ENSURE ERRORS DONT PENALISE YOUR SET-ASIDE
DO NOT be deceived by this autumns low 5% set-aside rate – you could still lose over £6000 for each 1ha of set-aside which fails to meet IACS rules.
With set-aside at 5% the penalty for each error is proportionately far higher than it was at the old 15% rate, making it vital that set-aside management and IACS claims are spot on this season, say business consultants Andersons.
"At the 15% rate 1ha of set-aside justified 5.67ha of eligible cropping," explains Melton Mowbray based Andersons consultant Francis Mordaunt.
"But at todays 5% rate each 1ha represents 19ha of eligible cropping. So, with an average payment of £300/ha for eligible crops, mistakes mean a loss of over £6000 in set-aside and area aid payments for each 1ha of set-aside."
Where a large error is made IACS penalties can be imposed, as outlined in the table. The 20% threshold can easily be exceeded, since it is based on the area of invalid set-aside, divided by the area of set-aside found, not the total set-aside declared.
Despite such hefty penalties growers continue to make genuine errors each year, Mr Mordaunt warns. "Each year there are growers with insufficient set-aside, often because they calculate it on the crop area not the area of crops including set-aside. Others fail to meet the deadline for establishing a set-aside cover, set-aside strips which are too narrow, and destroy their cover too soon in the summer." The panel highlights the most common pitfalls.
Significantly, two frequent problems involving industrial set-aside crops have now been removed. "Growers will be able to sow industrial crops before a contract is signed and the field area and location can be changed after the contract has been signed and submitted to the Intervention Board," says Mr Mordaunt.
"This is good news. It takes account of the practicalities of changing plans for sound agronomic reasons."
Set-aside management needs to be spot on to avoid up to £6000 of lost income for each 1ha which is found to be ineligible.
Effect of 1ha of set-aside being ruled not legitimate
rate (%)claims of (ha)
Under 3% or 2haPayment for
Over 3% or 2haError doubled.
but under 20%
Over 20%No set-aside
payment at all
Common set-aside pitfalls
• Not enough set-aside, often because calculated on crop area, rather than area of crops including set-aside.
• Ineligible previous crop (eg, after temporary grass, grazed roots or non-set-aside game crops).
• Land not farmed for the two years preceding the start of the set-aside period (ie 15 Jan). There are some exceptions. Farmed effectively means included on the IACS return of the business.
• Set-aside green cover sown as a single crop (eg, maize) rather than an acceptable unharvestable mix of crops.
• Farmers leaving guaranteed set-aside early but failing to leave the cover for the full 12 months, ie to Jan 15.
• Headland strips less than 20m wide.
• Set-aside blocks of less than 0.3ha.
Rule change needed
Current set-aside rules encourage fraud and should be changed, argues Mr Mordaunt. Farmers have little scope for mitigating their losses when errors become evident during IACS form filling, he says. The temptation is to cover up mistakes by setting aside land which does not meet all the criteria and hope it is not detected.
"Such action can not be condoned, but is understandable. After all, the land is being set-aside, which fulfils the main purpose of the Arable Area Payments Scheme." The alternative is to admit the error and face severe financial loss.
"When honesty does not pay there is something wrong with the system. The current legislation actually encourages fraud, defeating the whole purpose of the penalty system, which aims to prevent it."
An appeals system should be introduced, suggests Mr Mordaunt. "If it can be shown no fraud was intended and the set-aside area still meets the main objectives of taking land out of production, then a lesser penalty could be applied."