Farmers who try to circumvent the rules of the new CAP for their own benefit could face significant penalties.
epartment of Agriculture officials have strongly signalled that the new CAP will be much harsher on farmers caught artificially creating the conditions to get around the rules to obtain benefits.
Officials have warned that the EU is placing far more scrutiny on this area and have told farmers and their advisers to be careful not to find themselves in a position where they could be ‘tempted by circumvention’.
Examples of circumvention:
Splitting herds to avoid capping
Ireland will implement a comprehensive system of capping of direct payments in the new CAP. This means that BISS payments begin to be capped above €60,000 and the maximum BISS payment will be €66,000
Department officials have indicated that it will be clamping down on any farmers found to be circumventing the rules by splitting their herds into several entities just to avoid the cap.
Selling entitlements to create ‘naked land’ to take advantage of National Reserve
New farmers and young farmers can draw down new payment entitlements from the National Reserve at the National Average rate under the new CAP. To do this, farmers must meet the eligibility criteria and hold land without entitlements, i.e naked land.
However, Department officials have indicated they are concerned there could be an abuse of the National Reserve. This could happen when a farm holder sells all their payment entitlements, just so a son or a daughter can draw down a new set of entitlements from the National Reserve on the same land. The Department has not yet indicated how it will stop this from happening.
Pretending to be a young farmer
The new Young Farmer Scheme in the new CAP is expected to translate to an average rate of approximately €178/ha across the CAP period.
However, the Department of Agriculture has strict rules in place to ensure only genuine young farmers are eligible for this support. The key test for the Department is that the young farmer is in managerial control of the farm. To do this, it examines a host of financial documents related to the farm and also conducts inspections which include a Q&A with the young farmer to test their knowledge of the business. It is understood the Department identified several non-genuine young farmers taking part in the last Young Farmers Scheme, with some reportedly not even residing in the country.
Artificial Creation of Holding
The Department is also said to be clamping down on the ‘artificial’ creation of farm holdings to obtain certain grants and supports.
As an example, the Department recently wrote to advisers to warn them that the Circumvention in relation to area-based schemes, including the Organic Farming Scheme, shall not be permitted where it is established that the conditions required for obtaining such an advantage were created artificially.
It’s understood the communication relates to the creation of very small organic holdings in order to apply for TAMS organic grant aid for buildings and machinery. Rules to prevent the creation of such holdings have also been included in the Terms and Conditions of the new Solar Investment scheme.
Retention of investments
Department rules in relation to the grant aid of farm investments such as machinery and farm equipment will again be in force in the new CAP. Farmers that get grant aid for investments will be required to keep the investment item on the holding and use it for its intended purpose for a period of at least 5 years. Farmers cannot get grant aid for a piece of equipment or machine and then sell it to make a profit.
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