Applications to The Regional Reserve and Young Farmers’ Payment

The Department of Agriculture and Rural Development (DARD) is clarifying the procedures to be followed when making an application to the Regional Reserve and Young Farmers’ Payment in advance of the opening of the 2015 Single Application period.

The definition of a young farmer in EU regulations refers to setting up an agricultural holding for the first time as head of holding. Therefore, it is possible to become head of an existing farm business and be eligible for an allocation from the Regional Reserve as a young farmer and receive payment under the Young Farmers’ Payment.

The Department expects that the vast majority of young farmers who make a business decision to become the head of holding will do so in an existing farm business and not by setting up a new business. Therefore, young farmers who are assuming control of an existing farm business should ensure that they are added as a member of that business on DARD’s records and submit the necessary evidence to show when they became head of holding.

Where a request is received to set up a new business, either by a young farmer or a new entrant, the Department has strict conditions that an applicant must meet. The Department expects to receive very few of these requests, particularly where an existing business is already operating on that land, yard or with existing livestock. Splitting an existing business artificially in order to create a new one as a means of receiving an allocation from the regional reserve (either as a young farmer or new entrant) and/or the Young Farmers’ Payment is not permitted.

Category 1 Business ID’s are only allocated where DARD is fully satisfied that the businesses will operate as fully separate and independent businesses in practice. Inspections are likely to take place both before and after establishment of the business to ensure that this is, and remains, the case. The onus is on applicants to demonstrate that their applications for any new business ID meet the following criteria:

Legal Status

If a business is to qualify as a separate and distinct entity, it must have a separate legal status. Satisfying this requirement is not in itself sufficient to establish separateness, as the other three criteria also need to be considered.

Economic Structure/Organisation

This relates to the economic control and functioning of the business. Relevant to this is the shareholding or partnership interest or voting rights of the directors, shareholders, partners or individuals (or legal persons) of all those involved in the business; those who benefit from the profits or suffer the losses relating to the businesses; and those who have ultimate responsibility for making the longer term policy decisions that will affect the profitability of the business. How the business is financed (including the nature of any loans and guarantees) and land tenure arrangements may also be considered, including any reliance on, or linkages to, other businesses.

Commercial Arrangements

This relates to commercial structure and concerns the commercial independence of a business. Information which is relevant may include whether the person with day-to-day responsibility for managing the business has discretion to buy and sell, whether there are separate financial accounts and tax status, whether all transactions are carried out at commercial rates, whether there are separate bank accounts and whether the financial transactions through these accounts and all taxation returns are appropriate to the size and nature of the business and clearly linked to its operations.

Operational Arrangements

This relates to the separateness of cropping, stocking, feed, fertiliser, stock housing, machinery, labour, land for grazing, livestock records, farm plans, registration, herd marks, etc. of a business. In particular, any herds/flocks must operate completely independently of any herds/flocks belonging to another business. The scale, nature and frequency of transfers of animals between businesses may be taken into account in making this assessment.

DARD will have stringent procedures in place to detect anyone attempting to create artificial conditions via the creation of a new business in order to benefit from the Regional Reserve and/or the Young Farmers’ Payment. Where the evidence submitted does not clearly show that a proposed new Business is separate and independent, the application for a new Category 1 Business ID will be rejected. If an attempt has been made to split artificially off part of an existing business and the application for a new business ID has been refused, this could have serious adverse implications for the remaining part of the business in terms of CAP support and its ability to meet scheme conditions.

Processing of applications for a new Business ID, particularly the investigation as to whether they meet the criteria to be regarded as separate, may take some time and the outcome in some cases might not be known until after 15 May 2015.

When a new Category 1 DARD Business ID, is granted, it must remain a separate entity. If this is not the case, then the Business ID may be revoked or merged with another business. DARD will be carrying out inspections to ensure that businesses remain separate entities and in 2015, there will be a particular focus on those that apply to the Regional Reserve and/or to the Young Farmers’ Payment.

Existing Businesses

Existing Category 1 DARD Businesses which have commonly managed herds/flocks registered to another business are strongly advised to take immediate action to manage these herds/flocks independently, including separate grazing and housing. Alternatively, an application for the merger of the businesses should be considered. An application for a business merger should be made by 15 May 2015.

It is permissible to have one or more herds/flocks registered to different keepers within the same business, so herds/flocks will not be merged unless this is specifically requested.