Establishment of entitlements in 2015 advice

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The Department of Agriculture and Rural Development has issued clarification on the establishment of entitlements in 2015 under the new Basic Payment Scheme.

Under the EU regulatory framework, applicants to the Basic Payment Scheme must declare all agricultural parcels on their holdings. If all agricultural parcels are not declared, then a penalty of up to 3% of the value of all area-related direct payments will be applied if the area of these undeclared parcels exceeds 3% of the total declared area.

There could also be reductions if non declared land leads to non-compliance with the greening obligations. Therefore, the requirement to declare all land parcels is clear.

The regulations also state that the number of entitlements allocated to a farmer shall be equal to the number of eligible hectares declared in accordance with the requirements noted above. For the purposes of the Basic Payment Scheme and related payments, “eligible hectare” is defined as any agricultural area of the holding that is used for an agricultural activity.

In previous audits in Northern Ireland, the EU Commission auditors have taken a very firm position that the definition of “eligible hectare” meaning any agricultural area of the holding must be interpreted as meaning all agricultural area of the holding. On that basis, the auditors have previously concluded that entitlements must be established on all eligible land on the holding.

Therefore, from the above, it follows that where an eligible area of land is declared (and all land parcels must be declared, as described above), then entitlements must be allocated against that land.

On that basis, the Department will expect applicants to declare all of the agricultural land parcels that form part of their holding in 2015 on their Single Application Form and make an application for the allocation of Basic Payment Scheme entitlements in respect of all eligible land within these parcels.

When it comes to the administration of the Nitrates Regulations in 2015, the declared land parcels and the area of land within them used to establish entitlements in 2015 will be regarded by DARD as defining the extent of each agricultural holding and will be passed to the Northern Ireland Environment Agency on this basis.

In financial terms, given the transition towards a flat rate support regime, there are very few circumstances where a farmer might achieve lasting benefit from trying to declare less eligible land than he farms. Even in cases where the farmer loses conacre land in the years after establishing his entitlements, any surplus entitlements can be claimed against alternative conacre land, or can be rented out, or can be sold. Therefore, the situation in 2015 is very different from that in 2005. It should also be noted that the distribution of entitlements in 2015 could endure well beyond 2019, in which case it is extremely unlikely that any financial gain could be achieved over this longer timeframe by attempting to reduce the number of entitlements established this year.

Farmers should not, of course, attempt to establish entitlements on ineligible land. Making deductions in respect of ineligible areas is expected, or in the case of areas where the eligibility of the land is genuinely in doubt, is accepted. However farmers are strongly advised against applying for an allocation of entitlements for an area of eligible land that is lower than the eligible area they are farming in 2015.

Given the intent of the EU regulations and nature of the support arrangements, farmers should not expect to obtain any advantage from doing so and may be at greater risk of follow up inspection if they do.