Single Payment Scheme - History

History

It was an intention of the scheme to 'decouple' grant payments from production. This was in response to criticism from other World Trade Organisation (WTO) countries (mainly the US), that the EU was unfairly subsidising farmers and providing an unfair competitive advantage. Under the SPS the farmer is no longer paid different amounts according to the crop he produces, but a set amount per hectare of agricultural land maintained in cultivatable condition. The intention is that choice of crop is based purely on market driven forces and not on production based grants. Decoupling of payments has allowed them to be categorised under the so-called blue box for the purpose of WTO negotiations, ensuring the legality and compliance of international obligations.

To gain funds from the SPS the Farmer has to cross comply – that is, to farm in an environmentally friendly way, with careful use of pesticides and fertilisers. The farmer also had to set aside (not farm) 8% of their productive land annually, in addition two metres on the perimeter of each field must be left uncropped to become overgrown. However, the requirement for set aside was suspended for one year in Autumn 2007 following sharp increases in prices for certain crops, and in consideration of the aim to grow more crops for biofuel production.

Another stated goal at the outset was to simplify the existing process including applications. Eleven existing schemes were replaced by the SPS. The reality appears to be however that the SPS is much more complicated than what went before. However, we can see that the SPS has given more legitimacy to the EU's farmer support system, as a ceiling has been introduced, limiting the future increase of payments due to farmers.

Implementation of the payments in England has been impaired by problems at the Rural Payments Agency. Payments under the scheme were intended to be made by around January 2006, but by December 2006 some 2% of claims still remained unsettled. Payments amounted to £1.5 billion distributed amongst 115,000 claimants, though most of the money went to relatively few of the claimants (according to the size of their holdings). Difficulties in implementation included double the number of expected claimants, as rules of the new scheme allowed many more people with relatively small areas of land to claim.

Applications are made annually by completion of the SP5 form, which requires claimants to declare all the land under their control, the land they wish to claim payment on and whether they are subject to Statutory Management Requirements (SMR) or Good Agricultural and Environmental Conditions (GAEC). In February 2008 RPA began accepting electronic applications via third party software. The first application was submitted 27 February 2008 through Single Payment Supervisor by Paul Holliday Software. Following the success of the project to accept electronic applications via third party software RPA took the next logical step and in March 2010 began allowing submissions directly through their own Whole Farm Approach website. There is speculation within the agricultural industry that paper forms will be withdrawn in an attempt to reduce costs.

The scheme replaced eleven previous subsidy schemes which were based on the production of crops and/or livestock e.g. dairy premium and arable area payments scheme. Initially the payments had a bias towards paying producers who historically received the highest subsidies. The payment bias works on a sliding scale with a move away from historic payments towards land based payments with payments in 2012 having no historic element.

Implementation of the Single Payment Scheme in Wales was the responsibility of the Welsh Assembly Government. Payments totaling £250m were paid to more than 98% of eligible farmers between 1 December 2005 and 30 June 2006, including £110m to about 75% of Welsh farmers on the first possible day, which made them amongst the first in Europe to receive the new payment.