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Where are we heading with Entitlement for 2014?

What are the latest proposals for entitlement allocation in the new scheme?

Although the principles of the CAP reform deal were agreed late in the afternoon of June 26th 2012, the legislation and detail of many elements have been left undecided.

One of the key questions arising from this deal is how to obtain entitlements for the new scheme which will be due to take affect from 1st January 2015.

There are 2 options available, being:

  1. New Allocation of Entitlements

The Single Payment Scheme as we know it ends on 31/12/2014 and all current entitlements are cancelled. There will then be a new allocation of entitlements for the new scheme on 01/01/2015 based on the land claimed in May 2015.

In order to be eligible for the re allocation you as claimant will need to have “2013 status” and also be an “active farmer.”

This active farmer rule has been included to stop undeserving claimants; however the definition is relatively broad and hinges on a farmer undertaking an agricultural activity, which is defined as “maintaining an agricultural area in a state that makes is suitable for grazing or cultivation”.  

More details on this definition will be unveiled shortly.

The amount of entitlements you are then allocated will be based on the number of Eligible Hectares are declared in 2015. This is land that is registered with the Rural Land Register and at your disposal. There is also talk of restricting the number of eligible hectares to what was claimed in 2013. This will be confirmed shortly if this is to be the chosen option.

  1. Rolling forward Entitlements

England also has the option to roll current entitlements forward. This will basically mean whatever entitlements are owned as at 31/12/2014 will also be owned in the new scheme.

Although this seems to be the most straightforward approach, there are concerns that the register of claimants and entitlements is not completely accurate and should this data be inputted into a new IT system, there is potential for even more errors.

There are arguments that new allocations would ensure that the registers are fully accurate and compliant with new computer software.

 I have surplus English Entitlement to sell – is there a market for them?

If you have surplus English Entitlement which you are looking to sell you can look to market them now, before any decision has been made.

However, when the decision is made as to how entitlements will be dealt with, this will have an impact on the price of entitlements.

If the decision is to allocate new entitlements, there will only be the value of a 2014 claim to a prospective purchaser and therefore the entitlements are likely to sell for a figure no more than what a claimant would see paid back on them.

If entitlements are rolled forward however, these entitlements will be worth a substantial amount more. There will be the ability to claim from 2014 to 2020 and market forces will determine this price.

I am a new entrant and want to claim Single Payment – how do I do this?

In addition to the usual requirements, such as registering with the RPA and having eligible land at your disposal, the question at the moment for a new entrant is when to purchase entitlements.

As with selling entitlements, there is a potential market prior to a decision being made.

Should the entitlements be re allocated, a new entrant will not have the 2013 status and will be ineligible to claim for a new allocation of entitlements in the new scheme. If there is a new allocation there will be the option for new entrants being able to buy entitlements from the open market post 2015.

If entitlements roll forward, a new entrant in 2014 will be able to purchase entitlements and still be eligible in the new scheme and entitlement values will increase on this basis.

Who will make the ultimate decision and by when?

The decision for English Entitlement allocation will lie with Owen Patterson, Secretary of State for Environment, Food and Rural Affairs and it is predicted that the decision will be made in October 2013.

If you wish to discuss the latest proposals with a member of the Entitlement Trading team please contact us on 01829 773000.