Inside Track Magazine for Agribusiness and Land Managers in the UK

sending warning letters rather than fines for small infringements
a de minimis rule to exempt from reductions any penalty falling below €50
a single control rate, of 1% minimum, for spot checks
in cases where checks have revealed a significant degree of non-compliance, Member States should focus only on the areas of risk and not on all standards, as is currently the case
notice of checks up to 14 days in advance to be given, except for controls on feed and food law, animal health and animal welfare, and identification and registration of animals, which will remain unannounced.
checks need only be made on half of the land parcels, rather than the whole farm
farmers must receive the control report, at the latest, three months after the checks.

Administrative costs for farmers
The need for cross-compliance simplification has been highlighted by an external report prepared for the Commission which shows that administrative costs for farmers, excluding public sector costs and administration, take up between 3% and 9% of total CAP payments in five EU countries sampled. Sadly, the UK was not sampled since the costs arising from RPA incompetence would have made interesting reading across Europe.

SPS administrative costs to farmers 2006

	% Cost/SPS payment	€/ ha	€/farm
Denmark	3.4	12	507
France	6.7	13	954
Germany	9.3	28	1,298
Ireland	3.0	9	294
Italy	8.5	14	107

Source: European Commission

Most of the costs involve time spent on the SPS claims and transfers, rather than on cross-compliance which affects only relatively few farmers. But the costs to those farmers affected are high. Clearly the larger the farm, the lower the cost per hectare but Italy, which had the smallest average farm size at 8 ha, also had the lowest cost per farmer because of the relative simplicity of their administrative and farming systems.

SPS external costs and time (hours) 2006

	Consultant costs €/hr	Time /farm*
Denmark	100.0	392.8
France	96.4	1,699.1
Germany	94.0	1,673.7
Ireland	86.0	338.0
Italy	77.0	238.0

Source: European Commission *includes farmers’ own time

The costs are skewed by the cost of consultants, where used. In France and Italy, external paid advisors are not used and so the cost of public agencies assisting farmers has not been included and has lowered costs in those two countries. Farmers’ costs were factored in at between €27/hr to €54/hr.

Costs/time were high in France due to the delayed implementation of the SPS and in Italy where the olive oil support was incorporated into the SPS in 2006. These are expected to fall by 30 – 40% next year.

English subsidy payments arrive

By the end of the year the RPA announced that £497 million of subsidy payments (out of around £1.52 billion) had been made to nearly 50,000 customers (out of about 100,000). Clearly, many of the payments have been to the smaller farmers. Limited experience suggests that more of the payments are correct than in the past, although there were errors in the first mailing where some statements showed the 2006 regional payment rather than the 2007 rate. The payment this year includes the sugar beet payment.

English regional rate of payment (gross of modulation)

	2006		2007
	€/ha	£/ha	€/ha	£/ha
Non SDA	45.92	31.11	95.13	66.28
SDA (excl. Moorland)	38.02	25.76	76.98	53.63
Moorland	6.48	4.39	13.40	9.33
Energy supplement*	45.00	30.50	31.65	22.05
Protein supplement	55.57	37.66	55.57	38.72
	€/t	£/t	€/t	£/t
Sugar beet	9.71	6.58	9.50331	6.62

Source: RPA *gross of scale-back

While the regional payment increases from 15% to 30%, in broad terms the inclusion of a number of small adjustments such as the new decoupled payments for sugar beet (paid completely and separately to growers in 2006) and the phasing out of a National Reserve reduction means a slightly greater increase than the percentage phasing would suggest. The historic element falls from 85% of the reference amount in 2006 to 70% in 2007. While this would be expected to reduce the 2006 historic element by 70/85 (i.e. to produce a historical reference factor of 0.8233529) the gradual reduction in the National Reserve and other adjustments results in a slightly different adjustment.

Factors to derive historic payment element

	2006	2007
Basic change in historic element	90% to 85%	85% to 70%
Non SDA	0.9362357	0.8224050932
SDA (excl. Moorland)	0.9362357	0.8217647726
Moorland	0.9362357	0.8188342677

Reminders

	2006	2007
Exchange rate £/€	£0.67770	£0.69680
English modulation	6%	12%
Welsh modulation	0.5%	0%
Scottish modulation	4.5%	5%
N Ireland modulation	4.5%	4.5%
Compulsory modulation	4%	5%
Financial Discipline	0%	0%

The scale-back on the modulation rebate has not been determined but where the claim is €5,000 (about £3,500) or over it is likely to be around £165 compared with £128.55 in 2006.

A typical combinable cropping grower will receive a payment of about £190–195/ha for the 2007 claim year (before energy or protein payments). We urge everyone to check 2007 payments carefully and, as importantly, 2005 and 2006 payments if not already done. There are errors of over 20% that have still not been rectified.

Fruit and vegetables

Land under orchards and nursery crops will be eligible under the SPS from the 2009 scheme year. A consultation exercise will take place early in the New Year on the criteria under which any new Entitlements will be allocated in respect of this land in 2009 or 2010.