Irish Farmers Journal CAP meetings

• Five key points to take home 1. The pots of money 2. The impact of linear reduction3. The importance of years 4. The new payment5. The impact of convergence

• Do’s and don’ts of the new system

1. The pots of money

Pillar 1 Pillar 2 Farm assist €0

€200,000,000

€400,000,000

€600,000,000

€800,000,000

€1,000,000,000

€1,200,000,000

€1,400,000,000€1,216,000,000

€580,000,000

€99,500,000

Maximising pillar 2

2. Impact of linear reduction

Shrink to fit Linear Reduction

Gross Payment Claim in 2013

Impact of Linear Cut on 2014 entitlement values

No SFP claim in 2013 All entitlements subject to linear cut

€0 - €5000 Only unused entitlements cut

€5001- €5586 Brought down to €5,000 (unused still cut)

> €5586 All entitlements subject to linear cut of 10.49%

• Exemption applies where gross payment claim is no greater than €5000 and only to entitlements utilised in 2013

Linear cut to entitlements (if over €5,865 in 2013)

2013 entitlement value 2014 entitlement value €100 €89.5€200 €179.0€300 €268.5€400 €358.0€500 €447.6€600 €537.1€700 €626.6€800 €716.1

3 - The importance of years

• 2013 - Key year in reforms – Sets allocation right – automatic entry • Scottish derogation, fruit and veg, national reserve,

buy entitlements in 2016

– Sets maximum number of entitlements you can establish in 2015• Extra land in 2014 or 2015 not taken into account

The importance of years

• 2014 – value of entitlements held • Benefits – Farmers with more entitlements than land – Farmers that lost land though LIPIS review– Dept – easier to calculate in 2014

• 100% leased entitlements? – Other option - money automatically went to active farmer

• Deadline 15 May to transfer permanently• Tax implications (assume the worst)

The importance of years

• 2015 – Need to be active (even if retired) • 1 ha with 1 entitlement worth over €100

– PCC if leasing or selling land and entitlements – Consider reducing number of entitlements

established• Increase value/ha vs increase options

4 - The new payment

Basic payment - National average

• National average = €171– (2019 BPS ceiling/2015 hectares)– ( €1.216bn/4.83m ha)

• 90% National average = €153.90• 60% National average = €102.50

5 – The impact of convergence

Impact on convergence (Teagasc)

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Dairy Mixed Livestock

Tillage Cattle Rearing

Cattle Other Sheep Other

Gains from convergence No change from convergence Loses from convergence

• Accelerated gainers <€136• Gainers €136-€263• Static €263-€292• Loser €292 - €1150• Accelerated losers - > €1150• Left outside the gate - €0 – Fruit and veg – Scottish– National reserve

Six different groups - based on 2013 entitlement values

Do’s for CAP reforms • 100% leased entitlements - Permanently transfer entitlements to

active farmer by May 15 2014 if you leased them out 100% in 2013• Eligible land - Make sure you just submit eligible land in 2014 and

especially in 2015 • Online - use online to submit SFP especially if you are arable

farmer forced into crop diversification • National reserve - Get educated if you are young farmer or new

entrant • Make good investment decisions

– Consider buying entitlements in 2014 if you have naked land and money on deposit (get advice)

• Rented land - Look at the option of dropping land in 2015 to consolidate your entitlements

Don’ts for CAP reform

• Make bad investment decisions– Increase entitlements values held in 2014 without

looking at tax implications • Buy entitlement in 2014 if you could potentially get

the Scottish derogation• Lose entitlements to national reserve under no

rotation (2015 on- Leasing without land option) • Farm just for premiums –CAP budget will not get bigger and inflation alone reduces it each year. Farm

system has to make a profit.