CAP Q&A: Active Farmer rules explained

Before making your Basic Payment Scheme (BPS) claim next year you will need to consider the new Active Farmer rules to ensure you are eligible to apply. NFU’s senior BPS adviser Richard Wordsworth explains how Defra sees these new rules applying in England and why you shouldn’t ignore them.

Why are there new rules being introduced around who can claim BPS?

There has been much criticism around Europe in recent years as to who has been eligible to receive Single Payment Scheme monies under CAP.  Within the latest CAP reform the European Commission has tried to address these concerns in the form of the Active Farmer rules that all farmers will now need to consider.

See also: Be clear on greening, livestock farmers warned

So can I claim BPS in 2015?

To claim BPS, first you need to be considered a farmer – a person or business that carries out agricultural activity. This means either producing, rearing or growing agricultural products, or maintaining an agricultural area so that it is kept clear of dense scrub. In addition to this a farmer must now consider the new active farmer rules.

Why is Active Farmer important to me?

To receive BPS (including the greening payment and the young farmer scheme top-up) each year a farmer must declare, among other things, they are an active farmer for the whole calendar year. Some farmers claiming SPS may not be automatically eligible to claim BPS in 2015 if this active farmer test is not satisfied.

What non-agricultural activities are covered by this new rule that may impact on my ability to receive BPS?

A farmer will not qualify as an Active Farmer and therefore will not automatically be eligible to receive BPS if they operate one or more of the following five non-agricultural activities: Railway services, airports, waterworks, permanent sport and recreational grounds and real estate services.

Where can I find out more about the new Active Farmer rules?

The latest Defra CAP Update booklet published in October, which farmers will be receiving in the post in November, gives more details and examples on the first four categories set out above. More information on the real estate services category and readmission process, which allows farmers who operate these non-agricultural activities, is expected in the next two months.

I am involved in a farming business and also another business that operates one of these non-agricultural activities, what should I do?

You first need to carefully consider whether the farming business applying for BPS and the business operating a non-agricultural activity are different. Much will turn on who “operates” i.e. makes the decisions for the non-agricultural activity. For example, in the case of a farmer who is also a director of a limited company, the farmer can apply for BPS as he is not the same business as the company that operates an airport. Similarly, an employee of the company could apply as for his own holding.

I operate one of the non-agricultural activities, but it does not take place at the farm or indeed on eligible BPS land, surely I am not caught by these new rules?

A farmer may still be considered as operating the non-agricultural activity even if it does not take place on his land. The land equally does not need to be eligible for BPS, it is about the non-agricultural activity being operated by the business.

I am operating one of the non-agricultural activities listed, does that mean I cannot claim BPS in 2015?

No, there is a readmission process that will allow farmers who operate the certain non-agricultural activities to continue to be eligible to claim BPS, by supplying evidence that they qualify under one of the following three “readmission criteria”. More information can be found on Defra’s October guidance.

If I need to use the readmission criteria, when do I need to submit my evidence?

The evidence must be sent to the RPA in time for it to be received (along with the BPS application) by the BPS application deadline, which is midnight on 15 May. If the evidence is received after the deadline, penalties will be applied in the same way as if the BPS application was late. The application will be rejected if the evidence is received after midnight on 9 June.

Can I simply alter my business structure to avoid these new rules?

The Rural Payments Agency will look closely at any arrangements that have recently been put in place to try to circumvent these active farmer provisions.  An operator will not be considered an active farmer if he has artificially created the conditions needed to qualify for BPS payments.

When do I have to declare that I am an active farmer?

Farmers must declare that they are an active farmer for the whole calendar year when they apply for BPS or provide evidence that they qualify under the readmission process. Therefore a farmer needs to consider these rules before they submit their application in 2015.

What if I do not give the RPA the correct answer when I apply for BPS?

If a farmer is found to have wrongly declared that he is an Active Farmer, he will be unlikely to be able use as his defence the readmission criteria set out above. If he is deemed not to be an Active Farmer, and this affects the 2015 BPS application, he will lose all the BPS payment and the entitlements allocated to him. He may also have to repay any amounts already paid out, and additional penalties may apply.

Finally, will the new active farmer rules apply to all farmers then?

As written, the new legislation states the rules apply to farmers who received more than €5,000 (£4,000) for the previous scheme year (before any penalties were applied or cross-compliance reductions made) – for either SPS or BPS, including the greening payment and any young farmer payment.