Advance BPS payment to help farm cash flows

18th May 2022 | Farm Business, UK Policy & Regulation

The government has reacted to increases in farm production costs by allowing eligible claimants in England to draw a 50% advance on their Basic Payment Scheme (BPS) scheme entitlements which are usually paid in December. The NFU has welcomed the move, as long as it does not compromise the efficiency of making the payments – there has been a chequered history of changing the IT around the payment systems.

The switch to two annual payments will also be available in the remaining BPS scheme years until it is phased out by 2028.

Defra minister George Eustice has written to all claimants to say that government recognises that extreme turbulence on international markets is affecting farm input costs and cashflows. Therefore, this year’s BPS payments will be made in two instalments – one from the end of July and the second from the traditional December window. He says the change will apply to BPS payments for the rest of the agricultural transition period to help businesses manage their cashflow.

The 2022/23 scheme year will see a minimum cut of 20% in BPS monies, following the initial 5% cut on the first £30,000 of BPS entitlement last year. Higher BPS payment bands will suffer more severe cuts – for example up to 40% from payments over £150,000.

The NFU says Defra’s decision provides some much-needed help with business cashflow in the face of rapidly rising costs.

“With farmers facing extreme inflationary pressure and businesses being squeezed more than ever, any advance payment of BPS claims for this year is positive and will help cash flow,” says NFU vice president David Exwood. “I’m pleased Defra and the Rural Payments Agency have recognised the seriousness of the situation and put in place a practical solution.

“However, it’s crucial that this change does not adversely affect the delivery and promptness of payments. As Defra plan to move forward with two payment windows on a permanent basis, we will be looking for reassurances from the RPA that it will continue its strong delivery performance and ensure farmers receive their payments as early as possible on both occasions. We’d ask the RPA to continue working with the NFU on the rollout and delivery of the scheme.