MOST farmers have now received the information regarding the historical element of the new Single Payment subsidy and some have been able to challenge their moorland line, but everyone is still in the dark.

It appears that the Rural Payments Agency has been inundated with amendments to their SP1 forms and farmers are unlikely to get a response until well into this month.

This is causing great difficulty in trying to look to the future and making business decisions.

The new subsidy system means that farmers do not need to grow wheat or have suckler cows to claim the Single Payment subsidy. The old system of coupled payments has gone and farmers have a much greater freedom to produce what they want.

Farmers need to look at the profit margin of growing a crop or producing a calf/lamb without taking into account the subsidy cheque. If you find you are losing £10/tonne growing wheat before subsidy, you must ask the question, am I going to support this loss with my subsidy cheque?

The business decisions are huge for farmers and have the potential to make large differences to profitability, business strategy and lifestyle.

However, this for some farmers is not the only major decision that they need to bear in mind.

Under the new regulations, farmers with historical entitlement have the ability to "concentrate" their payments on to a smaller acreage of land. This has major impacts on tenancies which, potentially, expire before 2012.

The historical information will be divided over all the hectares declared on the IACS equivalent form in May, 2005. This sets the entitlement value per hectare and cannot be separated out at a later stage.

If, therefore, in 2007 you give up farming half of the land you declare in May 2005, you will lose 50pc of your historical payments which belong to you, the farmer.

As the history can be concentrated and effectively secured over the forthcoming eight years, tenant farmers should ensure that the land they declare in May 2005 is secure up to 2012.

My advice is to contact your landlord as soon as possible and seek to secure the land until 2012 or, alternatively, leave it out of the 2005 declaration.

After 2012, all payments will just have regional values but, as the historic value is yours, you must endeavour to secure this element.

There are many deals being done between landlords and tenants at present where the landlord is extending the tenancy until 2012 on the provision that the entitlement (which is only regional by then) is returned to the landlord. This would seem to be the more sensible option for both parties, ensuring that neither party loses out in the long term.

We must try to avoid situations where tenants do not feel comfortable declaring tenanted land in May, 2005.