Does the new focus on land ineligibility mean I can have up to 10% land ineligible and not get a penalty? That’s one of the most common question being asked by farmers after last week’s article. The answer is definitely no. The 10% issue is just related to specific parcels with scattered scrub. So do not get caught out. You still have to remove features that are ineligible from the area and mark them on your maps.

The new system for deduction in a parcel seems to be more about making it easier for two inspectors to come up with the same answer when they walk into a field.

Instead of having to establish an exact percentage, they will add up the ineligible areas and establish which of the five categories the farm is in. The five bands or categories are shown in Figure 1. Decisions on deductions are then made.

Yes, if the Department deems there is less than 10% ineligible by adding up the different ineligible bits, the farmer gets no deduction and is able to claim all the areas. That is a big boost. But what if the calculation comes in at 12%. Under the new system, this farmer would have to deduct 20% from the area. Another example in the same band is a farmer with 29% ineligible. He would be brought down to 20%. There are winners and losers.

Changed focus

Yes, the focus has changed away from agricultural activity to having land grazeable. That does make it simpler, but the issue of eligibility remains complex.

The diagram printed on the brochure does make it simpler for farmers to go through the process to check if their land is eligible (see above). It remains simple until question five, when the red marker comes out.

The Department did have an example in the initial booklet, but it had to be revised before it went to the printers last week to make it easier to understand. It can be expected to be delivered to farmers next week.

Six steps to deductions

Farmers are getting increasingly used to seeing red lines and deductions noted by X on their maps. The example the Department gave is a parcel with three red-lined areas. Area A (0.23ha) was deemed to be in band 4, between 50 and 70% and suffered a 60% reduction (0.14 ha ineligible). Area B (0.07) is in band two between 10 and 30%, and represented a 20% reduction of the area (0.01 ineligible). Area C (0.41ha) was 100% ineligible as it was fenced off and inaccessible to animals.

Example of application of reduction coefficient

The Existing Reference Area of Parcel is 2.70ha.

Step 1 – Deduct X03 (100% ineligible): 0.41ha

Step 2 - Adjusted Eligible Area: 2.29ha

Step 3 - Total of X01 & X02 ineligible areas: 0.15ha (0.14 +0.01)

Step 4 – Reduction Percentage of Step 3 0.15 / 2.29ha x 100 = 6.55%

Step 5 – 6.55% is in Reduction Coefficient Category 1: 0 Reduction

Step 6 – Payable Area for Parcel: 2.29 ha

To work out using the areas in red-lining graphic above, the first step is to remove the totally ineligible area to establish the adjusted eligible area of the parcel, ie, the reference area less the area of totally ineligible land – Step 1. The result is 2.29 ha - Step 2. Where areas of less than 100% ineligible have been identified, within parcels, the ineligible area is calculated and totalled - Step 3. The overall percentage reduction is then calculated - Step 4. This figure is used to determine the appropriate category in the pro-rata table - Step 5. As 6.55% falls into Category 1, no deduction is applied to the adjusted eligible area, so it will become the new payable area for this parcel – Step 6.

Example of Application of Reduction Coefficient Existing Reference Area of Parcel: 2.70ha Step 1 – Deduct X03 (100% ineligible): 0.41ha Step 2 - Adjusted Eligible Area: 2.29ha Step 3 - Total of X01 & X02 ineligible areas: 0.15ha (0.14 +0.01) Step 4 – Reduction Percentage of Step 3 0.15 / 2.29ha x 100 = 6.55% Step 5 – 6.55% is in Reduction Coefficient Category 1: 0 Reduction Step 6 – Payable Area for Parcel: 2.29 ha

As can be seen from the reduction coefficient table, where the total ineligible area within a parcel accounts for up to 10% of the area of the parcel, less the area deducted as 100% ineligible, no reduction will apply to the adjusted reference area of the parcel. Where the total ineligible area to be excluded is 70% or greater, then the full area of the parcel will be excluded from payment.