The active farmer test will not be applied to 2018 Basic Payment Scheme (BPS) claims in England – saving some applicants time and money.
Meanwhile, Scotland has also announced a significant relaxation in its active farmer rules by removing the principle of the negative list.
Both decisions are designed to reduce some of the bureaucracy surrounding the process of making a BPS application.
See also: Active farmer rules explained
Defra has confirmed that farmers in England will “no longer need to meet the ‘active farmer’ requirement under BPS for 2018 onwards”.
Until now, one of the key tests for whether a farmer was eligible or not to claim BPS was whether they carried out any activities that fell into the so-called “negative” list.
The negative list covered non-agricultural activities such as airports, railway services, water treatment works, real-estate services or permanent sport and recreational grounds.
Farmers who carried out any of the activities on the negative list could establish they were an active farmer and make a claim for direct payments – but only if they met certain criteria for ‘readmission’ back into the scheme.
Townsend Chartered Surveyors, based in Exeter, said dropping the active farmer rule would remove a claimant’s need to pursue this readmissions route, which typically involved paying for an accountant’s certificate to prove the business putting in the application was also farming.
However, it also meant that certain claimants that were previously excluded, such as water utility companies, will now be eligible to make a BPS claim in 2018.
“This has the potential to increase the number of BPS applications this year and also affect the entitlement trading market as previously excluded applicants will now return to the market creating a greater demand than supply.”
Announcing the removal of the negative list in Scotland, rural affairs secretary Fergus Ewing pointed out that it was a positive move.
“I have made no secret of my belief that current CAP rules are too prescriptive, often place excessive administrative burdens on our farmers, and do not allow for enough flexibility at a local level,” he said.
But Mr Ewing promised that in Scotland, safeguards would continue to be in place to ensure funds went to active farmers.
All businesses making a claim for BPS in Scotland will still have to adhere to the minimum activity requirements, which remain unchanged.
NFU Scotland president Andrew McCornick said the removal of the negative list would be complicated, as it had been an effective tool for ensuring non-agricultural businesses were not eligible for direct support. “With the removal of the negative list, it is the hope of the union that this is the first step towards more effective measures of ‘agricultural activity’ and a switch from the area-based CAP payments to a new activity-based approach.”
Despite the announcements, the payment agencies in Scotland and England have both warned that a question about active farmer status will continue to appear on the 2018 BPS application form because it is now too late to remove it from the IT systems.
However, while the box will need to be completed, the answer will not be assessed as part of the application.
A decision has already been announced in Northern Ireland that the active farmer question will not be applied from the 2018 scheme year, although the requirement to be an active farmer still stands.
It has not yet been confirmed whether a decision has been taken to drop the active farmer rule in Wales.
Entitlement trading update
BPS entitlements are trading for lower values than at the same point last year, with divergent views about where trade could go over the coming weeks.
Hugh Townsend of Townsends Chartered Surveyors said non-severely disadvantaged area (SDA) entitlements are currently trading at £150-160/ha (plus VAT) compared with about £190/ha at this point in 2017.
SDA entitlements are selling for £200-220/ha and moorland at £55-65/ha, he added.
Mr Townsend said the market was steady, but “illogically down” on last year, given the government’s guarantee that the amount committed to farming support will stay the same until 2022.
It was therefore possible that prices could start to rise, particularly if businesses that had previously been excluded from claiming BPS by the active farmer rule decided to buy entitlements, he said.
But George Paton of surveyors Webb Paton said he is not expecting prices to rise significantly and he expects trade to settle at around £140-145/ha (plus VAT) for non-SDA entitlements.
The bulk of trades he has seen so far have been around the £145/ha level.
“The change in the active farmer rule will help to support prices, but it’s not going to drive them up,” he said.
While some of the businesses affected by the active farmer rule change own significant land holdings, there are not significant numbers of them, he said.
Cheshire-based Rostons said non-SDA entitlements are currently trading at around £160/ha.
Colin Stewart, partner with Galbraith, said the Scottish entitlement market had been fairly active since the start of the year and he expected it to continue to be busy until the transfer deadline (2 April).
Region 1 entitlements were currently trading at around 1.25 times face value (about £220/unit), while Region 2 were selling for about £36/unit (a similar multiplier to Region 1). Regional 3 were trading at face value (£12/unit).
Mr Stewart said he did not expect the lifting of the negative list to have any great impact on the market.