AS Welsh Farmer/Y Tir went to press, the Welsh Government’s consultation on the future of the Basic Payment Scheme was believed to be imminent.

Following a legal challenge by Fairness for the Uplands, the Welsh Government agreed in December to quash legislation which would have led to the phased introduction of three payment regions – moorland over 400m, Severely Disadvantaged Area (SDA), and lowland, where payments by 2019 would have been €20, €200, and €240 per hectare respectively.

Legal advice received since December has suggested a payment system based on any of the established regions (SDA and DA) could be challenged on similar grounds to those which Fairness for the Uplands based their challenge to the moorland region.

Namely, that the regions do not objectively or accurately define “regions in accordance with objective and non-discriminatory criteria such as their agronomic and socio- economic characteristics, their regional agricultural potential…” as laid down in Article 23 for the Basic Payment regulations.

Payment options likely to be included in the consultation include moving from historically-based payments to a single uniform flat rate of €176 per hectare (an estimate based upon eligible land declared in 2013) over either a five year transition period in uniform steps, or over a seven-year period using a complex approach called “tunnelling”.

The advantage of the latter option is that it smooths out the financial pain for those with higher value entitlements who are often on smaller farms and would, therefore, see a more significant annual drop in income over a shorter transition period.

The consultation is also likely to include the option not previously considered in consultations of a ”redistributive payment” which allows up to 30 per cent of the budget to be used to top up the first 54 entitlements, provided the top up is not greater than 65 per cent of the average payment per hectare.

Based on the figures in the Welsh Government database, a redistributive payment would mean payments of around €243 on up to the first 54 hectares and around €120 on the remaining hectares.

Work done by the Welsh Government’s CAP modelling group, on which the FUW sits, suggests that the redistributive option would reduce disruption and losses for those who would be worst hit by a flat rate payment.

However, some are concerned that farms could be artificially split in order to benefit from such a system, while others argue that the costs and hassle of running two separate sets of accounts, movement records etc. for a relatively modest financial gain – not to mention the harsh penalties for generating artificial circumstances in order to benefit under the system – would prevent such artificiality.

Once the consultation is launched, the FUW will be consulting with members to assess which system, if any, members support.

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