Brussels, 12/10/2011 (Agence Europe) - On Wednesday 12 October, the European Commission proposed to reduce direct aid in the category starting from €150,000 and to cap it at €300,000, starting from 2014. In its legislative proposals on the reform of the common agriculture policy (CAP), it also proposed that 30% of the payments be granted conditionally on the basis of respect for sustainable and environmentally beneficial agricultural practices (crop diversification, maintaining permanent pasture, preserving reservoirs of biodiversity, etc). The Commission has also proposed a fairer division of aid between farmers, whilst acknowledging that this redistribution effort lacks ambition due to budgetary constraints. Many criticisms focus on the greening of agricultural aid.
The Commission is proposing to bring in a “proper partnership of trust between society, which offers the financial resources of a public policy, and farmers, who support rural areas, are in touch with the ecosystems and produce our food”, said European Commissioner Dacian Cioloº, when presenting the package of legislative proposals on the CAP post-2013.
The key objectives of this reform are as follows, the European agriculture commissioner explained: - making the competitiveness of all European agricultures work to improve our food security; - start creating the foundations for new long-term competitiveness, which is both economical and ecological; - ensuring the presence of an agriculture which develops harmoniously throughout the European territory; - simplifying the CAP.
“An in-depth reform does not mean less budget for a public policy. An in-depth reform to me means fundamentally changing the objectives and instruments. This is what we have done”, Cioloº told a group of journalists on Monday 10 October. He went on to explain that this was a reform to make it possible to “change the logic of direct payments”, whilst working towards achieving the objectives laid down for EU agriculture.
As regards macroeconomic conditionality (suspension of funds for countries breaking the rules of the stability and growth pact) applicable to the structural funds as per the Commission's proposals, only second-pillar agricultural funds (rural development) would be affected by this measure. Direct payments to farmers cannot be suspended, DG Agriculture explained to us.
The Commission is proposing to set in place “differentiated support on the basis of objective needs”, the commissioner explained. He referred to an “evolutionary” mechanism of direct support.
(1) Direct payments. “We need a paradigm change”, argued Cioloº. The historical references have expired. He proposed setting in place a “renewed model, with better-targeted support linked to surface area, with 2014 as the reference year”. The agricultural surface area used will be a key element of a new payment model, taking account of both the productive dimension and public goods generated on this land. “This approach means that we must work towards convergence because the same productive basis, the same production level of public goods, should receive a similar level of support”, the commissioner explained.
The Commission is proposing a basic payment scheme to be used from 2014. It is anticipated that 70% of direct payments will go to supporting the basic income of farmers. They will consist of decoupled payments (with no link to production). All countries of the EU will have to implement uniform payments per hectare at national and regional level in 2019. The aim is to create a fairer distribution of aid between farmers, between regions and between member states.
In order to improve the division of aid between the member states, the Commission is proposing that the countries with the highest levels of payment per hectare see a reduction in their envelope of aid. Countries receiving less than 90% of the average of payments per hectare in the EU will receive a bit more. The Commission proposes that the gap (the difference between the lowest payments and 90% of the European average for the period) be cut by one third over the period of the next financial framework (2014-2020). Cioloº states that for all countries which will see a cut in their aid, the reductions will be “less than 10%, in the order of 6 to 7%”. A table shows that the countries to be the most affected by the reduction in payments are Malta (which currently receives €700/hectare on average), the Netherlands (around €420/hectare), Belgium (€400), Italy (€380), Greece, Cyprus and Denmark (€350), Slovenia and Germany (€300/hectare), France (slightly below €300), Luxembourg and Ireland. The countries which will see their levels rise the most are, in order of size, Latvia (from €100/hectare to around €150), Estonia, Lithuania, Romania, Portugal, Slovakia, Poland, the United Kingdom and Spain. The same amount of aid for all countries is a target to be achieved during the post-2020 period.
The Commission is proposing the reduction (degression) in the sum of direct payments to be made to a single farmer. The reduction will be: 20% for payments in the €150,000-200,000 bracket, 40% between €200,000 and €250,000 and 70% for payments between €250,000 and €300,000. Aid may not exceed €300,000 euros, due to the new upper limits. Calculating the upper limit will involve subtracting the wage bill, in order not to penalise holdings which employ large numbers of people.
The Commission proposes that 30% of the direct payments are made available for environmentally-friendly agricultural practices; this is what is known as “greening”. The upper limits will not apply to this aid, which will be in proportion to the surface area of the farms. The three agricultural practices which must be respected are: - crop diversification (farmers must grow at least three crops on their arable land); - maintaining permanent pasture; - maintaining a reservoir of biodiversity and landscape elements (at least 7% of the farmland must be used for ecological purposes). “These measures are simple and effective way to fight climate change and the loss of biodiversity. What is more, they do not mean a disproportionate burden of work either for farmers or the administrations”, Cioloº told the European Parliament.
An aid regime is planned for smallholdings. This regime is optional and the countries of the EU may earmark up to 10% of all of their direct payments to cover this aid. The aid will be annual and fixed at between €500 and €1,000. A farmer may apply to benefit from this aid regime from the start when it is set in place in 2014, but not at any other time during the process. “This is to avoid the parcelling-up of farms in order to receive this support”, Cioloº explained. The farmer may opt out of this small farmer regime whenever he or she wishes, but a farm which becomes small along the way cannot join the system, or there is a risk that a medium-sized holding could split into two or three small units in order to receive the aid. If a small farmer dies, only one of the heirs may remain in the scheme, if he or she keeps the farm as it was. If a farmer wishes to sell the land, there will be a restructuring measure in the second pillar (rural development) allowing him or her to continue to receive the small farmer aid.
The Commission wishes to authorise the payment of an additional sum (up to 2% of the national envelope of direct payments) to young farmers (under the age of 40) going into the industry (for five years). Young farmers will be entitled to a payment 25% higher than the average, but for a limited surface area (25 ha maximum). Very often, young farmers have major investments to make when setting up and struggle to secure funding from banks. Two thirds of EU farmers are over the age of 55 and just 7% are under the age of 40.
The Commission will allow the countries to pay additional aid (optional scheme) for farmers in less favoured areas (up to 5% of the national envelope). These are farms in areas with natural disadvantages. At the same time, the Commission has kept in place the rural development measure for less favoured areas, with an increase in the maximum aid, which will now be €300/hectare.
Additionally, the Commission is allowing coupled payments (which keep in place a link with the volumes produced) to be made, within certain limits. Countries with less than 5% of their total payment under coupled aid may go up to 5% of coupled payments. Countries with between 5 and 10% of coupled aid may pay up to 10% in coupled payments. “The countries will have to give reasons as to why certain categories of farmers and certain regions” receive coupled aid. This margin (within the limits of the coupled totals negotiated at the World Trade Organisation) will make it possible to “maintain agriculture even in the toughest areas and in sectors experiencing difficulties”, the European commissioner explained.
Direct payments will be made to active farmers. “It is proposed that very large beneficiaries with land, but little or no agricultural activity, be excluded from these payments. We will have to ensure that those benefiting from these payments have a minimum level of activity on their farms”, Cioloº explained. “I seriously doubt that airports or golf clubs need agricultural income support”, the commissioner told the members of the European Parliament. It is for this reason that “we have brought in a criterion that stipulates that direct aid received must represent at least 5% of the non-agricultural income of the direct aid beneficiary. We have also brought in a minimum work obligation for agricultural surface area, because it is not the purpose of the CAP to remunerate armchair farmers”. However, certain voices at the European Parliament lamented the fact that under this definition, the Queen of England will continue to receive EU agricultural support.
The conditionality of aid (aid granted subject to meeting certain environmental, animal welfare and quality criteria) will be kept in place, but simplified. Whilst ensuring a methodological management of public money, “we can reduce the burden of controls, for example by rewarding member states with an error rate below 2% for several years in succession”, the commissioner added.
The countries of the EU will have the option to transfer up to 10% of their national envelope of direct payments into their rural development funds envelope. And countries with less than 90% of the average of EU direct payments will be able to transfer up to 5% of their rural development fund into their direct aid envelope.
(2) Market measures. The existing public intervention and private storage measures are mechanisms which are used to help producers in the event of problems on the market. The Commission is proposing to extend private storage to practically all types of production for which this is justified. “The fact that we have not systematic intervention, but a genuine safety net for the whole of the sector, is an important gain for agriculture”, Cioloº commented. “We have defined a faster market intervention system. We have also created a separate fund to intervene in situations of crisis, in the event of drops in prices or income.” There are plans for a crisis reserve fund of €3.5 billion to be used for market measures, in the event of crisis on the market or a loss of confidence in consumers on a large scale.
In the framework of the second pillar, the Commission is proposing a new crisis management tool to fight volatility, which will have the philosophy of “Europe will help those who help themselves”, in other words: “take out insurance, create mutual funds and the Commission will support you”.
The Commission is also proposing a safeguard clause or “exceptional disturbance clause” for all sectors, in order to allow the Commission to take emergency measures to combat serious unforeseen circumstances (such as sanitary crises, for example the E. coli outbreak).
For the sugar sector, the Commission is planning for the production quota system to expire on 30 September 2015 (not 2016 as Cioloº' services initially preferred). For the post-quota period, white sugar will be eligible for private storage aid. Additionally, framework provisions will be set in place for agreements between the sugar industries and the producers.
The Commission is also planning measures to improve farmers' negotiation power. Each country must register and recognise producer organisations. The Commission is also proposing to extend to other sectors the option which exists in the fruit and vegetables sector to act collectively within producer organisations. Farmers will be able to get together to carry out all sorts of actions, except price-setting, the Commission explained. “This gives farmers the option to get organised and reinforce their negotiation power”, said Cioloº.
The Commission is proposing to renew programmes to distribute fruit, vegetables and milk to schools.
(3) Rural development. New measures will be used to increase the competitiveness and growth of rural areas around six priorities: encouraging innovation; increasing competitiveness; working on the organisation and management of risk; preserving ecosystems; encouraging an efficient use of resources; and promoting social inclusion.
Within this general framework, 20 measures are planned, including: - a coherent package for knowledge-based agriculture, including support to knowledge transfer, advisory and information services and cooperation between farmers and scientists; - additional support for agriculture with a focus on quality (support of €3000 per holding for quality procedures and certification); - clear support for organised agriculture which markets its products better (maintaining producer groups, collective initiatives such as the creation of short supply chains, etc); - new measures for “farm and business development”. This initiative will help to support young farmers getting started, the development of small farms and non-agricultural economic diversification, with support of up to €70,000.
(4) Knowledge-based agriculture. “We aim to use new resources for research and innovation. The agriculture of tomorrow is knowledge-based agriculture, to produce more with less”, Cioloº said. He proposed doubling the agronomic research effort for the period 2014-2020. Within the budget of the framework programme for research, €4.5 billion have been earmarked for agriculture. “We are behind other countries in the world”, the commissioner stressed. (LC/transl.fl)