HFASCHEMEUPANDRUNNING… SOHOWDOESITWORKOUT?
HFASCHEMEUPANDRUNNING… SOHOWDOESITWORKOUT?
The much talked about Hill Farming Allowance Scheme is
now up and running, with first payments due at the end of
this month. Emma Penny explains how the scheme works
– and looks at whether theres more money to be made.
ITS BEEN suspiciously quiet on the NFUs hill and upland desk lately – and that can only mean that the packages received from MAFF around Christmas time havent been opened, believes policy advisor Sally Gibbins.
But the move to what is regarded as a more environmentally-friendly area based payment is likely to have an effect on all farms, particularly those which are currently successfully running productive units with high stocking rates.
The three year safety net, designed to ease the transition between Hill Livestock Compensatory Allowances and HFAs and which applies throughout the UK, will help, concedes Ms Gibbins.
This means in 2001 producers will receive at least 90% of the payment which was received under HLCAs in 2000, 80% of the payment in 2002, and 50% of the difference between the two figures in 2003. This is, however, conditional on no change to the business set up or forage area since submitting IACS 2000 forms.
"The first two years will give some breathing space for us to assess the effects of the scheme and carry out further lobbying to make it better. The mid-term review of the scheme in 2003 will also help, and we will be focusing on that.
"We cant wipe out the whole scheme – undoing the whole scheme risks payments not being made – and changes would only be tweaks rather than monumental changes."
Besides concerns over lower payments, Ms Gibbins says land classification – particularly if it falls in the moorland category, which receives less money – is a controversial topic.
Initial work by MAFF showed that having three categories of land – moorland, DA and SDA – would help limit redistribution. However, the moorland map, which was finally produced in 1992 and collated by aerial photography and foot work may not reflect current land use, says Ms Gibbins.
"Many producers believe their land isnt properly classified, but theres no appeal procedure which is unfair. We are looking at this, but until the statutory instrument is laid – likely to be in mid February – theres nothing we can do about it."
In England, capping is causing real concern on large hill farms, says Andrew Graham of Strutt and Parkers Salisbury office.
"The scheme favours small family farms, which is fine, but it absolutely ruins any chance bigger units had to try and be profitable by farming the uplands as a business. These farms employ people and if their jobs go they will not be replaced, with serious knock-on effects in the local community.
"Its paying hill farmers to be park keepers and encouraging inefficient businesses to survive."
In theory, businesses should be able to benefit from financial enhancements built into the scheme, but for many large units, this is rather like rearranging the deck chairs on the Titanic, says Mr Graham.
In England and Wales, where a specific amount of LFA was under arable or woodland cover when the 2000 IACS form was submitted, an enhancement of 10% – or 20% where two or more enhancement requirements are met – can be claimed.
Whether or not it is worthwhile trying to meet this criteria for the 2001 IACS form will depend on individual farm circumstances, says Ms Gibbins. However, Mr Graham points out that planting trees to meet one of the enhancement categories would also qualify for woodland grants, as well as providing shelter and enhancing the landscape.
English and Welsh producers could also benefit from enhanced payments where stocking rates are 1.2LU/ha or less, which might also produce extensification payment benefits, he adds.
"But dont go paying huge sums of money for extra land to do this – think about what it is worth and dont go over that.
"Reducing stocking density on the same land area is only any good if you release other costs such as labour, bought-in feed and so on, or free up time to do something else or diversify. Also, in England, taking on additional land may mean you are affected by capping, which probably already affects a lot of hill farms."
Another area worth considering for farmers throughout the UK is keeping a higher proportion of cattle, as meeting scheme targets results in a further enhancement. According to Ben Kellagher of Andersons Lothian office, this may make a large difference on some Scottish moorland farms, where producers will be able to claim an additional £5.50/ha where stocking rates are 0.65LU/ha or less and cattle make up 10% of total LUs.
While Mr Graham agrees that keeping a higher proportion of cattle is worth considering, and would help grazing management, he says its important to ensure the move doesnt tie up more working capital than the sheep they are replacing, and adds that the cost of quota must also be taken into account.
There are other options, unrelated to enhancements, which can be considered in an attempt to improve profits – whether to stay in dairying and changing sheep breeds.
Where hill units are also running a dairy, its financial contribution to the business may be worth considering. This is because dairying affects the farms forage area for HFA purposes, explains Ms Gibbins. "When the forage area for dairying is removed from the HFA area on your farm, you might just have a small area left to claim HFA on, and where producers are considering getting out of milk, this might sway their decision."
But Mr Graham adds that this decision should be carefully considered. "It depends on your herds actual yield compared with the HFA virtual cow yield. If your yields are higher than that, then the rising milk price means it may be better to stick with dairying."
Changing sheep breed might also be worth considering as producers no longer have to fill in an HLCA claim form and are therefore no longer limited to specific breeds.
"This might help as you could increase production and some people will be able to breed their own replacements cheaply. But hill ewes are on the hill for a reason, and Mules wouldnt do in many places as theyre not hardy enough and there may not be enough grass to support twins. But where kinder ground and some lambing sheds are available it might be a runner," he says.
But while theres no longer any need to fill in an HLCA claims form, Ms Gibbins warns that increased reliance on IACS will mean its even more vital to get forms filled in correctly and on time. "Also, in the past, sheep annual premium claimants didnt have to submit an IACS form unless they were claiming LFA supplement, but they will have to now." *
England – HFAs
Payment rates
Land classification £/ha
0-350ha 350-700ha
Moorland 13.02 6.51
Common land 13.02 6.51
Other DA land 18.60 9.30
Other SDA land 34.40 17.20
No payment made on land in excess of 700ha. Minimum stocking rate of 0.15LU/ha.
Enhancements
Producers can enhance their payments by 10% for satisfying one of the following criteria, or by 20% if they satisfy two or more:
• Maintaining at least 1ha or 5%, whichever is the lesser, of the holdings LFA land under woodland or arable cover but not receiving any CAP support.
• Farm registered as organic with UKROFS.
• 15% of combined livestock units receiving suckler cow premium and sheep annual premium must be cattle.
• Stocking rate must be less than 1.2LU/ha, or 1LU/ha for second enhancement.
Source: FW/Andersons/MAFF.
Scotland – HFAs
Payment rates
Land classification £/ha
Improved Rough
pasture grazing
Moorland 30.40 6.10
Northern upland 45.00 9.00
Southern upland 39.40 7.90
Minimum stocking density for moorland is 0.08LU/ha, northern upland 0.27LU/ha and southern upland 0.38LU/ha. If stocking density falls below this, payments will be adjusted using minimum stocking density figures to assess how many hectares are used for sustainable farming and payment will be made on this basis.
Enhancements
• All farm types can claim an additional £2.50/ha if stocking rate is 0.65LU/ha or less, with cattle accounting for at least 10% of total LUs.
• Moorland farms with a stocking rate of 0.65LU/ha or less, with cattle accounting for at least 10% of total LUs can claim an additional £3/ha. This is in addition to the above enhancement.
Source: Andersons/SERAD.
Wales – HFAs
Payment rates Land classification £/ha
0-140ha 140-640ha 640+ha
Disadvantaged 23 14.95 6.90
land
Severely 35 22.75 10.50
disadvantaged
land
Enhancements
Producers can increase their payments by 10% by satisfying one of the following likely conditions. Payments can be increased by 20% if two or more conditions are satisfied:
• Membership of an approved farm assurance scheme.
• Farm registered as organic with UKROFS.
• At least 2% (minimum 1ha) of LFA land arable, root crops or field horticultural crops.
• At least 2% (minimum 1ha) of LFA land woodland.
• A commitment to remove all stock from common land for three months between Sept and Feb.
• Farms should have at least one bovine livestock unit for every 30 ewes in the SDA.
• Stocking rate below or at 1.2LU/ha
Source: FW/Andersons/FUW.