How often have you come across a land owner who has “let” out his land but who remains claiming the Single Payment Scheme (SPS) or the contract farming agreement on land miles from the owner where he also claims the SPS? I am sure that you have and at best the SPS is at risk and at worst fraud has been committed.
The SPS was introduced by Council Regulation (EC) 1782/2003 and farmers started claiming it in 2005. The CAP Health-check was decided at the Agriculture Council on 20th November 2008 and the new horizontal regulation governing the SPS, Council Regulation (EC) 73/2009 was published on 19th January 2009 and came into force the next day.
In 73/2009 the basic ground rules for claiming the SPS are set down. Article 34.1 states:
“Support under the single payment scheme shall be granted upon activation of a payment entitlement per eligible hectare. Activated payment entitlements shall give a right to the payment of the amount fixed therein.”
It is a prerequisite of claiming that the claimant is a “farmer”. This in turn is defined in Art 2 (a) as
“…. 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…. and who exercises an agricultural activity.” This latter phrase is defined in Art 2 (c) as
“ ….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 …”.
In order to claim the SPS Art 35.1 states that:
“The farmer shall declare the parcels corresponding to the eligible hectares accompanying any payment entitlement. …, these parcels shall be at the farmer's disposal on a date fixed by the …”.
The regulation unhelpfully does not define what being at the farmer’s disposal means. It specifically does not mention ownership or any other form of land tenure but one thing is clear, it is a scheme for farmers to claim.
If you are an owner/occupier the situation is clear; if you are a tenant, again the position should be clear, but I am still coming across situations where there is a full-blown FBT but the landlord insists on claiming the SPS.
So what, you may ask? If the tenant is farming the land under a tenancy then he should have exclusive occupation of it and will be taking the operational risk in its farming. Therefore as a matter of law and fact the land will be at the tenants disposal and he is the only one permitted to claim the SPS. Under the SPS a claimant has to list all land at their disposal, however if the landlord is claiming the SPS the land must appear on the landlords SP5. There are a number of consequences to this:
If the land is subject to an inspection by the Rural Payments Agency (RPA) and the tenant is farming it but the landlord is claiming, the rest of the tenants SPS may be at risk because he will have under-declared the land at his disposal
The landlord is not eligible for the SPS. The SP5 contains a declaration that says, in essence that the claimant has read the regulations and scheme rules and that the contents of the SP5 are correct. If as a matter of fact the land is not at the landlord’s disposal then, arguably, a fraud has been committed by the landlord. In any event the landlord has no right to the SPS.
The situation with a grazing or contracting agreement is less clear however I am of the view that it is equally perilous for all parties. Many agreements do contain provisions that the landowner remains the farmer and claimant for SPS purposes. However no matter what is said in an agreement, this is only evidence to back up what actually happens on the ground. The RPA does, in its SPS booklets give guidance on what factors may be taken into account in determining who has land at their disposal.
What the RPA is interested in is who, as a matter of fact, has the land at their disposal. If the landowner, as a matter of fact, has nothing to do with the land and the contractor/grazier takes all the decisions in relation to looking after it without reference to the owner, then there is a real risk that RPA will determine that the owner is not the farmer but the contractor grazier is. If they determine this and it is contrary to what has been declared in the SP5s then penalties for both the owner and grazier/contractor may follow.
The moral of the story is that if you are advising the owner of land who is claiming SPS when they are not actually farming land or tenants/graziers/contractors who are farming but not claiming, you need to exercise caution and identify what is actually happening on the ground. Failure to do so could result in expense all round.
For more information or advice on the Single Payment Scheme (SPS), please contact
Paul Rice.
