Set aside

Set-aside

[set-uh-sahyd]
Set-aside as a political measure was introduced by the European Union (EU) in 1988 to (i) help reduce the large and costly surpluses produced in Europe under the guaranteed price system of the Common Agricultural Policy; and (ii) to deliver some environmental benefits following considerable damage to agricultural ecosystems and wildlife as a result of the intensification of agriculture. It has since become used as a generic term for the practice of leaving a proportion of farm land uncultivated or put to non-agricultural use for a period of time.

In the days before modern pesticides, it was necessary to fallow cropping land regularly in order to provide an opportunity to reduce levels of weeds by cultivation techniques, and levels of pests and disease. This could only be carried out in the absence of a host crop, during which the population of relevant pests and diseases would be expected to decline to levels below which an economic threat to the following crop would occur. Nutrients such as nitrogen were also replenished during fallowing, but fertilisers are now used for this purpose.

The need for set-aside in Western Europe today is largely political and social, as fertilisers and pesticides are now used. Nowadays, as well as being used for this reason, it is also used to prevent food surpluses. It also has the benefit of providing habitat for wild animals, particularly if the set aside is land that is never used, rather than rotated.

In research financing set-asides are: Funds set aside by a foundation for a specific purpose or project that are counted as qualifying distributions toward the foundation's annual payout requirement. Amounts for the project must be paid within five years of the first set-aside.

Set-aside programs have been used in the United States since the early 1960's for major crops like corn, sorghum, barley, oats, wheat, rice and cotton. The basis of the programs goes back to 1933 with the Agricultural Adjustment Act. At that time the primary motivation was to help control commodity prices and stabilize markets. The Conservation Reserve Program is another set-aside program aimed at erosion control created in 1985 as part of the Food Security act (P.L. 99-198).

Operation

From the 1992 Common Agricultural Policy reform all UK producers of eligible crops (in particular the main UK crops of cereals, oilseed rape, linseed, peas, and beans) have an obligation to fill out an IACS (Integrated Administration and Control System) dossier.

This procedure must be forwarded to Department for Environment, Food and Rural Affairs (DEFRA) every spring in order to register the farm's cropping for EU subsidies.

The EU decide on the percentage of eligible land to be set-aside each year.

Up to 30% of a farm's land as cited above may be put in subsidised set-aside. Above that level the land cannot receive subsidy. Between 5 and 15% of eligible land is ordered by the EU into set-aside every year, typically 10%.

Eligibility

Set-aside can only be performed on the above eligible cropped land if that land was not used as of 15 May 2003 for any of perennial grassland, perennial crops, forestry or non-agricultural use.

Set-aside may not be used for any production between 15 January and 31 August. All income related production is forbidden, including taking seeds.

Set-aside land must be a minimum area of 0.1 hectares and be at least 10 metres wide.

Only producers of at least 92 tonnes annually of eligible crops are obliged to set-aside.

However, the EU try to enforce it with all farmers — cattle and dairy farmers are now being encouraged to leave part of their land to grow, turning it into a haven for wildlife. However, set-aside does face problems, particularly the EU, as some farmers have gone several years without receiving subsidies. Another concern is the amount of tax.

Financial

Set-aside is subsidized by a payment from the EU to the farmer of 406 euros per hectare of set-aside. The payment is made by DEFRA in December following the declaration (as of November 2006 most UK farmers were still waiting for their payments due to administrative problems).

Since typical arable farms will have a fixed cost level of 650 euros per hectare , set-aside will be a loss-maker for most farms, returning a maximum margin of -244 euros per hectare.

This is offset by the possibility of the eligible farm to register for payments of support subsidies for the crops listed in the paragraph "operation", without which the said crops would be uneconomic to produce.

An important benefit of set-aside is the fact that minimum expected production of EU crops can be managed by the EU, therefore limiting amounts available for export (which could need subsidies in years of plenty) whilst maintaining a minimum amount for domestic use and maximising the price of the commodity for the producer.

In July 2008, the European Commission announced that set-aside is to be abolished permanently. Farmers will continue to receive their set-aside subsidy despite being able to use the land for commercial production.

Obligations for the farmer

Set-aside must consist of a cover crop in order to prevent nitrogen leaching and generation of nuisance weed seeds such as thistles. This can take the form of regrowth of the previous crop or the implantation of a specific cover crop such as ryegrass, mustard, or clover. Naked soil is forbidden.

Fertiliser application is forbidden, and use of chemical pesticides is severely restricted.

Drilling must take place before 1 May.

Topping is forbidden between 1 May and 15 July. This operation must then be performed after this date if there is any danger of nuisance weed seeds developing.

The following year's crop cannot be drilled before 1 September.

Industrial set-aside

Industrial set-aside is a form of set-aside by which an eligible un-subsidized crop may be grown on set-aside land on the signing of a specific contract for a crop which cannot be used in the human or animal food supply chain nor for production of seed. Grain produced must be permanently dyed to avoid passage into the food supply.

Examples: Cereals for production of bio-ethanol; oilseeds for the production of bio-diesel; flax; hemp; plants for use in perfumes and medicine; sugar beet for the production of bio-ethanol.

"Green set-aside"

Special, highly regulated contracts exist whereby a farmer may dedicate set-aside land to approved environmental uses specifically for the purpose of protection of the environment e.g. wild flowers for specific habitats or establishment of new woodland where subsidy payments partly cover costs incurred during the first few years. Extra subsidy payments are available for these contracts.

References

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