All farmers will have a plethora of changes imposed on them in 2023 or before.

These are coming about because of the many changes in the common agricultural policy (CAP), the Climate Action Plan and nitrates.

While climate change-related actions have been exerting a greater focus on the livestock sectors, there remains a blind spot amongst most in authority as to the potential for the tillage sector to contribute some solutions to these challenges.

That said, tillage farmers will also have to take actions from a climate perspective, they will have new nitrates obligations to comply with and alterations to the CAP will bring considerable change.

The future will be different but perhaps it will not be all bad, that is except for the loss of financial support which is being heavily drained away from the sector.

Reduction in CAP support

There can be little doubt but that the multi-phased hit in CAP support will be hugely significant. It will affect individual growers differently but all of them negatively.

As we understand it now, those renting in land and especially those renting in entitlements could be much worse hit and this scenario will inevitably impact on the lessors also.

BISS and convergence

Most growers will know by now that there will be three separate attacks on the financial yield of entitlements as we know them today.

All entitlements above the value of the national average are to be devalued to within 85% of the national average of the new BISS payment.

Convergence was also part of the last CAP where the target was to make all entitlements sit within 60% of the national average.

This is being extended further in the next CAP with five annual reductions set to take all entitlement values to within 85% of the national average BISS payment, which is calculated after the eco scheme and most other deductions.

In recent years, tillage and only tillage farmers were obliged to comply with certain actions in accordance with a 30% greening payment

In the next CAP, what used to be a BPS application is set to become a Basic Income Support for Sustainability (BISS) payment and this will be smaller on every front than where we are today.

In recent years, tillage and only tillage farmers were obliged to comply with certain actions in accordance with a 30% greening payment.

This was part of the value of each individual entitlement and it was payable on the same area as was applied for under the BPS.

Farmers had to comply with several different measures to access the balance of their entitlement value, which was paid out under the greening measure.

Depending on the individual, this meant a number of crops to be grown on each individual application, coupled with having at least 5% of the application area designated as ecological focus area.

Eco schemes

This time around, it is implied that all entitlements lose 25% of their value to a new eco scheme that will apply across all farmers.

Those with higher-value entitlements will inevitably give up more in value than they will get back because the value to the qualifying applicant will depend on the number of farmers who engage in the eco scheme and the average value of the 25% pot.

The only good thing about the proposed payment methodology is that the eco-scheme payment will be made on all the hectares farmed

Because tillage farmers have higher than average entitlement values, they will inevitably get back less than is taken from them.

The only good thing about the proposed payment methodology is that the eco-scheme payment will be made on all the hectares farmed, even if this is bigger than the number of entitlements on which the new BISS is to be paid.

So if a farmer has 100 entitlements and 105ha, the BISS will be paid on the 100ha and the eco scheme will be paid on the 105ha, providing the farmer complies with all the necessary measures.

CRISS deductions

The other deduction that will bite tillage hard is the new CRISS or front-loading measure.

This Complementary Redistributive Income Support for Sustainability (CRISS) measure will take 10% from the value of all the entitlements held, with applicants to receive an additional €44/ha on the first 30ha in every holding.

Those with higher entitlement values and bigger holdings will lose out most, as will those with many batches of leased-in entitlements.

CRISS will act as an enhanced convergence.

New decisions

To some degree, the new regime may bring into question the validity of leasing in entitlements, given that so many deductions will apply and that having access to extra land will still qualify for the eco-scheme payment.

Purchase of entitlements may be a preferable option for many but how will they be valued relative to convergence, eco schemes, CRISS and other deductions?

The Department estimates that the gross BISS value in the new regime will only be 62% of the current entitlement value (including greening) when eco schemes (25%), CRISS (10%) and the young farmer payment (3%) are taken off.

A further 3% will be removed from this gross BISS to fund the National Reserve, giving cumulative cuts of over 40%.

It certainly seems like something that must be considered rather than something that might be ignored

The eco-scheme payment will be paid on top of the reduced BISS, around €70/ha, and it will be a significant amount of money for those who can qualify via the proposed measures.

It certainly seems like something that must be considered rather than something that might be ignored.

Leased in entitlements

While the measures will represent a significant reduction in support to many growers, there will be significant added challenges for growers with leased-in land and entitlements.

Take a grower with five leases including the relevant entitlements.

Convergence will apply on all entitlements that are above the relevant average value in each of the five years in the new CAP.

Leased-in entitlements will also be subject to CRISS deductions and they will not benefit from the additional payment on the first 30ha because an applicant in the new CAP can only receive this additional payment on one 30ha of their entire holding.

Given all the deductions that will apply, how will the drawdown value of the leased-in entitlements fare and how will this be reflected in the “rental” value of these entitlements that go back to the owners?

Will there be implications for the tax-free element of leases?

Who will calculate the new BISS value for packets of leased-in entitlements? Will these measures affect long-standing rental agreements because different farmers may be able to secure different drawdown of individual entitlements, especially for anyone who exceeds the €60,000 threshold.

So change is inevitable and it remains difficult to envisage how the new regime will pan out.

In short

  • Current entitlement values will be subject to cuts to fund the eco scheme, CRISS and young farmers.
  • The new BISS payments will be subject to reductions to fund the national reserve and annual convergence to take all entitlements to within 85% of the new BISS average payment level.
  • Because tillage farms tend to have bigger scale and a lot of rented land, they will suffer badly from the erosion in entitlement values.