Select Committee on Agriculture Appendices to the 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 reduction in support prices for cereals. The following crops are currently eligible for aid: in Northern Ireland wheat, rye, barley, oats, maize, sorghum, buckwheat, millet, canary seed, rapeseed (but not fodder rape), peas for harvesting dry, field beans, sweetcorn, sweet lupins and linseed. All of these can be grown for grain, seed or fodder. Flax and hemp grown for fibre will be incorporated into the AAPS from 2001. 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, establishes 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.

National

  The Arable Area Payments Regulations (SR 1997 No 477), 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 less than:

    18.29 hectares (ha) for crops other than oilseeds grown on land classified as LFA; or

    17.62 ha for crops other than oilseeds grown on land classified as non-LFA; or

    16.16 ha for oilseeds grown on land classified as either LFA or non-LFA;

  in which case there is an exemption from the requirement for set-aside. In 2000 the obligatory set-aside rates is 10 per cent.

  Discussions within the EU initiated by the UK resulted in the adoption at the June 1995 Agriculture Council of provisions enabling eligible arable land entered into the Habitats 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 regional 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 yields 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 was posted free of charge to all arable farmers with arable land registered on the DARD census database. 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 reflected the Agenda 2000 reforms. The Guide told farmers how to apply for crop subsidies and set-aside payments in 2000. An update for 2001 will be issued shortly.

  Staff based in IACS Branch, Orchard House, Londonderry and the six County Agriculture Offices 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, 3,672 claims were received in Northern Ireland and expenditure totalled £9.14 million. Approximately 18,500 hectares of arable land were claimed under the main scheme of which around 15,300 hectares were in cereals, 320 hectares in oilseeds, and 150 hectares in proteins. Set-aside accounted for approximately 2,500 hectares. Nearly 26,000 hectares of land were claimed under the simplified scheme. The area entered under the scheme was within the regional base area of 52,900 hectares.

  The table below gives the payment rates for Northern Ireland in Sterling and in Euros per hectare for 1999 and 2000:
1999
£/ha
1999
Euro/ha
2000
£/ha
2000
Euro/ha
Cereals LFA177.68273.33 185.55295.11
Cereals Non LFA184.39 283.65192.56306.26
Oilseeds348.67536.36 292.63465.43
Proteins LFA256.64394.80 229.29364.68
Proteins Non LFA266.34 409.72237.95378.45
Linseed LFA343.65528.65 279.13443.95
Linseed Non LFA356.64 548.62289.67460.72
Set-aside LFA225.06 346.21185.55295.11
Set-aside Non LFA233.56 359.29192.56306.26


FIELD MANAGEMENT SYSTEM (FMS)

  This system which underpins IACS and hence applies to all IACS related scheme claims was developed following an IACS map updating exercise undertaken in 1995. It centres on a database that was developed using Farm Survey maps derived from Ordnance Survey maps. All field claimed by IACS applicants are matched against the FMS database to ensure their authenticity.

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.

National

  The Beef Special Premium Regulations (NI) 1996 No 611 as amended[2], the Integrated Administration and Control System 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 less than 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 on the first day of the retention period. There is no upper age limit. No producer can be paid on more than 90 animals in each age range in any one 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.

  Producers can lodge up to six applications for a first age premium, six for bull premium and ten applications for a second age premium each year.

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 65,000 claims received and expenditure totalled £49.5 million.

  In Northern Ireland, BSPS is operated differently from GB—all claims are field inspected and all animals permanently ear-marked to denote their premium status. While this results in a higher inspection workload it has the substantial benefit of not requiring the routine use of cattle passports. This 100 per cent approach to BSP inspections is being reviewed in the light of moves towards farm based inspections.

DESEASONALISATION PREMIUM

  Deseasonalisation Premium is fully funded by the EC. It is paid on castrated male bovines which have had Beef Special Premium paid on them at least once previously and which have been slaughtered between specified dates. The premium is payable only to the registered producer who last kept the animal and presented it for slaughter. There are no age or retention requirements for qualifying animals, nor headage, stocking density or other limits for producers claiming the premium.

  In years when this scheme applies, DARD (using the APHIS database) provides producers with lists of potentially eligible animals—producers check these and submit the lists as applications for premium.

Legislation

EC

  Article 4 of Council Regulation (EEC) No 805/68 (inserted by Council Regulation (EEC) No 2066/92) enables the payment to beef and veal producers of a Deseasonalisation Premium.

National

  Deseasonalisation Premium (Protection of Payments) Regulations 1992 No. 570 as amended.

1999 Scheme Payments

  DSP was claimed on a total of 99,747 animals in 1999 which represented premium payments of £3.12 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. From the year 2000 heifers may form 20 per cent of the claim; for claims for between two and nine 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.

National

  The Suckler Cow Premium Regulations 1993 (SI 1993/1441), as amended[4] by SI 1994 No 1528, SI 1995 No 15 and SI 1995 No 1446. 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. Claims received after 6 December will continue to be accepted up to and including 31 December although such claims will be subject to a late claim penalty reduction.

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 plus an additional premium (Objective 1 region) of £15.13 per animal. This will be paid in two stages—an advance of 60 per cent in November 2000 with the balance payment due by early March 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 plus £1.00 will be paid from November 2000.

Claims and Expenditure

  In 1999 there were 14,916 claims and expenditure totalled £52.7 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.

National

  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.

  Claims are assessed on the basis of all bovine animals aged six months or over on farm, plus the sheep claimed and paid to quota 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. Alternately, claimants may opt for the "simplified" scheme, signing an undertaking to stay within the required stocking density for every day of the year.

  In Northern Ireland DARD assists farmers by providing all scheme participants with a statement of livestock units on their holdings for each of the six census dates though farmers are still required to keep their own records. Farmers do not need to make returns at each of the census points.

2000 Scheme Payment Rates

  £41.36 per animal for holdings where the stocking density is at or below 1.6 livestock units per hectare; £20.68 per animal for holdings where 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 2000. 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 sheepmeat and goatmeat contains general provisions on the Sheep Annual Premium. Council Regulation (EEC) No. 3493/90, (as amended[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.

National

  The Sheep Annual Premium Regulations (Northern Ireland) 1992 No. 476 (as amended[7]). The Identification and Movement of Goats Order (Northern Ireland) 1997 No.173.

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 27 November and 29 December 2000.

  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 can 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 premium—£13.58

    LFA supplement—£4.16

  Rates for the first advance payment for 2000 were agreed on 19 May. These are:

    Premium—£3.35

    LFA supplement—£3.74

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 equal to the difference between the definitive rate for the year less the two advances.

  The LFA supplement is paid in two instalments. Ninety 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

  There are two types of compensation currently payable within the UK. Transitional compensation is in respect of reductions, because of the move to the Euro, in the value, in national currencies, of subsidies and is digressive. Payment of compensation in full was compulsory in 1999 but only one-third is compulsory in 2000 and one-sixth in 2001, (a further one third is optional in 2000 and one sixth in 2001.) 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 in June 2000, was £0.45 per eligible animal plus a further £0.16 per animal which qualifying 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 has been paid. £1.6 million was paid to the Northern Ireland sheep farmers who were paid SAPS in 1999.

  Definitive compensation is in respect of currency movements in 1999, 2000 and 2001 and is wholly optional. There is no provision for further compensation in respect of years after 2001 although payments may go on being made up to 2004 (the third tranche of any compensation paid in respect of 2001). A total of £28.5 million will be paid in compensation by the year 2002, this includes the £13.7 million currently being paid.

Claims and Expenditure

  In 1999 there were 10,743 claims and expenditure totalled £22.5 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.

National

  Statutory Rule is in the process of being drafted.

General Provisions

  The Slaughter Premium Scheme provides direct support to cattle producers. The basis outline of the scheme is set out below.

  Slaughter Premium can be claimed on all bovines slaughtered in licensed slaughterhouses in Northern Ireland. The scheme is split in two categories—calves aged from one up to seven months; and adult bovines aged eight months and over. Payments are limited by a ceiling. In relation to the regional ceiling for calves the total number of animals claimed in a scheme year is UK limited to 26,271 head at present. For adult bovines the ceiling is 3,266,212. If the total number of animals claimed for Premium in a scheme year exceeds these limits all Premium will be reduced proportionately. The extent of this reduction, if applicable, is calculated at the close of the scheme year and the rate of scale back to payments is applied at the balance payment stage for all animals.

  The EC rules do not allow payment of premium before 15 October in the year of the claim, after which an advance of at least 60 per cent can be paid. This can be scaled back to 40 per cent if the regional ceiling appears likely to be exceeded. After the end of the scheme year, any deductions from claims and stocking density limits will be taken into consideration in calculating the regional ceiling. The balance payment, will be paid between 1 April and 30 June of the year following the end of the scheme year ie balance payments on 2000 claims will be paid by 30 June 2001.

  In NI, DARD assists farmers by identifying—from the APHIS database—those animals apparently eligible for premium. Lists are issued once every four months for farmers to check and return.

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 sheepmeat regime. Commission Regulation 3567/92 lays down the detailed rules for the application of the sheepmeat regime; both contain specific provisions on SAPS quotas.

National

  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 quotas 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.

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 in the middle of July and closes around the middle of August each year. The application period for the SCPS Quota National Reserve usually opens at the beginning of April and closes around the end of April each year. Further details about the reserves and the categories of producers 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 (late September to early late December for SAPS quota, late June to 6 December for SCP quota) and must be notified to DARD 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)/LFA COMPENSATORY ALLOWANCES

  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 were made for headage-based HLCAs to continue to be paid in 2000.

  The move to area-based payments will lead to some redistribution of support when compared to HLCAs. 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 2000 receipts paid under HLCA, provided their forage area does not decline. In 2002 the safety net falls to 80 per cent and 50 per cent in 2003. Being land based this new scheme is closely linked to IACS and inspections will, as far as possible, be combined with IACS inspections to minimise the burden for farmers and the Department alike.


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

2   by SI 1998/871 and SI 1999/1179. Back

3   by SI 1994/1134, SI 1997/1148 and SI 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 S.I. 1994/2741, S.I. 1995/2779, S.I. 1996/49, S.I. 1997/2500 Back


 
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