Recently debated and proposed reform of the Common Agricultural Policy has led to confusion around the ability of some farmers to be eligible for the new Direct Payment Scheme beyond December 31, 2013.

Along with greening and capping, the ‘active farmer’ has been one of the key concepts being developed by the Commission. This is an area of concern to those farmers with significant income from sources outside agriculture given the current proposal that the annual amount of direct payments is less than five per cent of total receipts obtained from non-agricultural activities in the most recent fiscal year.

It is fairly typical for farmers to develop alternative revenue streams and the increasing demands and opp-ortunities of diver-sification by processing or investment in renewable technologies could significantly alter the balance of revenue away from ‘pure’ agriculture.

For some farmers with significant non-farming enterprises or ‘diversified’ activities, under the same business umbrella, there may be an opportunity to reorganise the business simply to maintain this revenue source in 2014.

However, reorganisation could raise the spectre of taxation implications which further complicate the issue. Another significant proposal is the 2011 ‘Entry Ticket’, basically requiring a Direct Payment claimant in 2014 to have claimed Single Payment in 2011 on at least 1 hectare.

Current proposals provide a number of routes for those who did not claim in 2011 to be able to claim under the new regime, including a National

Reserve proposed for ‘young farmers’, waiting and buying Entitlements afterwards, letting land to an eligible tenant or the ‘contract’ route on buying or leasing land. Currently, the proposals are problematic for those who bought part of a farm in 2011 – the draft says that a 2011 claimant can only transfer his 2011 status to one person.

It should be stressed that the current proposals are only a draft. However, this area of reform should be closely monitored by those potentially affected by the current proposals.

Although there is considerable uncertainty, as in 2004/2005 with the implementation of the Single Payment Scheme, as further developments emerge it is possible that mechanisms will be developed to assist those who would be at a disadvantage as a result of the draft proposals.

Robert McCabe MRICS FAAV is a Rural Surveyor and Partner of Nock Deighton Agricultural LLP