetary compensation payments were made to 1998 SAP claimants to ease the transition to the new agrimonetary system. This compensation is being paid in three instalments. The first tranche was paid to sheep producers in June 1999 and was fixed at £1.36 per eligible animal plus a further £0.47 per animal qualifying for LFA supplement. The second tranche, which was paid to 1998 SAP claimants along with the 1999 final balance, was £0.45 per eligible animal plus a further £0.16 per animal which qualified for LFA supplement. The third tranche is expected to be paid to 1998 producers in April 2001.

  As a result of the strength of sterling against the Euro further agrimonetary aid is being paid. £22 million was paid in the UK during July/September 2000 to sheep farmers who were paid SAPS in 1999.

CLAIMS AND EXPENDITURE

  In 1999 there were 33,321 claims and expenditure totalled £136 million.

SLAUGHTER PREMIUM SCHEME

  The premium is fully funded by the European Union. It commenced on 1 January 2000, and is intended to provide direct support to all cattle producers. It operates on a calendar year basis.

LEGISLATION

EC

  Council Regulation No 1254/99 lays down the general rules governing the beef regime. EC Commission Regulation 2342/99 lays down the detailed rules for the application of the beef regime. Both contain specific provisions on the Slaughter Premium. Other Community legislation on animal identification and on the Integrated Administration and Control System also applies.

UK

  UK Statutory Instruments will be made during 2000.

GENERAL PROVISIONS

  The legislation divides the Scheme into two categories: the Slaughter Premium Scheme (SPS) and the Veal Calf Slaughter Premium Scheme. To be eligible for the SPS, cattle must be: kept on the holding for a retention period of two months immediately prior to slaughter; must be slaughtered within one month of leaving the holding; and claimed on within six months of leaving the holding for slaughter. In England, MAFF Regional Service Centres (RSCs) operate the scheme for cattle aged between eight and 30 months, and the Intervention Board operates the scheme for cattle over 30 months old.

  Veal Calf Slaughter Premium is payable on calves of more than one and less than seven months of age, with a carcass weight of less than 160 kg. Calves aged three-six months old (inclusive) must be retained on farm for two months immediately prior to leaving the holding for slaughter. For calves aged more than one month and less than three months, the retention period is one month. The periods within which slaughter and claim submission must be made are the same as for the SPS. All claims in England must be submitted to Worcester RSC.

  Producers may submit a maximum of 12 claims for each element of the Scheme: ie 12 Veal Calf SPS claims, 12 claims for cattle under 30 month; 12 claims for cattle over 30 month.

2000 SCHEME PAYMENT RATES
£
Slaughter Premium Scheme16.92
Veal Slaughter Premium Scheme10.65


  For each scheme there is a limit to the number of animals which may be claimed in the UK. If the total is exceeded in any year then the balance payments will be reduced to bring overall expenditure down to the UK limit.

PAYMENT TIMETABLE

  An advance of 60 per cent of the premium is made 16 October onwards, with the balance payment made between April and June of the following year.

LIVESTOCK QUOTAS

  Livestock Quotas were introduced in 1993 to regulate production and expenditure under the Suckler Cow Premium Scheme (SCPS) and the Sheep Annual Premium Scheme (SAPS).

LEGISLATION

EC

  SCPS: Council Regulation 1254/1999 establishes the common organisation of the market in beef and veal. Commission Regulation 2342/1999 lays down the detailed rules for the application of the beef regime. Both contain specific provisions on SCP quotas.

  SAPS: Council Regulation 2467/98 lays down the general rules of the sheep meat regime. Commission Regulation 3567/92 lays down the detailed rules for the application of the sheep meat regime; both contain specific provisions on SAPS quotas.

UK

  The Sheep Annual Premium Scheme and Suckler Cow Premium Scheme Quotas Regulations 1997 (SI 1997 No 2844).

GENERAL PROVISION

  When the quota system was introduced, producers received an initial allocation based on the number of eligible animals they received premium on in the reference year (1991 for sheep, 1992 for suckler cows). The normal way in which producers may acquire quota now is by purchasing or leasing it on the open market.

USAGE RULES AND SIPHON

  Each year, producers holding quota must meet certain usage levels (at least 70 per cent for sheep quota, and at least 90 per cent for suckler cow quota) either by using it themselves, or by leasing out to another producer, or by a combination of both. If they do not meet the usage levels, the unused quota is withdrawn permanently without compensation and added to the National Reserve. If quota is sold without the holding, 15 per cent is "siphoned", without compensation, into the National Reserve.

RING-FENCE AREAS

  To receive premium payments the ring-fence designation of the quota held must match the overall ring-fence designation of the producer's holding. The six ring-fence areas in the United Kingdom are set out in the Quotas Explanatory Guide. A holding is assigned to one ring-fence area only, based on the location of the majority of land on the holding. If changes take place which alter the ring-fence designation of the holding, the producer must dispose of his old quota and acquire quota of the correct designation if he wishes to receive premium payments.

THE NATIONAL RESERVE

  Certain groups of producers who meet strictly defined eligibility criteria may apply to receive an allocation of quota from the National Reserve. However, supplies are strictly limited and it is not always possible to make allocations to all eligible producers. The application period for the SAPS Quota National Reserve usually opens at the beginning of May and closes around the end of May each year. The application period for the SCPS Quota National Reserve usually opens at the beginning of March and closes around the end of March each year. Further details about the reserves and the categories of producer who may apply are given in the quotas explanatory guides.

TRANSFER AND LEASE OF QUOTA

  Transfer or lease of quota may take place only during certain periods of the year (mid-September to early February for SAPS quota, mid-June to early December for SCP quota) and must be notified to MAFF on the appropriate form. Producers may lease out quota for a maximum of three consecutive years, after which there must be a period of two consecutive years before they lease out quota again. The leasing rules, and all other rules relating to the transfer and lease of quota are explained in detail in the explanatory leaflets which accompany the transfer and lease notification forms.

HILL LIVESTOCK COMPENSATORY ALLOWANCES (HLCAS)/HILL FARM ALLOWANCE

  The Agenda 2000 CAP reforms have changed the basis on which support for farmers in the Less Favoured Areas (LFAs) can be provided. In future, LFA aid payments must comply with the Rural Development Regulation (RDR). This requires that payments be made on an area, rather than headage, basis. However, delays in introducing the RDR mean that special arrangements have been made for headage-based HLCAs to continue to be paid in 2000. A new area-based Hill Farm Allowance (HFA) scheme has been introduced as part of the England Rural Development Programme (ERDP). The first payments under this scheme will be made early in 2001.

  HFA is partly funded by EU payments and is designed to make an effective contribution to the maintenance of the social fabric in upland rural communities through support for continued agricultural use. HFA will also help to preserve the farmed upland environment by ensuring that land in LFAs is managed sustainably. HFA, as part of ERDP, is operated under authority of Council regulation 1257/99 and Commission Regulation 1750/99. [National legislation is being drafted.]

  Claimants must submit an IACS area aid application in the year prior to HFA payment. They must farm at least ten hectares of eligible forage land in the less favoured areas of England on which they keep breeding sheep or suckler cows at a minimum stocking density of 0.15 livestock units (cow equivalents). Claimants must adhere to Good Farming Practice.

  Payments per hectare for 2001 will be:
£
land within the moorland line13.02
other common land13.02
other disadvantaged land18.60
other severely disadvantaged land34.40


  These rates will be paid up to 350 hectares, halved between 350 hectares and 700 hectares and no payment will be made for land in excess of 700 hectares. Payments may be enhanced by up to 20 per cent if farmers meet certain environmental criteria such as low stocking or farming organically.

  The move to area-based payments will lead to some redistribution of support when compared to HLCAs. The rates set, the land classifications, the taper at 350 hectares and cut at 700 hectares all minimise this effect. To allow hill farmers to adjust to the new payments, and to take advantage of other income streams that will build up under ERDP, a safety net mechanism will cushion those farmers who will lose money. In 2001, the safety net guarantees that no farmer will receive less than 90 per cent of the 2,000 receipts paid under HLCA, provided their forage area does not decline. In 2002, the safety net falls to 80 per cent.


1   Commission Regulation (EC) No 1900/2000. Back

2   By SI 1998/871 and S.I 1999/1179. Back

3   By SI 1994/1134, S.I. 1997/1148 and S.I. 2000/-. Back

4   By SI 1994/1528, SI 1995/15, SI 1995/1446, SI 1996/1488, SI 1997/1249 and SI 1998/871. Back

5   By Council Regulation (EEC) No 2070/1992 and Council Regulation (EC) No 233/1994. Back

6   By Commission Regulation (EEC) No 80/94, Commission Regulation (EC) No 279/94, Commission Regulation (EC) No 2940/95, Commission Regulation (EC) No 1526/96. Back

7   By SI 1994/2741, SI 1995/2779, SI 1996/49, SI 1997/2500. Back


 
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