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Written Statement - Further decisions on Pillar 1 of the Common Agricultural Policy

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The Common Agricultural Policy’s Pillar 1 - Direct Payments to Farmers is the successor to the Single Payment Scheme and will run from 2015 – 2020.
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Alun Davies, Minister for Natural Resources and Food

On 14 January 2014 I announced decisions for the main elements of Pillar 1 of the Common Agricultural Policy to be introduced from January 2015.  My statement was a significant step on the road to CAP reform in Wales and was made after extensive consultation and lengthy negotiations about the regulatory framework and budget.  There remained important details to decide about how the new Payment Scheme will work.  

My statement today is about the detail of how the reformed Pillar 1 scheme will operate for payment entitlements, the active farmer definition, greening and the young farmer scheme.  These are detailed matters, so for clarity they are listed and described in the attached annex in the order in which they arise in the Direct Payment Regulation (EU Regulation No 1307/2013).  

New entitlements will be allocated in 2015.   The value of entitlements held in 2014 will be used as a basis for calculating the entitlement unit rate for 2015; although this may not necessarily be the same as the payments claimants received in 2014.  I confirm that these will be available to persons who can evidence that they produced agricultural products in 2013 irrespective of whether they made a SPS claim that year, opening the door to any persons currently farming without entitlements to be eligible for the first allocation of new entitlements in 2015 if they have not claimed Pillar 1 support previously.  In the interests of simplicity, and not disadvantaging any claimants who do not hold historical SPS entitlements, I have decided not to apply any additional criteria regarding claimants’ skills, experience or education to be eligible for new entitlements.  I want a level playing field between those who currently hold entitlements and those who do not and I am not going to erect barriers to new entrants, many of whom are amongst the most forward thinking and enterprising people in agriculture who have managed to start and develop farm businesses without Pillar 1 support.  In the interests of simplicity I will not be implementing the optional choice to revert any windfall profit a claimant gets from the sale, grant or lease of entitlements between now and 15 May 2015 into the National Reserve.

The new scheme will include the establishment of a reserve for each of the three land regions used for payments meaning that there will in effect be three ‘Regional Reserves’ not a Welsh ‘National Reserve’.  I welcome that the regulations give priority to young and new entrants receiving reserve allocations.  Otherwise reserve applications will be dealt with on a first come first served basis in a timely manner.  I have also decided, for the reasons already described, not to set additional criteria for new entrants applying to the reserve.  

The definition of an ‘Active farmer’ has been debated much in the industry and I share the desire that only people working the land should receive payments.  The regulatory framework does not address the problem comprehensively and the action I can take is limited.  Nevertheless I have decided to define ‘agricultural activity’ in ways that set high standards of activity to encourage claimants to either work the land themselves or to rent the land to someone who would work it and claim the CAP payments.  When entitlements are allocated Rural Payments Wales will be taking the approach that where more than one person wishes to claim on the same parcel of land the person who can prove they are undertaking the farming activity and has the land at their disposal will be granted the entitlements.  I am not adding to the negative list, it is adequate for Wales.  

I announced the main decisions on greening in January and what mostly remains are decisions about ecological focus areas.  In Wales claimants will be allowed to include fallow land, hedges, stone walls, short rotation coppice, afforested land and land used for nitrogen fixing crops.  Most Welsh farms will qualify as green on the basis of permanent grassland but for those that do not the EFA choice is intended to offer flexibility as well as promoting land uses that have environmental benefit.  I have decided not to use the regulatory options to allow joint EFAs however – the benefit is outweighed by the administrative complexity and compliance risk.  I recognise the value of larger, landscape based approaches to enhancing the environment but they are more appropriate for Pillar 2.  

My approach to the young farmers’ scheme will be simple.  Throughout the reform negotiations I argued for support that could be targeted properly to help new entrants.  In the interest of the good use of public money, I am taking the most limited approach I can to the scheme.  My intention is to use Pillar 2 instead to provide meaningful support for young farmers and new entrants which is properly targeted at need and likely outcome.  Turning to the detail, I will not impose additional qualification criteria – all eligible persons will be treated the same because that is fairest.  Payments will be based on the number of eligible hectares the claimant has, up to a maximum of 25 hectares.  

Throughout this process transparency is and has been very important to me, I intend to publish as much information as I can about CAP payments on the Welsh Government website.  This is in addition to my obligations under EC law to publish the information on the UK CAP Payments website.

The decisions I am making today complete the policy decisions I have to take for CAP Pillar 1.  They follow the principle of decisions made in January to put Wales’ farming industry on the best possible footing for the future.  Where possible I have aimed for simplicity and I have treated farmers equitably irrespective of whether they are new entrants or currently hold entitlements, or whether they have large or small farm businesses.  Rural Payments Wales will write in July to claimants explaining all these matters.