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Over the last week we have received a number of enquiries about the value of basic payment scheme (BPS) entitlements in NI this year.
Most of the queries relate to deals done with landowners in 2015, when some farmers agreed to pass on a proportion (or all) of the value of entitlements claimed in future years on rented land, as part of a conacre agreement.
Before exploring that, it must be pointed out that it is only the person actively farming the land who is in a position to claim, and the system is there to support active farmers, not landowners.
But the reality is that while some farmers agreed to add on £20/ac (what an area-based entitlement was roughly worth in 2014) to their conacre bill, others agreed to pay more. Below, two possible scenarios are presented.
Scenario one
The basis for the first scenario goes back to pre-2015 when landowners were allowed to claim an area-based payment worth €78.33/ha.
In 2015, when new rules around active farmers came into force, a significant number of these landowners dropped out, with some passing their entitlement to the conacre tenant.
Shown in Table 1 is the value of that entitlement now, as it moves in seven equal steps to the NI average of €330/ha by 2021.
The first step in that seven-year transition happened in 2015, when this entitlement increased in value to £31.53/ac.
It was worth just under £50/ac in 2016, £65.60/ac in 2017 and £78.95/ac in 2018.
That is probably more than originally envisaged in 2015, as most calculations were done on an exchange rate of €1 = £0.80, not the €1 = £0.89 that has occurred in the last two years.
Scenario two
In the second scenario, an additional hectare was added, but no entitlement was traded ahead of the 2015 claim. So rather than starting with an entitlement worth €78.33 in 2014, the starting point for this new entitlement in 2015 is zero.
Once the first step of seven is applied, each hectare of additional land generated the equivalent of £14.64/ac in 2015, rising to £32.56/ac in 2016, £53.72/ac in 2017 and £71.47/ac this year.
The calculations are the same (for each hectare of ‘clean’ land claimed since 2015), irrespective of the value of other entitlements held.
Next year
The figures shown in both tables assume that flat-rate payments will be in place by 2021. But the current CAP reform period ends in 2019, with DAERA to open a consultation next year on whether the value of entitlements should be frozen at this point, or whether the transition to flat payments should continue.
The situation is also complicated by Brexit.
The current BPS system (and fifth year of transition to a flat payment) will be maintained in 2019.
After that, the British government has guaranteed that payments to farmers will remain at their current level to 2022.
There might be some minor tweaks, but area-based payments should continue in 2020 and 2021.
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