The phasing out of the Basic Payments Scheme (BPS) will be one of the biggest challenges for farmers and landowners when the Agricultural Bill is introduced.
Nothing major will change for 2020 as payments will be made in the same way, however in 2021 a transition period will begin, which will see the gradual phasing out of the BPS by 2027. On the plus side, the application process is likely to be simplified.
As with the previous version of the Bill, the “agricultural transition” period in England is to be seven years, starting in 2021 – this period can be extended by the Secretary of State. On the basis that the previous bill was withdrawn, we could see a delay to the transition being implemented. Direct payments are to be phased out during this period, meaning 2027 will be the final year when any form of direct or “delinked” payment is made in England.
The Government’s policy statement in September 2019 set out how reduction payments would be made across all recipients, with different rates for different payment bands. Examples of cuts to BPS over the transition period is demonstrated below:
The changes to BPS will have an impact on all farms. The transition gives a time window in which farmers should review their businesses, consider how best to handle the likely erosion of margins, and deliver the necessary changes.