Payment Schemes

Compulsory Schemes

Basic payment ensures basic income support for farmers engaged in agricultural activities. There are two alternatives: the basic payment scheme (BPS) or the single area payment scheme (SAPS)[17]:

BPS was first implemented in 2015. Each eligible hectare gives the right to one entitlement. A farmer’s entitlements all have the same value, however, there may be differences between farmers, for instance, if the member state decides to use historical references. These historical references should, however, be reduced to the average by 2019, i.e. by now.

SAPS was offered to the member states that joined the EU in 2004 or 2007 as an alternative option for BPS. There are no payment entitlements, all farmers receive the same amount per hectare. This amount is based on the number of eligible hectares declared by farmers. SAPS will be removed after 2020.

What Defines an Eligible Hectare?

Under the SAPS eligible meant arable land, permanent pasture, land used to grow permanent crops, or (as a minimum) land that was maintained in good agricultural and environmental condition [25].

This allowed anybody to claim income support, even if they were not undertaking an agricultural activity, such as growing crops or keeping livestock.

The new BPS is significantly different. Here an eligible hectare is defined as any agricultural area of your business' land used for agricultural activity [25]. In general, agricultural activity means the rearing of animals or growing of agricultural products (for harvesting, milking, breeding, etc). The aim of this is to make sure that income support is only provided to those undertaking a minimum agricultural activity on eligible hectares.

If you declare hectares for payment that are found incompatible in terms of the requirements listed below, this will be treated as an over-declaration. As such, all area-based payments you have claimed (Basic Payment Scheme, Greening, Young Farmer) will be subject to penalties. In extreme cases, this will mean non-payment or recovery of all direct payments for the year concerned, as well as the following year [25].

The Green payment was introduced in 2013 and obliges every member state to allocate 30% of their direct payment funding to greening. Farmers must prove that they follow the practices of crop diversification, maintenance of permanent grassland, and ecological focus area [17]. Since there are different environmental conditions and agricultural systems all over Europe, the member states may allow farmers to meet the greening requirements through alternative practices which has an equivalent or higher benefit for the climate and the environment.

Non-Compulsory Schemes

Young farmers scheme is intended to support young farmers under the age of 35. The payment is granted for a maximum of five years from the moment a young farmer takes over as head of the farm. The payment can account for up to 2% of the national direct payment allocation [17].

Redistributive payment is used to redistribute support to smaller farmers. The number of hectares for which this payment can be allocated is limited to either 30 ha, or the mean farm size of the member state if that is larger than 30 ha. The amount per hectare is the same for all farmers within the member state, and cannot exceed 65% of the average payment per hectare. A member state can allocate up to 30% of their budget for this [17].

Voluntary coupled support provides the opportunity to still link a limited amount of the payments to the production of certain products. The aim is to maintain the level of production in regions undergoing difficulties and that is particularly important for economic, social or environmental reasons [17]. Germany is the only country in the EU that doesn’t apply this scheme, simply because they don’t need to.

Areas with natural constraints, i.e. handicapped by natural or other constraints, are defined by the member state. Up to 5% of the national allocation of direct payments can be allocated to these areas [17]. There are only a couple of countries which apply this scheme.

Small farmers scheme (SFS) is a simplified direct payment scheme. The idea is to enhance the competitiveness of small farms, and reduce the administrative burden [58]. The maximum level of the payment is decided at national level but may not exceed €1,250. The SFS includes simplified administrative procedures, and participating farmers are excluded from greening obligations and from cross-compliance penalties. It is applied in 15 EU states but represents different shares of the direct payments in these countries [17]. It is available for farmers that are approved for the BPS or SAPS, and the actual size of the farm does not matter. The farmers had to apply by the last quarter of 2015 and after that, there is no opportunity to opt-in anymore, only opt-out [58].