DEFRA is proposing to change the standard payment rates in each of the three regions of England to shift about €43m (£37m) to upland farmers.

Under the current Single Payment Scheme the country is split into three regions – lowland, severely disadvantaged areas and moorland.

As part of its CAP implementation consultation paper published on Thursday (31 October), DEFRA is proposing that these regions should stay the same – and the entitlements a farmer holds on 31 December 2014 rolled forward into the new scheme – but payments increased for SDA ground and moorland.

The document says that keeping payments in their current proportions would mean that by 2015 farmers in lowland areas would get about €242/ha (£206/ha), farmers in SDAs €195/ha (£166/ha) and those with moorland €34/ha (£29/ha), assuming they complied with greening requirements.

Example of payment reduction for larger claimants

A farm that received €180,000 in basic payment would have a 5% reduction applied to the part of the payment over €150,000. This means the reduction would be (€180,000 – €150,000) x 5% = €1,500.

Therefore, the final payment would be €180,000 – €1,500 = €178,500. The reduction would only apply to the basic payment so the part of the payment related to greening, however large, would remain unchanged.

But it says that if the SDA rates were raised to the same level as the lowland rate – and the same cash increase applied to moorland payments – then rates could be closer to €236/ha (£210/ha) for lowland and SDA farmers and €62/ha(£53/ha) for moorland producers.

Payments would still require farmers to hold eligible land and entitlements and to meet cross-compliance rules.

The document points out that farmers in lowland areas have received higher payments under SPS because the money was allocated in a similar way to preceding subsidy schemes.

“This means that, because farming is less productive in upland areas owing to poor climate, soils and terrain, upland farms receive a lower SPS payment per hectare than lowland farms.”

Upland farms had the potential to deliver a range of public goods, yet they faced particular challenges accentuated by their terrain, says the consultation.

The document also says that while the government fought European Commission proposals to require payments to be capped, it has had to agree to plans to reduce the largest payments.

DEFRA would prefer to minimise the impact of this on farms so it is proposing that farms who receive a basic payment over €150,000 should be subject to a 5% reduction.

It argues that the other options put forward by the EU, such as introducing a “salary mitigation” scheme or redistributing payments so smaller farms get a higher payment rate than larger ones, would affect the competitiveness of the farming industry.

Conversion to sterling based on exchange rate of €1= £0.85

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