Next year marks the start of the new Common Agricultural Policy era but the changes are set to impact farmers differently depending on which side of the border they are based.
There are currently a number of key differences between the way that subsidies are issued in England and Scotland. CAP reform will lead to changes for both countries but the two systems will continue to be differently administered.
The new Basic Payment, which replaces the Single Payment, is at the heart of CAP reform.
Scotland’s consultation on subsidy changes has only just finished and farmers will not hear the full details of how the Scottish government plans toimplement them until June.
In England, Defra’s consultation is finished and farmers have been informed the Basic Payment will continue in the same vein as the Single Payment, on a flat rate basis with no link to production. Scotland is eventually expected to phase out production and historic subsidy links but the Basic Payment will initially continue to recognise them.
Christopher Hadley, who leads Smiths Gore’s farm management services in the Scottish Borders, said: “The way the Basic Payment is made to farmers on either side of the border will continue to be don differently. And this could lead to a significant income drop for some Scottish farmers.
“In Scotland, the Single Payment has depended on the level of stocking and arable area during the 2000-2002 reference period, but the historic link will disappear between 2017 and 2019. Scottish farmers, who for example, had a lot of finishing cattle during the reference period, should prepare themselves for a reduction in payments.”
However, some Scottish production-linked payments, such as the Scottish Beef Scheme for beef calves, will continue. A similar linked scheme for sheep may also be introduced but there will be no production-linked payments on the southern side of the border.
CAP reform will also affect regional land classifications made for payments differently on either side of the border.
England will continue to be divided into three regions - Lowland, Severely Disadvantaged Areas (SDA) and Moorland.
England’s SDA rate will be increased to match the Lowland rate and Defra is proposing a significant Moorland payment rise, although this is yet to be finalised.
Scotland will see its first split into different land types as a result of the Basic Payment and will be categorised as either rough grazing or other land. Rough grazing areas will receive a significantly lower rate per hectare compared with the arable and improved grassland areas when the Basic Payment becomes a flat rate system in Scotland by 2019.
Mr Hadley said: “In Scotland, as part of the move to differentiating between rough grazing and improved land, there have also been calls for a minimum stockingdensity on rough grazing areas.
“This would be a means of ensuring the slipper farming schemes, where unstocked hill ground is rented in to claim against, would come to an end. Scotland’s decision on this is expected to be known in June.”
Duncan Winspear, from Smiths Gore’s farm management team in its Wooler office, added: “In England, it looks unlikely that Defra will require an introduction of a minimum livestock stocking density on Moorland areas, to coincide with the higher Moorland rate, although this is promoted by some farming lobby groups.”
English farmers’ entitlements held at the end of December this year will be rolled over into the Basic Payment. However, in Scotland, there will be a new allocation of entitlements for the Basic Payment, based on the area of land claimed by farmers on May 15 2015. This is part of the phasing out of the historic system.
Modulation – the movement of funds from direct payments to agri-environment schemes and rural grants – will continue after the Basic Payment is introduced.
However, the higher English modulation rate of 12 per cent will be applied to support payments, compared to Scotland’s 9.5 per cent modulation rate.
On both sides of the Border, the controversial greening requirement will be part of the Basic Payment. In England, 30 per cent of the payment will depend on greening measures - crop diversification, ecological focus areas and maintenance of permanent pasture.
For the first two years of the Basic Payment, if farms do not meet the greening requirement they will not receive the 30 per dent greening element, but after this period if greening is not being met then further penalties will apply.
In practice, English farmers with 30 hectares of arable land will have to grow three different crops, although there will be some exemptions to this for mainly grassland farms or those with a high proportion of fallow land. In addition, five per cent of the land must be in ecological focus areas such as margins, ponds and hedgerows or fallow.
Farmers will not be allowed to reduce their grassland by more than five per cent, but this will be monitored at a regional level rather than at each individual holding.
Scotland’s greening requirements have yet to be published but are expected to be broadly similar to England’s.