Newspaper article The Journal (Newcastle, England)

Big Hassle ( but Single Payment Is on Course

Newspaper article The Journal (Newcastle, England)

Big Hassle ( but Single Payment Is on Course

Article excerpt

Byline: By Louis Fell of George F White

Last year was a busy one for most rural farming businesses in the North-East. It was a year of change and resulted in many farmers taking a much tighter control of their finances because of the change in the subsidy system.

The biggest hassle of 2005 was the May 16 deadline for the submission of the Single Payment Scheme application. However, the processing is on course and we anticipate that the first money will be received in the first week of March, a welcome relief for most agricultural businesses.

National Reserve applicants will begin receiving acceptance letters over the New Year and RPA are hoping to have definitive establishment in February. A personal plea here, if applicants do receive a request for data from RPA, please respond asap, as it's only going to cause unnecessary further delay. The delay in the payments and the change to a single cheque annually is causing great financial strain on most agricultural businesses this year and it will take time for some to adjust to this, especially the beef sector.

Banks are well aware and seem to have been helping to meet the shortfall until payment is received, but undoubtedly some will be getting more nervous as modulation increases. For many farmers in the North-East, a good percentage of the asset value on their balance sheet was removed when Suckler Cow and Sheep Quota disappeared on the December 31, 2004. However, they now have a new asset to replace this and for the arable side of the business a new asset to add to their balance sheet.

The SPS Entitlements are tradeable, and therefore have a value. Whilst the trading mechanism cannot begin until definitive establishment, early signs are that the values are between 1.5 to two times the annual value, dependent on the historic value and the region in which the entitlements were established. Many businesses will be using this asset to bolster balance sheets. They do, however, bring with them taxation consequences and anyone trading or transferring entitlements through sale, gift or lease must be wary and should take advice. …

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