Quota brokers are warning that farmers who have traded their set-aside entitlements, which are not then being claimed against, could be falling foul of EU legislation.
As a result, they risk losing three years’ worth of single farm payments.
A number of agents have been offering to take set-aside entitlements from farmers, which are then registered to their own holdings, but not claimed against.
The farmers taking part have been paying up to £150/ha to the brokers to free themselves of set-aside, on the grounds that they can make a bigger margin by farming the land.
Fruit and vegetable growers and dairy farmers have been particularly attracted to the opportunity.
But Lincolnshire agent Duncan Clarke of DCFM claims that, while these deals may be within the letter of the law, they are outside the spirit of CAP reform, which says set-aside must be used to reduce production.
He warns that, after three years, the unclaimed set-aside will return to the national reserve and at this point the artificiality of the deal will be revealed, prompting an investigation by the EU Commission.
This could result in the deals being unwound and farmers having to repay their SFPs.
“There’s no such thing as a free lunch,” says Mr Clarke.
“I’d advise anyone not to get involved with any trade in which the purchaser doesn’t warrant that he will claim the set-aside in the following year.”
Quota broker Tony Carver of Carver Knowles agreed that farmers getting involved in these deals were taking a risk.
“We saw this with the old SLOM2 milk quota when the EU sniffed out that certain deals were artificial and the whole lot had to be unravelled, leaving many costly and difficult cases to be dealt with.
“We’ve learned from Brussels that anything that does not follow the thrust of EU policy gets flattened.”
But broker Charles Holt, who is involved in the transfer of set-aside entitlement, is convinced the arrangements are watertight.
“I’ve had an e-mail from the Rural Payments Agency, who know what’s going on and they’re happy with the transfers,” he told Farmers Weekly.
“My agreements have been drawn up by a reputable firm of agricultural solicitors, and they’re happy.
Also, we’re taking set-aside via about six other brokers who know the set-aside is not being activated.
“Also, nobody is being harmed by it.
Farmers are getting rid of their set-aside, we’re getting money for taking it and the government is saving because it does not have to pay anything.”
Mr Holt said so far he had overseen about 25 deals, mainly for small amounts of set-aside.
But William Neville, partner with law firm Burges Salmon, urged caution.
“A system which renders the set-aside policy of the CAP completely ineffective strikes me as being questionable,” he told Farmers Weekly.
“It could end up with each member state’s set-aside being stacked on 1ha of land.”