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Single Payment Scheme - Calculating Set-aside for 2006

Calculating a farmer's set-aside obligation for 2006 and beyond

As we are implementing the flat-rate model of the Single Payment Scheme in England, a farmer's set-aside obligation is determined by the number of hectares eligible for set-aside that he entered into the scheme in 2005, rather than by the area of land that he had in compulsory set-aside during the reference period. This note illustrates how the calculation will work for 2006, and for 2007 and beyond.

The Rules

  • For 2006, the basic requirement is for a farmer to have the same number of hectares of land in set-aside that he was required to have in 2005. This will not usually be affected by any change in the area of land he farms between 2005 and 2006, but may be affected by the transfer of set aside entitlements (see below). (Note: the 2006 requirement relates to the number of hectares that the farmer was obliged to set-aside in 2005, as distinct from any additional land taken out of production, which should have been managed to meet the GAEC 12 standard for land which is not in agricultural production and which will not count towards his 2006 set-aside obligation.)

  • For 2007, a farmer's set-aside obligation will be determined by the number of set-aside entitlements that he is allocated when entitlements are definitively established in 2006. This will be calculated as a percentage of the total number of hectares of land eligible to be set-aside on which he applied successfully to establish entitlements in 2005 and will not usually be affected by any change in the area of land he farms between 2006 and 2007. (Note: any area of land that the farmer wishes to take out of production over and above this figure should be separately identified and managed to meet the GAEC12 standard for land which is not in agricultural production.)

  • If, having completed all checks on 2005 applications, it is found that too much or too little land has been set-aside in one or more English areas, compared with the average area in compulsory set-aside during the reference period, the percentage used to calculate the number of set-aside entitlements that a farmer receives in 2006 may differ from the provisional rates used to set farmers' set-aside obligation in 2005 (8% in the non-SDA; 1.3% in the SDA non-moorland; zero in the SDA moorland). This will affect the amount of land that a farmer is obliged to set-aside in 2007, but not in 2006 (see examples 1 and 2 below), although Ministers may announce some flexibility for farmers to reduce their set-aside in 2006 if they receive a lower number of set-aside entitlements than the provisional rates suggested would be the case. (See example 2 below.)

  • A farmer can alter his set-aside obligation for 2006 onwards by transferring set-aside entitlements in to or out of his business. If a farmer transfers set-aside entitlements in time for the 2006 scheme year (notifying the transfer to RPA by 2 April 2006, in time to take effect by 15 May 2006), we will adjust his 2006 obligation by adding or subtracting the equivalent number of hectares from his basic 2005 set-aside obligation.

  • For 2007 and beyond, his set-aside obligation will be determined by the number of set-aside entitlements that he holds on 15 May in the claim year, which will be calculated by taking the number of set-aside entitlements allocated upon definitive establishment in 2006 and adjusting this total to take account of set-aside entitlements transferred in or out. (See examples 3 & 4 below.)

  • If, because of the transfer of land out of his holding, a farmer no longer has enough land eligible for set-aside to meet his 2006 set-aside obligation or, for 2007 and beyond, to activate all of his set-aside entitlements for payment, he will be required to activate his set-aside entitlements up to the limit of the number of hectares of land eligible for set-aside that he holds. He can then go on to activate his normal entitlements for payment. (See example 5 below.)

Example 1: higher set-aside rate used for definitive establishment
  • Farmer in English non-SDA area applies to establish entitlements on 100 ha of land in 2005, all of which is eligible for set-aside, and sets aside 8 ha in 2005 to meet the provisional 8% set-aside obligation.
  • His 2006 set-aside obligation is 8 ha, regardless of any change to his farmed area since 2005, and he sets aside that area by 15 January 2006.
  • After definitive establishment, set-aside entitlements are allocated finally as 8.5% of 2005 area.
  • Farmer receives set-aside entitlements for 8.5 ha and normal entitlements for 91.5 ha. He must activate all of his set-aside entitlements for payment on his 2006 SPS application form and also applies to activate all of his normal entitlements.
  • RPA activates 8 ha of set-aside entitlements against the land being managed as set-aside; 0.5 ha of set-aside entitlement against land in production (paid as set-aside rate) and 91.5 ha of normal entitlements against land in production. If all other requirements were complied with, no penalty would apply.
  • No transfers of entitlements undertaken, so set-aside obligation for 2007 is 8.5 ha, regardless of changes in production area, and the farmer will be expected to establish enough land in set-aside to meet this obligation.

Example 2: lower set-aside rate used for definitive establishment
  • Farmer in English SDA non-moorland area applies to establish entitlements on 200 ha of land in 2005, all of which is eligible for set-aside, and sets aside 2.6 ha in 2005 to meet the provisional 1.3% set-aside obligation.
  • His 2006 set-aside obligation is 2.6 ha, regardless of any change to his farmed area since 2005, and he sets aside that area by 15 January 2006.
  • Set-aside entitlements are allocated finally as 1.0% of 2005 area.
  • Farmer receives set-aside entitlements for 2.0 ha and normal entitlements for 198 ha and applies on his 2006 SPS application form to activate all of his entitlements for payment.
  • RPA activates 2.0 ha of set-aside entitlements against the land being managed as set-aside; 0.6 ha of normal entitlements against land in set-aside (paid at normal rate) and 197.4 ha of normal entitlements against land in production.
  • No transfers of entitlements undertaken, so set-aside obligation for 2007 is 2.0 ha.

(Variation: immediately after definitive establishment, a derogation is announced to allow the 0.3% of additional set-aside to be brought into production. The farmer can choose either to leave the land in set-aside, or bring it into production. In the latter case, RPA activates set-aside entitlements against 2.0 ha of set-aside land and 198 ha of normal entitlements against 198 ha of land in production.)


Example 3: transfer out of set-aside entitlements for 2006

  • Farmer in English non-SDA area applies to establish entitlements on 100 ha of land in 2005, all of which is eligible for set-aside, and sets aside 8 ha in 2005 to meet the provisional 8% set-aside obligation.
  • His 2006 set-aside obligation is 8 ha, regardless of any change to his farmed area since 2005, but farmer anticipates being able to transfer 4 ha of set-aside entitlements to another farmer and, at his own risk, chooses to establish only 4 ha of set-aside by 15 January 2006.
  • After definitive establishment, the farmer transfers out 4 set-aside entitlements successfully, leaving a reduced 2006 set-aside obligation of:

8 ha (the basic 2006 figure) - 4 ha (the equivalent area of the transferred entitlements) = 4 ha.

(Note: farmer has used 80% of his entitlements in 2005 and so can transfer entitlements without land attached).

  • Set-aside entitlements are allocated finally as 8.5% of 2005 area, giving farmer 91.5 ha of normal entitlements and, after transfer, 4.5 ha of set-aside entitlements.
  • Farmer applies on his 2006 SPS application form to activate all of his entitlements for payment.
  • RPA activates 4 ha of set-aside entitlements against the land being managed as set-aside; 0.5 ha of set-aside entitlement against land in production (paid at set-aside rate) and 91.5 ha of normal entitlements against land in production. (Note: if farmer had transferred in additional normal entitlements, he could have activated up to 95.5 ha of normal entitlements against his total area of 100 ha.)
  • The farmer's set-aside obligation for 2007 is 4.5 ha.

Example 4: transfer in of set-aside entitlements and additional land for 2006
  • Farmer in English SDA non-moorland area applies to establish entitlements on 100 ha of land in 2005, all of which is eligible for set-aside, and sets aside 1.3 ha in 2005 to meet the provisional 1.3% set-aside obligation.
  • His 2006 set-aside obligation is 1.3 ha, regardless of any change to his farmed area since 2005, but farmer anticipates being able to transfer in 3.7 ha of set-aside entitlements from another farmer and, at his own risk, establishes 5 ha of set-aside by 15 January 2006. He also acquires a further 4 ha of SPS eligible agricultural land through purchase.
  • After definitive establishment, the farmer transfers in 3.7 set-aside entitlements, giving a 2006 set-aside obligation of:

1.3 ha (the 2005 figure) + 3.7 ha (the transferred entitlements) = 5 ha.
  • Set-aside entitlements are allocated finally as 1.3% of 2005 area, giving farmer 98.7 ha of normal entitlements and, after transfer, set-aside entitlements for 5.0 ha.
  • Farmer applies on his 2006 SPS application form to activate all of his entitlements for payment.
  • RPA activates 5 ha of set-aside entitlements against the land being managed as set-aside and 98.7 normal entitlements against land in production. (As farmer's total area is 104 ha after purchase, compared with 103.7 ha of entitlements, he is left with 0.3 ha of land that attracts no SPS payment).
  • The farmer's set-aside obligation for 2007 is 5 ha.

Example 5: Insufficient eligible land to activate all of the set-aside entitlements held by the farmer
  • Farmer in English non-SDA area applies to establish entitlements on 100 ha of land in 2005, comprised of 50 ha of arable land eligible for set-aside and 50 ha of longstanding permanent pasture (prior to 2003). The farmer sets aside 4 ha in 2005 to meet the provisional 8% set-aside obligation.
  • His set-aside obligation for 2006 is set at 4 ha and, upon definitive establishment, set-aside entitlements are allocated as 8.0% of 2005 eligible area, giving him 4 ha of set-aside entitlements and 96 ha of normal entitlements.
  • The farmer then sells 48 ha of his arable land, together with 48 normal payment entitlements.
  • For 2006, the farmer must activate 2 set-aside entitlements against his remaining 2 ha of land eligible for set-aside and can activate 48 normal entitlements against his 50 ha of permanent pasture. 2 ha of set-aside entitlements remain un-activated as the area eligible for set-aside is less than the number of set aside entitlements he holds.


Page published: 31 January 2006