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It has been widely reported over the last few months that the
first draft of the Common Agricultural Policy ("CAP")
reform was published in Autumn 2011. The reforms are due to come
into effect in 2014, but it seems increasingly likely that their
implementation will be pushed back to 2015 at the earliest.
The reforms will introduce a new Basic Payment Scheme to replace
the existing Single Payment Scheme and will impose new requirements
on the claimant in order to be able to qualify for receiving the
payment. These changes have been covered in depth elsewhere, but to
summarise, the key points are:
The "Golden Ticket" whereby to claim the new payment
the claimant must have been a successful claimant in the 2011
Single Payment Scheme year.
The introduction of the "active farmer" test under
which a claimant's Basic Payment Scheme claim must exceed 5% of
their "non-agricultural receipts".
"Greening", which imposed obligations on:
3.3. use of arable areas;
3.4. permanent pastures; and
3.5. imposing "ecological areas".
As well as practical challenges for the claimant, the proposed
changes raise a number of legal issues to consider. In this issue
we will consider the "Golden Ticket".
The need to have a "Golden Ticket" will have a
significant impact on two types of person:
A first time farmer purchasing or renting land after 2 April
2011 who wishes to buy entitlements as part of their purchase or
lease ("Type A"); and
A landowner who does not claim entitlements himself and lets his
land to a tenant and may wish to either claim the Basic Payment
Scheme in the future himself or be able to lease the land to a new
tenant together with the right to claim the Basic Payment Scheme
("Type B").
Under the CAP reforms at present the "Golden Ticket"
can be transferred by one farmer to one other farmer i.e. a
claimant who successfully claims entitlements in 2011 can transfer
that right he acquired to a third party, but only to one third
party, and in doing so he will himself lose his "Golden
Ticket".
The transfer of the "Golden Ticket" can, it appears,
only be implemented on a sale or lease of land. This poses a number
of additional problems.
The Type A person will need to ensure that the drafting of the
Sale Contract contains carefully drafted provisions to ensure that
he can make a claim under the Basic Payment Scheme. Or, as is quite
likely, if the Seller does not wish to sell his "Golden
Ticket" the Buyer will need to seek advice on alternatives to
allow him to claim the Basic Payment Scheme payments.
Similarly, a seller to a Type A person who has no intention of
giving up his "Golden Ticket" will need to ensure that
the sale contract does not unwittingly oblige him to give up this
valuable right.
As drafted, it appears that the CAP reforms do not allow the
"Golden Ticket" to revert to the Landlord on the
termination or surrender of his tenancy. If the tenancy is due to
expire before the implementation of the CAP reforms and the
landlord wishes to let the land to a new tenant together with a
right to claim for the new Basic Payment Scheme he will not be able
to simply rely upon the clause in the tenancy agreement that the
tenant will transfer the entitlements to the landlord or whomever
he so directs. The Landlord will need to take advice on ways to
plan around this apparent stumbling block. This provision will also
have an impact on the landowner who bought a farm with an intention
to take on the farming himself in the future but in the interim has
let the land out to a tenant.
While measures to ensure that the landowner has a "Golden
Ticket" may be quite complicated, especially as significant
concessions or monetary stimulation may need to be given to the
"Golden Ticket" holder, landowners will need to take into
account the possibility of the financial implications on their
farming businesses if they are unable to claim the Basic Payment
Scheme.
Therefore planning and drafting are key for those wishing to
claim the new Basic Payment Scheme and who are not already
"Golden Ticket" holders. As it is possible that the 2011
reference year may be changed to 2012 it is also something that
farmers must bear in mind when entering into new arrangements this
year as even the simplest of arrangements may have a lasting impact
on their entitlements claims.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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