Single Payment Scheme
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The Single Payment Scheme (or Single Farm Payment, SPS) is a grant scheme introduced in 2005/2006 by the UK government to replace existing agricultural subsidy schemes under the Common Agricultural Policy (CAP) of the European Union.
The system of subsidy applies throughout the European Union according to rules agreed between the member states. However, exact details of implementaion and grants vary from country to country within the outline rules. Different rules also apply for new member states which joined the EU in 2004 and more recently. States have a choice of whether to introduce the new scheme at once, or to phase it in over a period from 2005-2013. The SPS was introduced by the UK agricultural agency DEFRA commencing in May 2005. The new scheme and its predecessor schemes will run in parallel for the transitional period up to 2013, with payments under the old scheme being reduced each year as payments under the new scheme increase. Criteria for qualification under the schemes differ, so a transitional period was allowed for farmers to alter farm practices.
It was an intention of the scheme to 'decouple' grant payments from production. This was in response to criticism from other World Trade Organisation (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 produces, but a set amount per hectare of agricultural land maintained in cultivateable 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. He also has to set aside (not farm) 8% of his productive land annually, in addition two metres on the perimeter of each fields must be left uncropped to become overgrown.
Another stated goal at the outset was to simplify the existing process including applications. The reality appears to be however that the SPS is much more complicated than what went before. However, we can see that the SFS has given more legitimacy to the EU's farmer support system, as a ceiling has been introduced, limiting the future increase of payments due to farmers.
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.
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.
[edit] Scheme Details
The Single Payment Scheme (SPS) pays farmers for the land that they manage or own. Farmers can submit a claim for each year based on their land and their entitlements. Entitlements are the farmer’s ‘right’ to claim. In order to gain these rights, farmers had to make a successful claim during the first year of SPS or purchase them from another farmer.
In order for farmers to qualify for payments under the scheme, they have to follow certain conditions and rules;
• their holdings must be at least 0.3 hectare and used for an agricultural activity;
• their land must be at their disposal for a period of ten months;
• they may have to set-aside a proportion of their land depending on their holding size and crops grown; and
• they must meet Cross Compliance standards. These cover environment, food safety and animal health and welfare law (and good practices). The two main areas are:
- Standard Management Requirements (SMRs) set out in EU legislation
- keeping land in Good Agricultural and Environmental Condition (GAEC)
SPS is managed under IACS (Integrated Administration and Control System), the EC (European Community) system for administering schemes to prevent fraud. The total amount that can be paid for SPS is set at EU Member State level and is called the National Ceiling. A percentage of the National Ceiling is removed to make up the National Reserve. All payments then have a further amounts taken off (EU modulation and national modulation) which are set at the European and national levels respectively. For EU modulation, the rates are 3% in 2005, 4% in 2006 and 5% from 2007 onwards. All farmers have the first €5,000 of their payments exempted from EU modulation. Calcualtion of payment to each applicant is complicated by the fact that the total fund value is set and must be divided amongst all the applicants. Thus no payment can be calculated until all claims have been verified.
