Brussels, 09/09/2011 (Agence Europe) - Draft regulations on post-2013 reform of the common agricultural policy (CAP) confirm the European Commission's resolve to provide aid for farms in accordance to clearly defined objectives (income support, environment, disadvantaged regions, young farmers, etc) and to make good use of the various market management instruments. This comes within the framework of a comprehensive policy draft for the future CAP, one that is not only economic but also green and rural. The Commission suggests amending the direct payments scheme. Such payments would become targeted payments intended as income support for active farmers, while being greener and fairer at the same time. The Commission foresees keeping safety nets in place (market management instruments), extending them to a number of products that are not covered. In order to manage the problem of price volatility and agricultural crises, the Commission is providing for a system of support for insurance premiums or mutual funds, co-funded by the EU budget under the second pillar of CAP (rural development).
The draft regulations prepared by the staff of European Agriculture Commissioner Dacian Cioloº, to which Agence Europe gained access, are undergoing an interservice consultation process until 15 September. The European Commission will not adopt these texts until 12 October within the college of commissioners. There is no doubt that these documents will fuel informal discussion by the EU agricultural ministers, who are scheduled to meet on Sunday 11 to Tuesday 13 September in Wroc³aw, Poland (see related article).
There are seven draft regulations to be adopted by the Commission on 12 October and forwarded to the EU Council of Ministers and European Parliament. These relate to: - direct support schemes, common market organisation, rural development, financing, CAP management and control, the fixing of certain subsidies and export refunds, transitional measures for 2013, and specific technical adjustment for wine growers. A text is also being drafted for the scheme pertaining to the distribution of foodstuffs to the EU's poor, as are new rules on the publication of information relating to beneficiaries of CAP aid (further to the EU Court of Justice ruling).
The main elements of the reform, as set out in the draft regulations, can be summarised as follows:
Direct payments. It is planned that, from 2014 on, the single payment scheme and the single area payment scheme (applicable in most of the new member states) will be replaced by the basic payment scheme. The Commission suggests gradually unifying the unitary value of payment rights in a member state or in a region so as to reach a uniform value by 1 January 2019 at the latest, followed by a uniform flat rate throughout the Union by the end of 2028. For all member states where direct payments are below 90% of the EU average, there will be a one third reduction of this difference and, to this end, adjustment of national budgets. For these same countries (Bulgaria, Estonia, Finland, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia, Spain, Sweden, United Kingdom), there would be the possibility, from 1 August 2013 onwards, to devote up to 5% of their 2015-2020 rural development budget to direct payments.
Better focus. The draft regulation stipulates that no direct payment will be granted to legal or natural persons or to groups of legal or natural persons whose annual income from agricultural activity does not exceed 5% of receipts resulting from all economic activities, not including CAP-related public subsidies.
Aid ceilings. The Commission suggests reducing the amount of direct payments to be granted to farmers. Reductions would be by way of: - 20% for payments between €150,000 and €200,000, 40% between €200,000 and €250,000, 70% between €250,000 and €300,000, and 100% above €300,000. Calculation of the ceiling would be achieved by subtracting the wage bill, including taxes and social contributions.
Greening of aids. Out of all direct payments, 30% will be allocated to aid “greening”. This will be in the form of an additional payment to farmers who comply with three farming practices that are beneficial for the climate and environment: (1) crop diversification (a farm should grow at least three different crops, the main one not exceeding 70% of land use); (2) maintenance of permanent pastureland; and (3) maintenance of an ecological reserve: at least 7% of the land should be given over to environmental purposes (such as lying fallow, terraces and grasses). This additional payment would be automatically paid out for organic farming.
Disadvantaged regions. An optional additional payment (of up to 5% of the national budget) will be paid to farmers located in areas that face specific natural constraints.
Young people. The Commission is proposing an additional payment (of up to 2% of the national budget allocation) for young farmers setting up. This money could be allocated under rural development.
Small farmers. The proposed regulation provides for a simplified regime for small farmers (up to 10% of the national envelope) in the form of a flat-rate payment.
Continuing coupled aid. Coupled support, (that is, where a link is maintained between the level of aid and production) could be paid to farms which are experiencing difficulty, in particular in the following sectors: durum wheat, protein crops, rice, nuts, energy crops, high-starch potatoes, milk and dairy products, seeds, arable crops, sheep and goat meat, beef and lamb, grain legumes, olive oil, silk worms, linen and hemp, dry fodder, hops, sugar beet, sugar cane and chicory, and fruit and vegetables.
Public intervention. This will be possible for cereals (from 1 November to 31 May annually), dairy products (for butter and high quality skimmed milk powder, purchases could only be up to a maximum of 30,000 tonnes and 109,000 tonnes respectively), fresh and chilled beef and veal (to be activated directly by the Commission if the average price in a country were to fall below €1,560 per tonne).
Private storage. Eligible products are: white sugar, olive oil, fibre flax, fresh and chilled meat from adult cattle, butter, skimmed milk powder, and pig, sheep and goat meat.
Disruption clause. Provision is also made for the Commission to make use of exceptional support measures in the cattle meat, milk, pig meat, and sheep and goat meat sectors in the event of market disruption as a result of significant price falls on the EU market or world markets. This possibility would also be available to tackle animal diseases or address a fall in consumer confidence following on from public health issues and risks associated with animal health.
Sectoral aid. The Commission proposes ending current aid schemes for skimmed milk, hops and silk worms.
Sugar. The Commission is looking to end the quota system from 30 September 2016.
Wine. The Commission confirms the legislation that provides for restrictions of planting rights of vines to be removed from 1 January 2016.
Fruit and vegetables. EU aid will be limited to 4.1% of the value of the marketed produce of producers' organisations, though this aid may be increased to 4.6% on condition that the amount received over 4.1% is used for crisis prevention measures. EU co-funding of operational programmes will be limited to 50% of expenditure commitments, rising to 60% in some cases. Provision is also made for the EU to bear the full cost in the event of the withdrawal (of products) of no more than 5% of the total marketed by each producers' organisation.
Olive oil. Aid for producers' organisations is planned, and also funding of a three-year programme (caring for the environment, improving quality and traceability). Aid amounting to €11 million for Greece, €36 million for Italy and €576,000 for France.
Nuts. National aid will be authorised for locust beans, pistachio nuts, hazelnuts, walnuts and almonds. These will be limited to 41,000 hectares in Greece, 568,200 hectares in Spain, 17,300 hectares in France, 130,100 hectares in Italy and 41,300 hectares in Portugal.
Rural development. Planning will be carried out, no longer along current priorities, but on six EU-wide priorities: encouraging knowledge transfer, enhancing the competitiveness and viability of the sector, promoting the organisation of the food chain and risk management, preserving ecosystems dependent on agriculture and forestry, encouraging the shift to a low-carbon economy, and addressing the needs for employment and development in rural areas.
The Commission allows the option of implementing sub-programmes, for example, for young farmers, small farmers, mountainous areas and selling direct to the public. Also suggested are specific aid for organic farming, setting up a “European Partnership for Innovation in Productivity and Agricultural Sustainability”, and better coordination between the European Agricultural Fund for Rural Development (EAFRD) and the other EU structural funds by means of a joint strategic framework.
The Commission plans to put in place a risk management “toolbox” comprising support for mutual funds and insurance, and a new income stabilising instrument (compensation for farmers facing a 30% drop in their revenue) in order to address the severe volatility of agricultural markets. Member states are also encouraged to provide support through various financial instruments (loan funds, guarantee funds and venture capital). (L.C./transl.jl/rt)