Many cropping licences may need to be replaced with alternative agreements
following new guidance from the RPA which makes it clear that SPS claimants
will be monitored to ensure they have land at their disposal.

Farmers need to consider very carefully whether using such licences, widely
employed for specialist cropping, will mean they fall foul of this monitoring
process, says Brown & Co partner Charles Birch.

“Where the Single Payment is to be claimed by the landowner, agreements need to
be prepared with great caution and the parties need to address the actual
responsibilities of each party, rather than just use a document because it is
convenient and has been alright in the past,” he explains.

“Following a recent European Court of Justice ruling and the RPA investigation into
the dual claims issue, the need for the claimant to have the land at their disposal
has come into sharp focus. If a third party is growing and managing a crop on land,
then usually this will not be the case.”

The RPA has drawn attention to this fact in the 2012 RPA guidance booklet,
published last week, so it is clearly not business as usual, he adds.

One relatively straightforward alternative is a short tenancy with entitlements
transferred out and back again with suitable new clauses to cover the review of
Common Agricultural Policy, says Mr Birch. However, this may not suit growers
dealing with many different landowners, or landlords who need to retain trading
status on the land for tax purposes.

In these cases, Brown & Co recommends a contract option agreement. The land
remains under management control of the owner whilst using the grower as a
contractor. There are a number of mechanisms for dealing with the contractor’s
ability to buy the crop and the terms on which this happens.

Some grazing licences may also be affected, so it is worth ensuring the owner does
grow the crop of grass. If the grazier is to carry out operations such as fertiliser and
chemical applications, he should act as a contractor.

“Whether you are the land provider or the cropping party, where the crop is to be
grown by one and the Single Payment claimed by another, it is vital now that the
parties look closely at the facts and agree what is the most appropriate type of
agreement,” Mr Birch concludes.