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Major changes to farmers’ direct payments from 2023

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Eco schemes such as reducing fertiliser spreading can add to farmers' income

Eco schemes such as reducing fertiliser spreading can add to farmers' income

Eco schemes such as reducing fertiliser spreading can add to farmers' income

The Government made a number of key announcements last week regarding the future of farm payments under the CAP reform due to come into force from 2023.

Under the new reforms, many aspects of farmers’ EU payments will change radically, with some farmers gaining significant sums and, equally, others in line for income cuts.

A detailed notice sent to stakeholders in the wake of the announcements and seen by the Farming Independent provides some further insight into how the new schemes and payments will work.

Here, we outline the most important changes that will affect farmers’ direct payments.

BISS Scheme (New BPS payment)

Ireland will continue with the system of payment entitlements under the Basic Income Support for Sustainability (BISS) as the main means of distributing direct payments to farmers.

It is proposed that the value of payment entitlements will continue to be subject to convergence, reaching a minimum value of 85pc of the average by 2026.

This will see a new average payment entitlement value of approximately €165, with total funding of €728m annually.

The minimum payment entitlement value will reach almost €145 by 2026 under this scheme.

Front loading

There will be a mandatory redistributive element based on farm size. Ireland will implement this measure for the first time. The Complementary Redistributive Income Support for Sustainability (CRISS) measure, often referred to as front loading, will redistribute 10pc of the direct payments ceiling based on farm size.

The payment totalling some €118m will mean farmers receive €43 per hectare on their first 30 hectares, the optimum range of hectares to benefit the majority of farmers (75pc).

Eco schemes

Eco schemes will provide direct income support to farmers who undertake agricultural practices beneficial for climate, biodiversity, water quality and the environment.

The allocation rate per annum is 25pc of Pillar I. This amounts to €297m per annum or €1.483bn over the course of the CAP. All active farmers will be able to apply for eco schemes regardless of whether they hold entitlements or not and payment will be made on all eligible hectares claimed.

If all 129,000 farmers that submitted a BPS in 2021 claim all their eligible hectares for eco schemes (c. 4.698 million hectares), the rate of payment should be c. €63/ha/year. If 85pc of farmers apply (c. 110,000), the rate of payment should be c. €74/ha/yr.

The agricultural practices have been designed to ensure all farmers can apply and undertake two practices and the Department can administer and control the scheme to ensure payments within the calendar year — late November/early December — while delivering environmental benefits.

Capping

Capping of direct payments in accordance with the full scope provided for in the regulations will result in an effective cap of €66,000. No deduction for salaries will be included in this mechanism.

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Young farmers

Generational renewal is a key objective of the new CAP programme. Ireland will implement the Complementary Income Support for Young Farmers (CIS-YF) in the new CAP programme, dedicating some three per cent of the direct-payments ceiling to help young farmers establish their farming businesses.

This allocation of approximately €35m per year will see qualifying young farmers benefit on a per-hectare basis, which will be more advantageous (the current system saw payments linked to payment entitlements).

The National Reserve will be implemented in each year of the new CAP to fund the mandatory categories of young farmers and new entrants to farming. Eligibility conditions will likely remain similar to the current CAP programme.


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