Rural Payments and Services

Scottish farming needs to attract a steady flow of young farmers and young crofters.

The average age of farmers in Scotland is increasing and there are not enough opportunities to attract the numbers of new entrants that the industry needs. This is a problem across the whole of Europe.

It is a priority for the Scottish Government to support a new generation of farmers in agriculture. Providing support for businesses in the critical early stages will make it easier for new entrants to access development capital.

This scheme aims to contribute towards an increase in the number of young entrepreneurs who farm and build profitable, innovative businesses that respond to the industry’s changing economic environment.

Young Farmers Start-Up Grant Scheme support is aimed at helping young farmers or crofters. The grant is linked to the delivery of your business plan objectives and must be central to core agricultural activities. For example, the grant may be used for the acquisition of land or livestock. You must commence implementing your business plan within nine months of the grant award date.

It is aimed at those who are starting an agricultural business for the first time or who are taking over an existing agricultural business.

• you must be between 16 years of age and under 41 years of age at the point of application
• you must have either already acquired at least three hectares of land or be able to provide evidence at the point of application that you have a commitment to acquiring at least three hectares of land to form a holding. You must also make sure (and be able to provide evidence) that you will have the use of land you have acquired or have a commitment to acquire for at least the duration of the five-year business plan
• your business must demonstrate future standard outputs in the range of €10,000 to €600,000 to be achieved by year four of the business plan using our Standard Output Ready Reckoner (see 'Standard outputs' section below)

Access to grant will be based on your standard output.

Standard outputs are representative of the level of output that could be expected on the average farm under 'normal' conditions (i.e. no disease outbreaks or adverse weather).

Standard outputs measure the total value of output of any one enterprise – per head for livestock and per hectare for crops. For crops this will be the main product (e.g. wheat, barley, peas) plus any by-product that is sold, for example straw. For livestock it will be the value of the main product (e.g. milk, eggs, lamb, pork) plus the value of any secondary product (e.g. calf, wool) minus the cost of replacement.

No subsidies or costs are taken into account.

To establish the standard output for your business we have provided an easy-to-use Standard Output Ready Reckoner.

These figures cover most agricultural operations. However, it is possible that your business or proposed business activities are not covered in the Ready Reckoner.

If this is the case we can determine standard output figures from comparable activities. However, you will need to contact your local area office to request these figures.

The grant is €70,000. This will be paid in GBP sterling at the appropriate exchange rate.

Support will be in the form of two payments:

• an initial payment of €63,000. This will be paid in GBP sterling at the appropriate exchange rate
• a second instalment of €7,000. This will be paid in GBP sterling at the appropriate exchange rate. This is payable on reaching the milestones laid down in your business plan

The maximum period between the payments is four years.

This scheme is open to young farmers or young crofters setting up as head of the holding of a new or existing farming business for the first time and who are between the age of 16 years and under 41 years of age at the point of application.

The process of setting up as head of holding may involve some of (though not exclusively) the following: the purchase or lease of land, purchase or lease of stock, cultivation of crops, commencement of trading, registering the business with companies house.

The application must be submitted no more than 18 months after the 'setting up' process has commenced. This means the date you took your first action to set up as a head of holding; see examples above.

If you meet the above criteria, you must also, on the date of submitting your application, show that:

• you are or will be
  - a sole trader, or
  - an equal partner with other young farmers, or
  - the controlling partner with other farmers, or
  - the majority shareholder in a company (limited or unlimited)
• have a suitable agricultural qualification (at least to National Vocational Qualification Level 2 or equivalent), or be able to demonstrate through witness testimony or other alternative means that you have a minimum of five years relevant practical agricultural experience

If you, or other young farmers or crofters in your business, do not hold a suitable agricultural qualification at the time of application – and the business plan does not include an aim of achieving an appropriate qualification within three years after the approval date for grant – an explanation must be given as to why this is not considered necessary.

You must also be able to demonstrate you have or will have control of the business.

In addition to the above individual eligibility, your business must also meet the following criteria:

• if the business is a partnership, the young farmer(s) must individually hold a minimum of 25 per cent of the capital of the business
• if one or more young farmers are in partnership with other partners who do not qualify as young farmers, there must be a legal agreement which demonstrates that the young farmers have control of the business as regards day-to-day management, financial planning and long-term business strategy
• the legal agreement must specify that partners who are not young farmers cannot exercise control of the business against the wishes of the young farmers
• where the business is a company and the controlling majority is held by more than one young farmer, there must be a legal agreement that they will vote together to ensure they cannot be out-voted by other shareholders who do not qualify as young farmers
• the business must comply with the definition of an active farmer under Article 9 of Regulation (EU) No 1307/2013 within 18 months from the date from which it was set up
• to be able to apply, the business must be registered with the Rural Payments and Inspections Division (RPID)

Eligible costs are those linked to the delivery of your business plan objectives and must be central to core agricultural activities.

Applications can be made to any RPID area office. You can check contact details for your nearest office below.

Contact us

There will be two windows for applications each calendar year:

• between 1 January and 30 April
• between 1 July and 31 October

Note that in 2015, however, there will be one application window that closes on 30 September.

Applications will be considered by our staff and approval of applications will be made by Principal Agricultural Officers.

The application form is a simple document that provides the details of:

• your business or business proposal
• the Standard Output figure. You should demonstrate how the figure has been calculated using the ready reckoner
• members of your business
• a short summary of the business plan
• any relevant declarations and undertakings which must be made

We will also require the following supporting information with your application form:

• a copy of your business development plan. This must:
  - describe the current financial and physical position of the business, as well as future cash-flow projections
  - if intended expenditure exceeds the grant, explain how the other necessary finance will be raised
  - set milestones to show how the business will develop over the next five years
  - specify what investments or costs the start-up grant will support and, if applicable, what any other financial support is intended to be used for
  - provide details of any training to be undertaken
  - provide details of steps that will be taken to meet environmental, climate change and resource efficiency requirements. Your business must undertake to comply with animal health and welfare legislation and with Cross Compliance requirements (Statutory Management Requirements and Good Agricultural and Environmental Conditions)
• copies of any available certified documents to demonstrate that the business is in the process of setting up for the first time, e.g. tenancy agreement, letter of intent, VAT registration
• proof of suitable agricultural qualification (if held)
• evidence of five years of agricultural experience if no formal agricultural qualifications are held (including independent testimony)
• personal development plan of young farmer(s) to attain qualifications if none are held or detailed explanation why qualification is not required
• a copy of the birth certificate or other proof of age for the young farmer(s) / crofter(s)
• evidence to confirm control of the business if the young farmer / crofter is not a sole trader. This will be a copy of partnership agreement or other legal agreement
• if the business is a company, then evidence of shareholding at the point of application must be supplied

You must commence implementing your business plan within nine months of the grant award date.

PF09/a Young Farmers Start-Up Grant Scheme application form

The funds available for this scheme are limited and it may not be possible to approve all eligible applications.

If this is the case, preference will be shown to those businesses that are not succession cases. This is because these are likely to have restricted access to alternative private funding and have less capital assets or infrastructure than those established businesses which have been trading for a considerable time.

Other factors that we will also consider are:

• the composition and make-up of the business in terms of its membership and the governance arrangements in place to ensure the smooth running of the business
• whether any additional investment is to be made without public support
• the effect of the investment on the physical agricultural output and labour requirement of the business
• the sector of agriculture to which the business belongs

If your application is approved you will be notified and a contract will be sent to you which you must sign and return to us.

After you have signed and returned your contract and you are ready to purchase materials and services detailed in the business plan in your approved contract you should submit a claim requesting the first instalment of your grant.

This claim must confirm what the grant will be used for. For example, purchasing livestock or purchasing agricultural machinery as outlined in your schedule of works

Payment will be made following any inspection or administrative checks that may be required. You will receive payment in sterling by BACS into your nominated bank account within three months of the receipt of the claim. The Sterling payment will be based on the Euro conversion rate applicable for the month and year that your claim is received in the area office.

A further claim for the second instalment of your grant can be submitted once the milestones laid down in your business plan have been reached.

You will also be required to submit documentation with this claim to provide confirmation that you have met the milestones in your plan.

For example, any purchase of machinery or livestock must be confirmed by proof of purchase from the supplier such as an invoice or if you have purchased land for agricultural use, you must provide confirmation from a solicitor that you own the land in question and the date that the land was purchased.

If you have undertaken a training course as one of your milestones you will need to provide confirmation of your attendance at the course plus an invoice to confirm payment.

Your business plan will be reviewed by us within four years of the acceptance of the contract. This review will compare progress against your business plan and consider any discrepancy.

Where your business plan has not been followed or progress is not satisfactory, we may withhold your remaining payment and require repayment of part or all of the claim already paid.

If the progress with your business plan is acceptable, this final payment will be made.

Young Farmer Start-Up Grant Scheme claim form (PF09/b1)

If your application to join the scheme is successful, you will be subject to our inspection programme. This is based on the European Commission’s regulatory requirements.

Both instalment claims will be subject to administrative checks before payment can be made to ensure that your claims comply with your approved business plan.

You may also be the subject of an on-the-spot inspection of your farm to assess the delivery of your plan against the specific milestones and to confirm the expenditure made.

Your second claim will not be paid until such time as we have reviewed your business plan as outlined in the claims section of this guidance.

You may also be visited during the period of your five year plan to assess delivery of your plan against your specific milestones and to confirm that you are still in control of your business.

For more detailed information, please read the guidance on administrative checks and capital inspections in the main inspections section.

Inspections

Any applicant that receives funding in excess of €10,000 is required to publicise the funding. We will check during our inspection that you are complying with this requirement. If you do not comply with this requirement we will consider this as a breach of your scheme conditions.

We will provide you with an A3 poster that can be used to inform the public about the funding for new entrants and its financial support from the European Union. You must display this poster at a location that is visible to the public at your holding.

The contribution of the European Union funding must also be mentioned on your business website and a hyperlink included to the EU Commission’s Rural Development page – http://ec.europa.eu/agriculture/index_en.htm

If you receive funding of more than €50,000 you must put up an explanatory plaque at a location that is visible to the public at your holding which gives information about your project and highlights the financial support you receive.

The plaque must include:

• the European emblem
• the text "The European Agricultural Fund for Rural Development: Europe investing in rural areas"
• a description of the project which shall take up at least 25 per cent of the plaque

If we discover that you have not followed your contract terms and conditions, we will call this a breach. A breach can be identified in a number of different ways, for example:

• through the administrative checks of your claim(s) against your approved plan
• following the check of the supporting documentation provided with your claim
• through an inspection

For example, you may submit a first instalment claim applying for assistance towards the purchase of livestock.

If, at either the second instalment claim or at inspection, it is discovered that you have failed to purchase the livestock or have failed to purchase the livestock in the quantity that you intimated in your plan, we would consider this as a breach.

We will discuss the nature of the breach with you and give you the opportunity to rectify the breach within an agreed timeframe. If you fail to rectify the breach, we may withdraw your application for support and seek to recover any payments made.

If we review your second claim against the milestones in your schedule of works and find them deficient we will consider reducing your final payment as such:

Milestones complete	Possible action
All milestones completed	Full payment due
No milestones completed	No second payment due and recovery of first payment
90 per cent of milestones completed	No second payment due and no recovery of first payment
Less than 90 per cent of milestones completed	No second payment due and recovery of part of first payment on a proportionality basis

As an example, if a young farmer beneficiary only completes 50 per cent of the milestones in the schedule of works within the allotted timeframe, then the total amount due would be reduced by 50 per cent.

Therefore the grant due would be €35,000 and not €70,000. As the first instalment paid was €63,000 we would instigate a recovery of €28,000.

If we do this, we will write to you explaining why we are seeking to recover, with the amount due, which will also include interest.

The letter will also give you advice on how to appeal our decision. You will have 60 days from the date of the letter to either repay or to seek a review of the decision.

If you do neither by the 60 day deadline, we will arrange to offset the debt from future payments from any Scottish Rural Development Programme scheme within three calendar years following the calendar year of the finding of the breach.

More information on appeals can be found in the main appeals section.

Appeals

• Regulation (EU) No 1303/2013 of the European Parliament and of the Council laying down common provisions on (inter alia) the European Agricultural Fund for Rural Development
• Regulation (EU) No 1305/2013 of the European Parliament and of the Council on support for rural development
• Commission Delegated Regulation (EU) No 807/2014 (supplementing Regulation (EU) No 1305/2013)
• Commission Implementing Regulation (EU) No 808/2014 (laying down rules for the application of Regulation (EU) No 1305/2013).
• Regulation (EU) No 1306/2013 of the European Parliament and of the Council on the financing, management and monitoring of the Common Agricultural Policy
• Commission Delegated Regulation (EU) No 640/2014 (supplementing Regulation (EU) No 1306/2013 ) with regard to the integrated administration and control system and conditions for the refusal of payments and administrative penalties applicable to direct payments, rural development support and cross compliance
• Regulation (EU) No 1307/2013 of the European Parliament and of the Council establishing rules for direct payments
• Commission Delegated Regulation (EU) No 639/2014 (supplementing Regulation (EU) No 1307/2013 ) as amended from time-to-time

Scottish Rural Development Programme

Your business may be able to access other grant schemes under the Scottish Rural Development Programme.

Your business plan will help provide a basis for access to these other schemes, although additional information may be required and the proposal will be considered competitively with other applications.

Where appropriate, you may also be able to benefit from the higher grant rates allowed to young farmers.

However, you cannot receive grant funding for the same costs from separate schemes.

For example, if your business plan relates to the construction of a shed and you receive a New Entrants Capital Grant, which provides 60 per cent of the costs, you cannot use this scheme to provide the other 40 per cent of the costs.

If you apply to this scheme you may also apply for any of the capital grants. However, your business must have become established (the setting up as head of holding process must be completed) before you will be eligible to apply for other capital grant schemes.

Capital grant schemes funded through the Scottish Rural Development Programme which may be appropriate are:

• Crofting Agricultural Grant Scheme
• New Entrants Capital Grant Scheme
• Small Farms Grant Scheme

When applying for funding from more than one scheme, there will be different eligibility requirements regarding the business establishment dates.

Whole Farm Review Scheme

Your business may also qualify for funding under the Whole Farm Review Scheme 2015.

Whole Farm Review Scheme

Section	Change
Claim and payments procedure	Clarification of relevant Euro/Sterling conversion rate

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