The Impact of Common Agricultural Policy Reform on UK Agriculture

Further supplementary written evidence submitted by the Country Land and Business Association (CLA) (CAP 18B)

CLA note on the active farmer

DOCUMENT IN PROCESS

1. The CLA is far from convinced that a new definition of active farmer is needed to specify eligibility to claim CAP payments under the Single Payment Scheme (SPS). The current SPS regulation 1782 (2003) has the following definitions in Article 2

(a) a ‘farmer' means a natural or legal person, or a group of natural or legal persons, whatever legal status is granted to the group and its members by national law, whose holding is situated within Community territory, as referred to in Article 299 of the Treaty, and who exercises an agricultural activity,

(b) ‘holding' means all the production units managed by a farmer situated within the territory of the same Member State,

(c) ‘agricultural activity' means the production, rearing or growing of agricultural products including harvesting, milking, breeding animals and keeping animals for farming purposes, or maintaining the land in good agricultural and environmental condition as established under Article 5,

2. It is already the case that there are stringent rules on the definition of eligible agricultural land which are designed to prevent spurious claims on land that is patently neither providing agricultural produce nor environmental services. Thus airfields, golf courses, sports fields, and land devoted to non-agricultural activities (e.g. boot fairs, shows, car parking) for more than 28 days per annum are all already excluded in UK implementation of the regulation [1] . If this is not the case throughout the EU, then it could, and should, be made part of the EU regulation. Also the utilisation of the land is already tightly monitored as all land parcels used to activate claims have to be specified, mapped, and a land use code offered. In England there are 37 such land use codes – i.e. it is already defined and controlled in great detail.

3. Any further narrowing of the definition of the activities of the applicant or of the land use will demand further questions on the application forms and further control and inspection procedures to determine each individual case. This is strongly to be resisted. The bureaucracy surrounding the Single Payment System is already excessive and this would add significantly to it. This would especially be so if the administration will have to investigate the details of the contractual obligations entered into by the claimant (contract and share farming agreements), or the ‘farming’ share of business turnover, or earnings, or if farmers will have to provide time sheets for evidence on time devoted to various activities, or if it is to be insisted that claimants live on or close to their land, in order to determine the extent and nature of an applicant’s farming activities. This has the capacity to explode in complexity.

4. But in any case, in principle, a critical aspect of the SPS is the idea of decoupling support payments from agricultural production therefore it is currently not the case, and it should not in future be the case, that claimants are obliged to produce particular, or even any, agricultural outputs.

5. We note that the Commission is proposing (inter alia) that the Single Payment be partitioned into a Basic Income Support and a Mandatory Greening Component. As the delivery of public goods is thus being explicitly incorporated into the SPS then perhaps the only change required in the definition of active farmer is to embrace the new language of provision of public environmental goods. The ‘or’ in the definition in Article 2( c) is vital.

6. Like all other go-ahead innovative businesses, farming is increasingly outsourcing the provision of specialist services. Thus the farmer who deploys his land and other assets for a land-based business based on some mix of agricultural production and environmental public good provision may well outsource or (to use the verb more commonly used in farming) contract, for example, the agronomy, financial accounting, field operations, and even product marketing to a variety of service providers or contractors or cooperatives for such functions. He is no less the farming entrepreneur because he does not sit on a tractor or have dirty fingernails than we would consider and executive of Shell oil not to be an oil producer because he never operates wrenches on an oil rig. ‘Activity’ must not be assumed to mean outdoor physical activity. Indeed as farmers follow the policy advice of decades they increasingly become entrepreneurs managing their resource deployment over a variety of farming and non-farming rural businesses and often working horizontally or vertically with other businesses in the food, tourism and rural recreation ‘chains’.

7. A critically important principle is that the share-out of all revenues to the business between the farmer and all those supplying services to the business MUST be left to negotiation between the parties involved. There is no suggestion that there should be state rules to decide the share out of revenues from products and services sold through the market, there is no reason why the revenues from the public purse, i.e. the Single Payment, or environmental payments, should be treated any differently.

8. However, if despite these arguments it is deemed there is still some political necessity to more explicitly define what is meant by and active farmer then it should be a self declaration process based around the following definition for the purposes of claiming CAP payments:

An active farmer is a person with management control of agricultural land appropriate to the purpose of the payment, who is taking business risks in managing it to produce agricultural products or environmental public goods.

9. It may then be necessary to add a definition and illustrative list of these public goods. This can be based on recent publications e.g. the study conducted for DG Agriculture on Public Goods from EU Agriculture or the RISE publication Public Goods from Private land.

10. When questioned about Active Farmers at the Oxford Farming Conference the Commissioner said it was necessary to ensure the CAP is legitimate and he referred to reports from the European Court of Auditors. We are seeking information on the true nature of the Auditors concerns. The Commissioner also hinted that any definition might work from a list of examples of clearly ineligible, i.e. inactive claimants. No such list has yet been seen. It may be no easier clarifying this concept negatively than positively.

11. To make this slightly more concrete for UK conditions, we should make it clear that with UK tenancy law, we would of course expect that in the case of 1986 Act (succession) tenancies the active farmer who has the necessary control and who will be the payment claimant can only be the tenant farmer. For any multi-year FBT, it would also normally be the case that the tenant is the only person in a position to have the land at his disposal for a SPS claim. In all other cases it could in principle be the land owner or another party to whom the land owner has devolved the appropriate authority who can make the SP claim.

2 February 2011