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Sheep Annual Premium Scheme Quotas - Explanatory Guide
SECTION TWO: USAGE RULES
Introduction
11 European Community regulations require producers who hold quota to use a specified percentage of that quota, otherwise the quota which they have not used may be withdrawn from them without compensation (see definition of 'used' in paragraph 13). If the number of quota units you hold is higher than the number of animals on which you claim premium and you do not dispose of the surplus units or lease them out, you may fail to comply with the quota usage rules. Quota which is withdrawn from producers who fail to meet the usage rules is redistributed to other producers via the national reserve.
12 The usage rules vary according to the scheme year(s) concerned. Before 1996 there were different usage rules for national reserve recipients and others. These were unified in 1996 and the rule for all producers is now that you must use at least 70 per cent of your quota every year. If you do not, the amount of quota unused in that year will be withdrawn without compensation. The Department will examine the quota usage of all sheep quota holders in an annual exercise, normally in the autumn. Producers who have quota withdrawn will have an opportunity to re-acquire quota for future years by transfer or lease before making their next premium claim. You should read the following paragraphs carefully to ensure that you know how the usage rules apply to you.
Definition of 'used' quota
13 Quota is regarded as used if a premium claim is made against it, if it has been leased out to another eligible producer during the quota trading period, or a combination of both.
Calculation of 'used' quota
14 In order to calculate how much quota you need to use, you should ignore quota you have leased in. Example:
quota owned: | 100 |
quota leased in: | 50 |
although you have a total of 150 units, you need use only 70 units (70 per cent of 100) in order to meet the usage rule.
15 In order to calculate how much quota you have used, you should add the number of quota units against which you have claimed premium to the number you have leased out. Example:
quota owned: | 100 |
premium claimed: | 50 |
quota leased out: | 25 |
In this example you have used 75 per cent of your quota.
16 If your premium claim is reduced as a result of losses arising from natural circumstances or losses accepted as being due to force majeure, quota is regarded as having been 'used' against these animals. However, if a penalty is imposed on you because you have failed to comply with the requirements of the scheme, the number of quota units counted as 'used' will be based on the number of eligible animals kept on your holding for the duration of the retention period.
| If you do not use your quota you may well lose it. |
Exemptions from usage rules
17 You may be exempt from the usage rules if you can satisfy the Department that you or your business were subject to exceptional circumstances which prevented you from using quota. The Department will consider any request you make for exemption from the usage rules in the light of the list of exceptional circumstances at Annex 1 to this booklet. Please note that you will normally be required to demonstrate that the exceptional circumstances prevented you from claiming premium or from leasing out or selling the quota.
18 If you failed to use your quota because you did not submit a valid premium claim, or because you were penalised under the scheme rules, it may be possible to base your quota usage on the number of eligible animals you kept on your holding for the duration of the retention period. To qualify for this you must continue to meet the full record-keeping requirements of the Sheep Annual Premium Scheme in order to prove that the animals were kept on your holding for the required period and it will be your responsibility to produce these records to the Department when required.
19 Failure to lease out quota to correct possible under usage cannot be accepted as an exceptional circumstance if for example the failure is related to the lack of demand or a producer being unable to achieve the full market value for the lease.
20 You should note that it is extremely unlikely that an exceptional circumstance which was accepted by the Department for the under-usage of quota in a particular scheme year could be acceptable in any subsequent year as it would no longer be deemed to be exceptional.
| It is safer to use your quota than to rely on an exceptional circumstance. |
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