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Friday 23 June 2017

I am young and landless - what are my Basic Payment options?

There are currently less supports available for young farmers starting out
There are currently less supports available for young farmers starting out

Theresa Murphy

Q - I am a young trained farmer who completed a level 6 course a few years ago. I would like to start farming but I will not be able to take over the home farm yet as my father is still actively farming and is planning on continuing farming for the next few years. The only option open to me right now is to lease a farm and start farming in my own right. As the margins in the suckler to beef enterprise are very low, I am wondering what supports are available under the Basic Payment Scheme and other schemes for young trained farmers?

A This question has come up many times and so I have put together a guide to assist those in your position.

National Reserve

While there have been more supports in the past for young trained farmers starting out, there are currently slightly fewer available.

Leasing land with entitlements

This is probably the most relevant issue for you as you propose leasing land.

If you are leasing land from a land owner that has been actively farming, there is a high probability that you will be able to lease the farm with entitlements.

This can be done by filling out an entitlement transfer form.

Completed applications for the transfer of entitlements must be submitted to the Transfer of Entitlements Section, Department of Agriculture, Food and the Marine, Knockmay Road, Portlaoise, Co Laois along with any other relevant documentation.

Buying or leasing entitlements without land

If the land is leased without entitlements, then it may be possible to buy or lease entitlements.

While the purchase of entitlements was common under the Single Farm Payment Scheme, the number of entitlements which have been sold and bought under the BPS has been quite low due to a 50pc clawback rule.

The sale of entitlements without land will be subject to a clawback of 50pc of the number of entitlements sold.

This means the seller sells 50 entitlements at €100 each and the buyer receives 25 entitlements at €100 each.

This is not the case where land is sold with entitlements; in this case, as long as there is one hectare of land sold per entitlement, then there is no clawback due.

It is possible to lease entitlements with or without land.

Make sure to keep in mind that a transfer of entitlements form must be returned to the Department.

While there is no requirement to provide details of the land farmed when entitlements are leased without land, the onus is on the farmer to ensure that the entitlements being leased are used.

One eligible hectare of land should be declared for each hectare farmed. A Private Contract Clause (PCC) will need to be filled out and returned to the Department in respect of entitlement leases and purchases.

Leased/rented entitlements will revert to the transferor at the end of the relevant scheme year.

Also keep in mind that where the expiry date of a rental agreement or lease end date as recorded on the 2015 PCC application is on or prior to May 30, 2016, entitlements shall revert to the owner of the entitlements for the 2016 scheme year.

Young Farmer Scheme

If you are a new entrant, and under 40 then you may be eligible for the Young Farmer Scheme. Under this scheme, if you are successful, you will be eligible to receive a top-up on your Basic Payment for up to five years.

The Young Farmers Scheme Payment will be calculated as 25pc of the national average payment per hectare (based on the national ceiling) multiplied by the number of entitlements activated by the successful applicant, to a maximum of 50.

A young trained farmer must hold entitlements on which the top up will be paid.

If 40 hectares are farmed with just 20 entitlements submitted in the year of application under the Young Farmer Scheme, then the top-up will only be paid on the 20 entitlements claimed.

A successful applicant will receive the payment for up to five years from the date of setting up the holding (registration of a herd number in ones name).

This is just a brief summary of the factors which you should bear in mind when deciding what enterprise to begin.

You should always consult your agricultural consultant and financial advisors about your individual circumstances before making any big decisions.

This article is intended as a general guide only. Theresa Murphy is a barrister based in Ardrahan, Co Galway

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