Single Payment Scheme

It was an intention of the scheme to 'decouple' grant payments from production. This was in response to criticism from other World Trade Organization (WTO) countries (mainly the US), that the EU was unfairly subsidising farmers and providing an unfair competitive advantage. Under the SPS the farmer is no longer paid different amounts according to the crop he or she produces, but a set amount per hectare of agricultural land maintained in cultivatable condition. The intention is that choice of crop is based purely on market driven forces and not on production based grants. Decoupling of payments has allowed them to be categorised under the so-called blue box for the purpose of WTO negotiations, ensuring the legality and compliance of international obligations.

To gain funds from the SPS the Farmer has to cross comply – that is, to farm in an environmentally friendly way, with careful use of pesticides and fertilisers. The farmer also had to set aside (not farm) 8% of their productive land annually, in addition two metres on the perimeter of each field must be left uncropped to become overgrown. However, the requirement for set aside was suspended for one year in Autumn 2007 following sharp increases in prices for certain crops, and in consideration of the aim to grow more crops for biofuel production.^[1]

Another stated goal at the outset was to simplify the existing process including applications. Eleven existing schemes were replaced by the SPS.

Implementation of the payments in England has been impaired by problems at the Rural Payments Agency. Payments under the scheme were intended to be made by around January 2006, but by December 2006 some 2% of claims still remained unsettled. Payments amounted to £1.5 billion distributed amongst 115,000 claimants, though most of the money went to relatively few of the claimants (according to the size of their holdings). Difficulties in implementation included double the number of expected claimants, as rules of the new scheme allowed many more people with relatively small areas of land to claim.

Applications are made annually by completion of the SP5 form, which requires claimants to declare all the land under their control, the land they wish to claim payment on and whether they are subject to Statutory Management Requirements (SMR)^[2] or Good Agricultural and Environmental Conditions (GAEC).^[3] In February 2008 RPA began accepting electronic applications via third party software.^[4] The first application was submitted 27 February 2008 through Single Payment Supervisor by Paul Holliday Software.^[5] Following the success of the project to accept electronic applications via third party software RPA took the next logical step and in March 2010 began allowing submissions directly through their own Whole Farm Approach website. There is speculation within the agricultural industry that paper forms will be withdrawn in an attempt to reduce costs.

The scheme replaced eleven previous subsidy schemes which were based on the production of crops and/or livestock e.g. dairy premium and arable area payments scheme. Initially the payments had a bias towards paying producers who historically received the highest subsidies. The payment bias works on a sliding scale with a move away from historic payments towards land based payments with payments in 2012 having no historic element.

Implementation of the Single Payment Scheme in Wales was the responsibility of the Welsh Assembly Government. Payments totaling £250m were paid to more than 98% of eligible farmers between 1 December 2005 and 30 June 2006, including £110m to about 75% of Welsh farmers on the first possible day, which made them amongst the first in Europe to receive the new payment.

Discover more about History related topics

Grant (money)

Grant (money)

A grant is a fund given by an end entity grant – often a public body, charitable foundation, a specialised grant-making institution, or in some cases a business with a corporate social responsibility mission – to an individual or another entity, usually, a non-profit organisation, sometimes a business or a local government body, for a specific purpose linked to public benefit. Unlike loans, grants are not to be paid back.

World Trade Organization

World Trade Organization

The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and enforce the rules that govern international trade. It officially commenced operations on 1 January 1995, pursuant to the 1994 Marrakesh Agreement, thus replacing the General Agreement on Tariffs and Trade (GATT) that had been established in 1948. The WTO is the world's largest international economic organization, with 164 member states representing over 98% of global trade and global GDP.

Agreement on Agriculture

Agreement on Agriculture

The Agreement on Agriculture (AoA) is an international treaty of the World Trade Organization. It was negotiated during the Uruguay Round of the General Agreement on Tariffs and Trade, and entered into force with the establishment of the WTO on January 1, 1995.

Environmentally friendly

Environmentally friendly

Environment friendly processes, or environmental-friendly processes, are sustainability and marketing terms referring to goods and services, laws, guidelines and policies that claim reduced, minimal, or no harm upon ecosystems or the environment.

Pesticide

Pesticide

Pesticides are substances that are meant to control pests. This includes herbicide, insecticide, nematicide, molluscicide, piscicide, avicide, rodenticide, bactericide, insect repellent, animal repellent, microbicide, fungicide, and lampricide. The most common of these are herbicides, which account for approximately 50% of all pesticide use globally. Most pesticides are intended to serve as plant protection products, which in general, protect plants from weeds, fungi, or insects. As an example, the fungus Alternaria solani is used to combat the aquatic weed Salvinia.

Rural Payments Agency

Rural Payments Agency

The Rural Payments Agency (RPA) is an executive agency of the UK Department for Environment, Food and Rural Affairs (Defra). Prior to Brexit, the RPA delivered the European Union (EU) Common Agricultural Policy (CAP) payments to farmers and traders in England, paying out over £2 billion in subsidies each year. The Agency managing more than 40 schemes, the largest of which the Basic Payment Scheme (BPS) paying more than £1.5 billion to around 105,000 claimants a year.

The Single Payment Scheme (SPS) rewards farmers for managing their land to minimum ("Cross Compliance") standards for crop production, animal welfare and the environment. Farmers can submit a claim annually by declaring (1) all of the agricultural parcels (crops) on their farm and (2) their payment entitlements for activation. The farmer's declaration of her payment entitlements for activation is the farmer's request for a 'Single Payment'.

The farmer is paid against her declared payment entitlements that are each matched against an eligible hectare of declared land ('activated for payment'). The 'Area Declared' for Single Payment is respective; meaning that it relates to the two factors of (1) declared agricultural parcels and (2) payment entitlements declared for activation.

By way of example:

A farmer holds 102.00 payment entitlements.

The farmer declares all of his agricultural parcels that total exactly 100.00 eligible hectares.

If the farmer declares 102.00 of his payment entitlements for activation, the 'Area Declared' for Single Payment would be 100.00 hectares (the lower of the eligible hectares declared and the payment entitlements declared for activation).

If the farmer declares 98.00 of his payment entitlements for activation, the 'Area Declared' for Single Payment would be 98.00 hectares (the lower of the eligible hectares declared and the payment entitlements declared for activation).

Political agreement on CAP reform was reached in 2013. In January 2015, the Single Payment Scheme was replaced by the Basic Payment Scheme (BPS).^[6]