A recent opinion from Advocate General Kokott for the European Court of Justice considered a reduction imposed on the level of Single Farm Payment (SFP) received by a Dutch farmer as a result of changes to the system used to map eligible hectares in the Netherlands.
Mr Vonk Noordegraaf's SFP was reduced due to changes made to the mapping system used by the Dutch Department of Agriculture following a critical review of their land mapping system by the European Commission in 2009. He challenged the reduction on the basis that in 2003, he had declared the eligible area of hectares in his possession in good faith and in accordance with the measuring method used by the Member State at that time to activate the payment entitlements. The area in his possession between 2003 and 2009 remained unchanged but the area which was determined eligible for the purposes of payment was reduced as a result of the changed measuring method imposed following the critical audit by the Commission in 2009. The farmer was penalised by a corresponding reduction in the number of entitlements and therefore the amount of SFP he received.
When the SFP regime was introduced in 2003 to replace the multitude of previous European agricultural support schemes, the unit value of each SFP entitlement received by a farmer was calculated by dividing the average amount of aid received by a farmer (known as the"reference amount") by the number of hectares a farmer had used to claim direct payments (including 'forage areas') in the three years prior to the introduction of the SFP regime. These new entitlements could then be activated against 'eligible hectares' – broadly defined in the European Regulations implementing the new SFP regime as any agricultural area of the holding taken up by arable land and permanent pasture except areas under forests or used for non agricultural activities.
For the purposes of the current case, in 2006, Mr Vonk Noordegraaf declared that he had 10.76 hectares of agricultural area at his disposal. In turn, his reference amount was divided by 10.76 and he received 10.76 entitlements. In 2009, a new land inventory system was introduced in the Netherlands which measured only 'net parcel areas' and excluded ditches, paths and banks. Using this new system, Mr Vonk Noordegraaf's eligible hectares were reduced to 8.34 hectares and the Netherlands sought to reduce Mr Vonk Noordegraaf's single payment. Rather than accept a reduction of the overall amount he received, Mr Vonk Noordegraaf sought a recalculation of the value of his entitlements to increase their value by dividing the reference amount by the reduced area of the holding. This would have the effect of maintaining the overall amount of agricultural subsidy he received.
Following consideration of the various regulations, Advocate General Kokott agreed with Mr Vonk Noordegraaf's position and ruled that, from a European perspective, an upwards adjustment to the value of the entitlements is permissible. Although the Opinion of the Advocate General has not yet been adopted by the European Court of Justice, if it were to be adopted, it may be of interest to Scottish farmers who faced similar problems following an audit by the Commission of the Land Parcel Identification System used by the Scottish Government Rural Payments and Inspections Directorate (SGRIPD). Some Scottish farmers faced penalties as a result of claiming entitlements on ground which, on inspection, and following a closer interpretation of the rules by SGRIPD, was found not to qualify as eligible hectares on which it was possible to activate entitlements. This means that these farmers had insufficient ground on which to activate all of their entitlements. Appeals may be defended by SGRIPD on the basis that their rules were not altered and that farmers had access to the rules which led to the interpretation that areas such as impenetrable gorse and bracken were not eligible to claim agricultural support before submitting their claim forms. However, it would be interesting to see the Scottish Government's approach, especially as the Commission ultimately imposed a disallowance penalty of £35 million on the UK Government for Scotland's failure to have an adequate mapping system in place prior to 2009.