Basic payments explained

The basic payment is an income support scheme for farmers engaging in agricultural activities. There are two different types of scheme.

• The basic payment scheme (BPS)
• The single area payment scheme (SAPS), a simplified transitional scheme.

The basic payment scheme

The basis of the BPS system is payment entitlements allocated to farmers. In the first year that the BPS was implemented, eligible farmers were allocated payment entitlements. In general, each eligible hectare gave the right to one entitlement (although some European Union countries applied limitations on the number of entitlements that could be allocated). Support under the BPS is then granted annually to farmers who have payment entitlements upon "activation" of these entitlements. This activation is done annually by declaring eligible hectares with an accompanying number of payment entitlements.

Support under the BPS is then granted annually to farmers who have payment entitlements upon ‘activation’ of these entitlements. This activation is done annually by declaring eligible hectares with an accompanying number of payment entitlements. The actual payment is made to active farmers based on the activation of the payment entitlements they hold and calculated in relation to the eligible land they declare.

All entitlements allocated to a farmer have the same value, but EU countries have the right to set  differences in the value of entitlements between farmers. In that case, the past level of payments to individual farmers is taken into account (or the value of the entitlements they possessed under the previous direct payments regime). This is done in order to avoid too abrupt a disruption to their level of support.

However, one of the objectives of the CAP is to move away from these historical references. As such, the EU countries that take this approach have agreed to progressively reduce the differences in the values of entitlements and bring these values closer to the EU average. This process is often referred to as ‘internal convergence’. Under the new CAP, these countries will need to continue to reduce these differences, and must ensure that all payments have a value of at least 85% of the average in 2026.

Single area payment scheme

In Bulgaria, Czechia, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, Romania and Slovakia, the SAPS is used instead of the BPS. The SAPS is a transitional measure stemming from the accession treaties of the specific countries.

In the SAPS, there are no payment entitlements, instead, the support paid is solely based on the eligible hectares declared by farmers and the level is the same for all hectares in the country.

Other income support payments

The basic payment is topped up by other income support payments targeting specific issues or specific types of beneficiaries. These include the young farmers’ payments, greening payments and additional optional schemes that EU countries can choose to implement.

New CAP: 2023-27

In June 2021, following extensive negotiations between the European Parliament, the Council of the EU and the European Commission, agreement was reached on reform of the common agricultural policy (CAP). This agreement was formally adopted on 2 December 2021, and the new CAP will begin on 1 January 2023

Under the new CAP, changes will be made to the existing income support system, with measures being taken to ensure a fairer distribution of financial support for farmers and workers across the EU. Until 2023, current income support measures will continue, in line with the provisions of the CAP transitional regulation.

Withdrawal of the UK from the EU

In accordance with article 137 (1) second subparagraph of the Withdrawal Agreement Between the EU and the UK, as from claim year 2020 the EU direct payment legislation does not apply to the UK. During the transition period set by that agreement (i.e. claim year 2020), Articles 107 to 109 of the Treaty on the Functioning of the EU (on aids granted by EU countries) do not apply in respect of the direct payment scheme the UK would apply, provided that such scheme is equivalent to the EU direct payment scheme set in EU Regulation 1307/2013. The withdrawal agreement also sets the financial limit which applies to any such UK direct payment scheme during the transition period.