The Basic Payment Scheme method for payment of entitlements to which farmers have become accustomed over the last decade is changing drastically under the CAP Strategic Plan 2023-2027. The previous system where an entitlement value comprised a Greening payment and a net value has been replaced, and each entitlement will now be subject to a number of new components.

The value of each entitlement will be reduced by 25% to fund the new eco scheme, with a further 10% deducted to fund a new concept called the Complementary Redistributive Income Support for Sustainability (CRISS).

In addition, there is also 3% deducted to fund the Coupled Income Support for Young Farmers (CIS-YF). The remaining 62% value, as detailed in the graphic below, will be subject to convergence at a rate of 85% following a deduction of 3% to fund the National Reserve.

Eco schemes

Eco schemes will replace Greening and form a major component of direct payments. They will be funded through ringfencing 25% of direct payments and this will deliver an overall fund of €1.48bn or €296.5m per annum.

Eco schemes will be paid on every eligible hectare of ground a farmer possesses and will be paid independent of entitlements, so you do not need an entitlement to activate payment and they will also be paid on so-called “naked hectares”. Payment will also be made on land deemed to be delivering an environmental dividend which has previously been deemed ineligible for payment. Examples of this include areas of scrub, groves of trees, rock outcrop etc.

The payment rate will be determined by the area of land submitted for payment. If every hectare of eligible ground (3,993,868ha) was included, the rate would be in the region of €64/ha while if 85% of the eligible area was included the rate would be about €74/ha.

The Department had expected in the region of 85% of the area to be included but has revised its predictions in light of in the region of 93% of farmers satisfying requirements without having to complete onerous tasks. The payment rate is expected to be in the region of €65/ha to €66/ha.

Farmers can assess if they will be net beneficiaries or contributors by following this example. A farmer with an entitlement worth €230 farming 29ha will contribute €57.50 from each entitlement (€230 x 25%) or €1,667.50 in total. With an eco scheme payment rate of €66/ha then the farmer will recoup €1,914 and be a net beneficiary to the tune of €246.50.

CRISS

Under CRISS, or what has become commonly known as frontloading, 10% of the direct payments fund will be ringfenced to deliver a fund of €590m, or €118m per annum, which will be redistributed to farmers.

The reason CRISS has become known as frontloading is due to the fact that in contrast to eco schemes, payments will be frontloaded on the first 30ha of eligible lands an applicant submits. The Department estimates that in this scenario of payment on 30ha approximately 75% of farmers will benefit financially from CRISS, ie they will receive a higher payment than they forego to fund the measure.

The payment rate is predicted at around €43/ha. This is based on payments being made on 2,750,000 eligible hectares or 60.9% of the utilisable agricultural area. Let’s look at two contrasting scenarios.

Farmer A with 25 entitlements with a unit value of €480 in 2022 and farming 25ha of eligible ground will contribute €1,200 (10% of €12,000) to the fund while recouping approximately €1,075 (25 x €43).

Farmer B with the same land area and entitlement value of €280 will contribute €700 to the fund while receiving €1,075 in payment.

It is important to note that the CRISS payment will be made almost exclusively of entitlements. It is expected that farmers will need to have one entitlement to activate payment under CRISS and that after this it will be paid on an eligible hectare of land irrespective of if this land is also being used to activate an entitlement payment.

BISS and convergence

The value of the entitlement remaining after removing 38% of its value (25% eco schemes, 10% CRISS and 3% CIS-YF) is what will be left to calculate the future entitlement-based payment after one more final cut is made.

The Department’s calculations outline that in the region of €4m will be redirected to fund the National Reserve with the remaining annual financial allocation for BISS outlined at €728.5m per annum or approximately €3.64bn for the period 2023-2027.

The planned average unit amount under this intervention is €164.39 per payment per activated entitlement. This is based on an expected number of 4,407,042 activated payment entitlements.

The remaining value of each entitlement (ie the 62% minus the National Reserve deduction) will be subject to convergence which is proposed at 85%. This means that all payment entitlements will have a value of at least 85% of the planned average unit amount ie 85% of €164.39 (€139.73) by 2026.

Support for young farmers

Every farmer with entitlements will contribute to a fund to support young farmers, the Coupled Income Support for Young Farmers (CIS-YF). This measure will harvest 3% of the value of every entitlement to fund a national envelope worth in the region of €178.5m over the period 2023 to 2027.

The proposed support under CIS-YF is outlined in the draft consultation document at €178/ha to a maximum of 50ha. Minimum and maximum payment rates of €165/ha and €190/ha, respectively, will be in place to allow for flexibility in terms of the number of applicants annually. The financial allocation under CIS-YF is expected to be adequate to meet the Department’s target of 4.89% of total utilisable agricultural area and is based on an average of 33ha per successful beneficiary (based on YFS allocations 2015-2020). A Department webinar explaining the process of applying and what can be expected can be viewed below.