Common Agricultural Policy Reform & The 'Golden Ticket'

It has been widely reported over the last few months that the first draft of the Common Agricultural Policy ("CAP") reform was published in Autumn 2011. The reforms are due to come into effect in 2014, but it seems increasingly likely that their implementation will be pushed back to 2015 at the earliest.

The reforms will introduce a new Basic Payment Scheme to replace the existing Single Payment Scheme and will impose new requirements on the claimant in order to be able to qualify for receiving the payment. These changes have been covered in depth elsewhere, but to summarise, the key points are:

The "Golden Ticket" whereby to claim the new payment the claimant must have been a successful claimant in the 2011 Single Payment Scheme year. The introduction of the "active farmer" test under which a claimant's Basic Payment Scheme claim must exceed 5% of their "non-agricultural receipts". "Greening", which imposed obligations on: 3.3. use of arable areas; 3.4. permanent pastures; and 3.5. imposing "ecological areas". As well as practical challenges for the claimant, the proposed changes raise a number of legal issues to consider. In this issue we will consider the "Golden Ticket".

The need to have a "Golden Ticket" will have a significant impact on two types of person:

A first time farmer purchasing or renting land after 2 April 2011 who wishes to buy entitlements as part of their purchase or lease ("Type A"); and

A landowner who does not claim entitlements himself and lets his land to a tenant and may wish to either claim the Basic Payment Scheme in the future himself or be able to lease the land to a new tenant together with the right to claim the Basic Payment Scheme ("Type B").

Under the CAP reforms at present the "Golden Ticket" can be transferred by one farmer to one other farmer i.e. a claimant who successfully claims entitlements in 2011 can transfer that right he acquired to a third party, but only to one third party, and in doing so he will himself lose his "Golden Ticket".

The transfer of the "Golden Ticket" can, it appears, only be implemented on a sale or lease of land. This poses a number of additional problems.

The Type A person will need to ensure that the drafting of the Sale Contract contains carefully drafted provisions to ensure that he can make a claim under the Basic Payment Scheme. Or, as is quite...