Hill farm in Wales© Rex

A flat-rate system of payments phased in over five years could be introduced in Wales under revised plans for the Basic Payment Scheme (BPS).

A consultation on the new proposals, which follows last year’s successful legal challenge to the scheme initially planned, points to the Welsh government favouring three options.

In its consultation document launched on Tuesday (31 March), the Welsh government supports three possibilities, including implementing a flat-rate system with payments adjusted each year over five years. Under this model, every farmer would receive an indicative payment rate of €176/ha (£127/ha) by 2019.

See also: Welsh farmers warned to expect CAP payment delays

Another option under consideration is to combine the flat-rate system with a redistributive element, “topping up” payments to a higher rate on the first 54ha.

If this combination was introduced, it is estimated that by 2019 the flat-rate payment would be €124/ha (£90/ha) on all land, with an additional payment rate of €119/ha (£86/ha) for the first 54ha. Under this system, 67% of farmers – 10,887 – would get paid more than they would from the Single Payment Scheme if it continued within the budget now available.

The government’s third preference is “tunnelling” – an approach that slows down the transition to a flat payment rate and spreads the change over a period of time, which in Wales’ case is seven years.

The consultation paper suggests an advantage of tunneling is that it allows more time for the industry to adjust to the financial disruption of a new BPS.

“Because tunnelling drives change more slowly than the flat-rate options, it results in fewer claimants having large losses or gains each year. Logically, the same numbers of claimants gain and lose in total. The difference is that the size of the changes each year are smaller,’’ the document states.

The industry now has 12 weeks, until 23 June, to respond. Whichever option the Welsh government plumps for, there will be implications for all farm businesses, admits Wales’ farm minister, Rebecca Evans.

“I am mindful that whatever I decide for the BPS will impact on all farm businesses, with some farms receiving higher payments and others lower payments. This is inevitable and unavoidable,’’ she said.

“With the change from that forecast for a regional payment system, I will wish to consider what this means for the balance of investment provided to the farming industry through the new Rural Development Programme.’’

Given the complexity of the consultation document and the likely impact of the proposals, NFU Cymru is running a series of events around Wales to discuss the paper with farmers.

“We know that the future design of the BPS is a contentious issue and our membership will have a range of views on the best way forward. This is completely understandable given that whatever proposal is eventually decided upon by Welsh government, can make a significant impact on the level of CAP support an individual farming business will receive in future,’’ said NFU Cymru president Stephen James.