Industry Eye: Confusion surrounds the replacement for the old Hill Farm Allowance payments

From July 1, 2010 onwards, the additional element of subsidy recognising the difficulties of farming in Severely Disadvantaged Areas (SDAs) will take the form of Upland Entry Level Stewardship (UELS).

In a nutshell, UELS is a strand of the familiar ELS agreements accessible only to those farming land classified as SDA.

There are additional requirements but there is a substantially improved payment – a little more than twice that available under ELS for SDA and small moorland parcels, just less than three times that for larger moorland parcels.

Catch number one is that whilst UELS replaces HFA, it cannot be paid against land already subject to an Environmentally Sensitive Area agreement or Countryside Stewardship Agreement.

To avoid penalising farmers in those schemes Uplands Transitional Payment (UTP) will be paid alongside the payment for that existing scheme.

Former HFA claimants with a whole farm CSS or ESA agreement still running will claim UTP on their SP5 form each year.

Those who have part-farm agreements must choose between claiming UTP alone, or not claiming UTP but entering the non-CSS/ESA land into a part farm UELS agreement.

For most the deciding factor will be financial; the necessary calculation is relatively simple but easy to get wrong.

The second catch is that while HFA merely required a farmer to have land "available" for four months, UELS will require the farmer to have management control over the land for a full five years.

This means that those taking land on annual grazing licences, short tenancies or coming towards the end of longer tenancies face the prospect of reduced support, as this land would formerly have counted towards their HFA area. There are two solutions to this: obtain a five-year Farm Business Tenancy or have your landlord countersign your UELS application.

Both are easier said than done.

While most landlords will understand how the problem arises, finding a solution could be difficult in some situations.

Either way, for most farmers the message is simple: there will be no more HFA and action is required now.

Farmers who are not eligible for the UTP but simply tick the box on the SP5 believing it is the new name for HFA will find themselves with neither UTP nor UELS – a very expensive mistake to make.

Simon Britton of Savills Agribusiness,13-15 Micklegate, York, YO1 6JH. Tel: 01904 617824 or 07967 555693. e-mail [email protected]