Many will have read in various publications about Defra including land used for the grazing of horses in the Single Payment Scheme (the “SPS”).
The SPS was introduced on as a major reform of the administration of the Common Agricultural Policy. Previously farmers were paid for the production of agricultural produce, whether crop or stock. Now they will be paid if they are engaged in an agricultural activity and keep the land in what is called Good Agricultural and Environmental Condition (“GAEC”).
During 2004 there was much consultation on the status of land used for horse grazing and on 2nd November Defra announced that land used in such a way could be used to establish and claim payments under the SPS. Therefore people with horses who have not regarded themselves traditionally as farmers can apply to enter into the scheme.
The minimum size of a holding that can be used is 0.3 of a hectare (or c.0.75 of an acre). In order for the SPS to be paid, the land has to be registered, cannot be used for a non-agricultural activity, and the occupier of the land must have it at his or her disposal for at least 10 months. In addition the rules relating to GAEC must be complied with and a proportion of claimants under the SPS will be subject to inspections to confirm that this is the case.
There are issues around the use of the land ancillary to the equine industry and whether it is eligible for SPS. In some circumstances it will be obvious (for instance an outside menage will not be eligible). However other instances will be less clear: land used for the schooling of horses may or may not be eligible. Defra have indicated that non-agricultural use for more than 28 days will render land ineligible for SPS without a specific derogation.
It must be noted that the definition of grazing of horses being an agricultural activity is specific to the SPS – it does not affect other areas such as taxation and planning.
If a farmer has not previously claimed from the CAP, then in 2005 the payment rate will be c£6 per acre rising to £60 per acre in 2012 (depending on how many apply). As there will be a cost in keeping the land in GAEC, a considerable amount of paperwork to undertake and the risk of inspection, thought will have to be given as to the viability of applying to the scheme.
It was crucial that any application form was submitted by 16th May 2005 If you did not apply by that date you are now prohibited from doing so and you cannot establish payment entitlements. However once payment entitlements have been determined by the Rural Payments Agency, the government body administering the SPS, (and this is likely to be around the turn of the year), you will, in most circumstances, be able to buy them, without land, or lease them with land. If you do this and want to claim payment, all the rules applying to the SPS will apply. Therefore you need to think carefully about the economics of being in the Scheme, particularly if you do not occupy much land. We in Wright Hassall's Farming and Rural Business Unit can advise on specific issues. Alternatively for general guidance you can try the RPA's Customer Service Centre which can be contacted on 0845 603 7777. (NB different rules apply in and Scotland and Wales).
