One of the burning questions throughout the CAP reform process has been whether a landowner can establish new Basic Payment Scheme entitlements in 2015 on land that is being used to grow grass, and which is sold as fresh material, to be ensiled by someone else.

The definition of an active farmer means that the claimant in 2015 must enjoy the decision-making power, benefits and financial risks in relation to the agricultural activity on the land. The example in DARD’s own guidance refers to a landowner buying fertilizer, making round-bale silage, advertising the bales and selling them to the highest bidder. The landowner clearly has carried all the financial risk and should be eligible to establish entitlements.

The second scenario in the DARD guidance is where a farmer arranges fertilizer spreading and contractor work on someone else’s land, and the grass is subsequently ensiled in the farmer’s own silo.

The landowner reimburses the farmer for input costs, and the farmer pays the landowner for the grass. According to DARD, this is just conacre in another form, and the landowner is unlikely to be eligible to establish entitlements in 2015.

However, there is a significant grey area between the two DARD scenarios. At the DARD roadshow in Armagh this week, Department officials tried to provide more clarity on just what would be allowed. The starting point was the second scenario above. Developing the point, Manus McHenry from DARD said that a landowner who has receipts for inputs such as fertilizer and sprays, pays a contractor to harvest the grass and sells the grass by weight (trailer load) from the field to another farmer (not the contractor) “has more evidence to prove that they are an active farmer”.

A landowner who subsequently makes bales or pit silage and advertises and sells the material to the highest bidder at a later stage “has stronger evidence,” said McHenry.

As one agricultural consultant said afterwards: “There will be two people who do exactly the same thing this year. One will make sure they have all the paperwork in place, and be deemed an active farmer. The other will keep few records, and be told by DARD they were not eligible to establish entitlements.”

What is clear is that grass growing can be seen as a legitimate business activity. Ideally, this grass will be made into silage and sold by weight, but if a landowner can prove (receipts etc) that they grew grass, and offered the freshly harvested grass for sale by weight (trailer load) to the highest bidder, then they will meet active farmer rules.

This should not be confused with the situation of two active farmers who decide to sell a cut of grass from one to another. Remember, it is the person who is in control of the land for the majority of the year who should establish entitlements on that land this year.

Don’t forget about land eligibility

While all fields now come with a maximum eligible area, it should not be assumed that this is the correct area of eligible land to claim this year.

The DARD map could be a couple of years out of date, and in that period scrub encroachment may have occurred or new hard features, such as lanes, added.

“In particular, the map will not have taken ineligible areas of rush into consideration.

‘‘If it is dense or difficult to walk through it becomes ineligible,” said Keith Johnston from DARD. Where entitlements are established on land this year which is subsequently found to be ineligible, the entitlements will be lost.

The advice from Johnston is for everyone to read through the ‘Guide to land eligibility’ booklet on the DARD website. The guidance hasn’t changed much since 2011, although he emphasised that there must be evidence of agricultural activity on the land.

In its most basic form, that means someone who maintains land in good condition by regular topping.

The land must also be eligible throughout the calendar year, which is slightly at odds with the active farmer rules which require that the person who is in control of land for the majority of the year establishes 2015 entitlements.

“I have conacre land and intend putting it on my form, but it has development potential and the owner might start to build houses on it this September.

What should I do?” asked one farmer. The answer from DARD is that all land should be declared, unless there is an immediate prospect that it will become ineligible (planning approved) or reasonable doubt that it is already ineligible.

Greening guidance ready at last

A booklet detailing the various requirements around greening is expected to be published within the coming days. It is the last major piece of guidance relating to the changes around CAP reform still to be made available to farmers.

The Irish Farmers Journal understands that the main reason for the delay was the unwillingness of the Ulster Farmers’ Union (UFU) to indicate to DARD that they were satisfied with the content of the booklet. The major issue seems to relate to the rule that a farmer with an Ecological Focus Area (EFA) requirement must assign an individual code on a map for each feature (eg hedges) to be counted towards the EFA. For some larger arable producers, this is a major bureaucratic task. It is something the UFU raised with Commissioner Hogan when he was in Belfast last week.

O’Neill confirms 15 May deadline

Despite concerns raised by some form fillers that they will struggle to meet the deadline of 15 May for submission of the 2015 Single Application Form (SAF), Agriculture Minister Michelle O’Neill has confirmed that the deadline remains unchanged.

It comes after the European Commission announced an intention to allow EU member states to extend the deadline up to 15 June 2015.

The Minister said that she had considered the issue carefully but extending the deadline increased the risk that payments would not be made this December.

Anyone who intends to set up a business for one year only to avail of a claim to the regional reserve has been warned by DARD that they run the risk of losing their entitlements if they are found to have created artificial conditions.

The warning comes after reports emerged that some young farmers and new entrants have been advised that if they are successful with a claim to the reserve this year they should consider selling the entitlements back to their parent next year.

Young farmers and new entrants eligible for the reserve go straight to the NI average of €329/ha. In theory, there is nothing in the rules to stop them trading these entitlements in future years, but a young farmer would have to forgo their top-up payment.

The major issue for many of these claimants are the tax implications of becoming head of a new or existing business, especially if a young farmer has income from outside farming. Professional legal and financial advice should always be sought before final decisions are taken.

However, there are obvious financial benefits for a farm that is able to split, consolidate an existing payment onto a lesser area and allow a young farmer or new entrant setting up for the first time to go straight to €329/ha on the remainder of the land. But closing this business next year, transferring the livestock and the entitlement back to a parent is something that will be assessed closely by DARD.

A DARD spokesperson told the Irish Farmers Journal: “This may constitute an abuse of the regional reserve. In such cases, DARD will investigate and if it is found that the business did not exist as a separate entity or the arrangement was an artificial construct, the entitlements allocated from the reserve may be confiscated and any monies which have been paid in respect of these entitlements recovered.”

The line from the Department is that any new business created this year must be “genuine, separate, independent and intended to be sustainable”.

While there were reports that some DARD offices had refused to issue any more new business IDs, it seems that the Department quickly realised that they could not sustain that position. However, anyone who applies now for a new ID may not have it approved in time for the 15 May deadline to submit a Single Application Form.

Blank form

It means that an applicant may have to request a blank form from DARD and complete it on the expectation that their business ID will be approved. That is a risk, and an applicant would need to be certain that they meet the rules for a new business. Otherwise, they could end up with no entitlements on the land included on this form, while another farm (belonging to a parent) is penalised for under-declaration of land. The key is separate handling facilities, livestock, etc, both now and into the future.

The same principle applies to farm businesses which work closely together and have associated herd status. For example, a father and son who make separate claims this year are expected to be economically and operationally separate.