The 2014 scheme year is the last year in which the Single Payment Scheme will operate and all entitlements held under that scheme will expire on 31 December 2014. Any farmer who was entitled to receive a direct payment in 2013 (Single Payment, Grassland Sheep Scheme, Burren Life Scheme, Beef Data Scheme) is automatically eligible to receive an allocation of new entitlements under the Basic Payment Scheme in 2015.
Where lessors have leased out all of their entitlements for a period which includes the 2013 scheme year (or leased out a portion of their entitlements but did not draw down a direct payment in 2013) they will not have an automatic ‘allocation right’ and consequently would not have access to the Basic Payment Scheme in 2015. As a consequence, these 100% lessors will neither be eligible to establish entitlements in their own right, nor can they enter into a Private Contract Clause to transfer entitlements to the lessee.
The value of such leased entitlements will be lost to both lessor and lessee unless the entitlements in question are transferred permanently by sale or gift before 15 May 2014. My Department is writing to all persons impacted by this scenario to advise them of their options.
A fundamental principle of the Regulation that will govern the new Basic Payment Scheme is that direct payments should only issue to active farmers. This is a principle that was endorsed by all farming organisations and indeed by the Deputy in his submission regarding the application of direct payments in Ireland.
Of the 6,417 herd owners involved, forty-three percent involve leases of three or more years. Of those who entered into leases in the period 2012, 2013 and 2014, 56% entered into leases of three years or more. These figures indicate that very high percentages of these lessors entered into contracts which effectively excluded them from active farming for extensive periods and that they had, in effect, withdrawn from active farming.
It is estimated that 1,968 cases relate to leases between family members where it is presumed a transfer can be easily arranged. There are 335 cases which involve leases to a Company where in most cases the lessor is also the director of the Company.
In conclusion, the greater majority of cases relate to entitlements held by persons who are no longer active farmers or to family members or companies where transfers can be arranged without difficulty. All lessors have the option to sell their entitlements in 2014 at prices dictated by the market. The issue of compensation for such persons does not arise.