DARD Management Notes: Finance

Business Development Groups will consist of up to 20 like-minded farmers working together to improve technical efficiency
Business Development Groups will consist of up to 20 like-minded farmers working together to improve technical efficiency

Understanding Basic Payment Scheme entitlements: Farmers across the country have recently received letters giving them an update on their Basic Payment Scheme (BPS) entitlements.

I want to help explain some of the detail around the calculation of your entitlements. To allow me to be as precise as possible, all the figures I quote in my calculations are to six decimal places.

We are moving towards the situation where every hectare of eligible land will attract the same level of support – a “flat rate”. This is calculated to be €229.27 by the year 2021 plus the Greening Payment of €101.15 making a total payment of €330.42. Your total payment is therefore now made up of two parts; the BPS and the Greening Payment. The value of entitlements held by farmers on 15 May 2014 will be scaled back by 32.455310% in order to provide funds for Greening Payment, Young Farmers’ Payment and Regional Reserve. Farmers who meet the greening criteria will receive a Greening Payment equal to 44.117647% of the value of BPS entitlements activated in 2015.

The value of entitlements after 2019 will depend on the outcome of future EU CAP Reform negotiations since the current EU CAP legislation covers the period up to the end of 2019. The intention of DARD is that all entitlements will be at the regional average by 2021.

So what does this mean for you? It depends on whether your initial BPS entitlement unit value (per hectare) is above or below the regional average of €229.27.

If you have BPS entitlements below the regional average they will be increased in five equal steps towards the average. By 2019 they will have moved 71.4% up towards the average; 14.28% each year.

If you have BPS entitlements above the regional average they will be reduced in five equal steps towards the average. By 2019 they will have moved 74.8% down towards the average; 14.96% each year.

For most famers, the letters received recently give the total number of entitlements that have been allocated to their business and the provisional total value of their BPS entitlements. This figure does not include the Greening Payment which can be calculated by taking 44.117647% of your provisional total value of the BPS entitlements. Please note that the figures are provisional as they are based on the expected number of successful applications for the BPS.

So for example, if your letter stated you had a total of 100 entitlements with a provisional total value of BPS entitlements of €10,000 (each hectare therefore getting a unit value of €100):

Your Greening Payment will be €10,000 x 44.117647% which equals €4,411.76.

Your total payment will therefore be these two figures added together which is €14,411.76.

Since the BPS unit value is less than the regional average, it will continue to increase each year until it is 71.4% of the difference between their initial unit value and the regional average at 2019. Please note in the example above, the €100 is the value after the first of the five steps has been made. A complete worked example showing the calculation of BPS entitlements and Greening Payment is attached to your letter.

You may have recently received a letter updating you on the BPS, which stated that it was not possible to confirm if your business is eligible to establish BPS at that time. This simply means your application is still being processed. Once your application is processed, if your farm business is eligible to establish BPS, you will receive an entitlement letter confirming the details. If you have been asked for further information, ensure you send this through, if you haven’t already done so.

To plan for the future, it is important you calculate the value of the payment you will receive in the coming years. Keeping your bank informed of the changes is also important, particularly if your payments are being reduced each year. The euro/pound exchange rate will also affect the value of your payment. The exchange rate used for the 2015 payments was €1 = £0.73129.

A Question and Answer document relating to the entitlement notifications is available online at: https://www.dardni.gov.uk/publications/2015-entitlements-calculator.

If you have a specific query regarding the BPS you can use the following contact details, quoting your Farm Business ID: Telephone: 0300 200 7848. Email: areabasedschemes@dardni.gov.uk.