Brussels, 27/04/2012 (Agence Europe) - On Thursday 26 April, the ministers of agriculture of the countries of the EU stood divided over the upper limit on aid and the internal redistribution between the countries of direct payments as proposed by the European Commission as part of the reform of the common agricultural policy (CAP). Discussions on the definition of active farmers made a small amount of progress, in favour of an alternative solution proposed by the Commission, which provides for the creation of a negative list, to include entities which manage golf clubs, for example.
The Danish Presidency noted broad support for its proposed compromise on active farmers, and also on the Commission's negative list. On the other hand, however, it noted much scepticism among the European agriculture ministers over the upper limit on aid. This system is being discussed in the context of the financial framework 2014-2020, the Presidency clarified. A number of delegations would like a longer period for convergence, the Presidency noted.
At a press conference on Thursday, Danish Agriculture Minister Mette Gjerskov said that she would put a report to the delegations before the end of the Danish Presidency on the state of play with work on the reform of the CAP, which could be used by the Cypriot Presidency to continue talks.
On the upper limit for aid, “it is well known that the division of direct income support between farmers has been characterised by the granting of disproportionate amounts to a small number of large beneficiaries”, said Commissioner Dacian Ciolos. Taking account of economies of scale, it is not necessary to grant the same unit level of support to large beneficiaries in order efficiently to achieve the objective of income support. This principle already exists in the current CAP, with the reinforced modulation decision for large beneficiaries. It would make no sense to European taxpayers if a number of countries urged the Council to take a step backwards, the commissioner said. He explained that the reform proposals have been designed in such a way as to avoid any negative impact on employment. The characteristics of holdings in terms of employment have been taken into account when laying down the levels of the upper limits. The number of holdings which would be affected by the degressivity and upper limits of aid is low - a few thousand cases across the EU. In answer to those who feel that this is an anti-economic measure, the commissioner retorts that this upper limit measure recognises the principle of economies of scale, the principle of good use of public money and proposes that the upper limit money be available for innovative projects which will also benefit large agricultural structures.
The agriculture ministers of the United Kingdom, Germany, the Czech Republic, Romania, Slovakia, Lithuania and Sweden more or less vehemently opposed the introduction of an upper limit on aid. Germany expressed its “categoric refusal” because, it argues, the proposal departs from production factors. In the view of Slovakia, the upper limit would jeopardise the competitiveness of farms. The Danish delegation said that the model was too complex. Spain is concerned at the consequences that the upper limit may have on cooperatives.
Among the countries in favour of upper limits are Hungary, Finland and Bulgaria. However, these countries argued that salaries, social security contributions and employee numbers must be taken into account when calculating the upper limit. Greece supported the upper limit, which it feels is an inherent element of the reform of the CAP and will have no negative impact on the environment and the economy. Its level could even be reduced, in line with the proposal of the Court of Auditors, in Greece's view.
For Romania, if the upper limit becomes obligatory, it would have to be higher. Slovenia and Malta are not opposed to the upper limit for basic forms of aid. Estonia feels that the upper limit system should be as simple as possible, and that the number of tranches should be limited. Latvia explained that it was in favour of the upper limit, as long as this creates no additional administrative burden and does not divide farms up. As for France, given the concerns over the upper limit, it feels that talks should continue, which Italy is prepared to support. Ireland feels that perhaps a bit more flexibility is needed in order to reach a compromise. Cyprus said that it was in favour of the upper limit as proposed by the Commission. In the view of the Danish delegation, there should be a fixed rate by 2019.
As regards the internal redistribution of aid, the Commission's proposal aims at a uniform value of payment entitlement at national or regional level, to be achieved in the payments at the end of 2019. This is in line with the objective of “putting an end to the historic references for individual support to the farmer, which can no longer be justified”. This is the logical and inevitable consequence of the decision made by the Council in 2003 to have decoupled payments. A transition period of five years has been proposed by the Commission to attenuate any negative consequences for farmers.
Many of the new countries of the EU (Poland, the Czech Republic, Romania, Estonia, Slovakia and Lithuania) equated this to the convergence of aid between member states. In Bulgaria's view, a level of equality is needed for all farmers and the simplified payment system SAPS should be kept in place. Sofia was backed up on this last point by many of the new states. Countries such as Sweden said that there should be an end to the historic references system. Germany and the United Kingdom supported the Commission's proposal, having themselves already started the internal convergence process. For the United Kingdom, however, the first step (40%) is too abrupt. Finland has also planned to move to a regional fixed-rate system in 2019. Malta feels that this is a good proposal. Latvia called for the payment uniformisation period to be reduced. Hungary feels that a sufficiently long period to achieve convergence should be taken into account. Belgium strongly criticised the convergence of aid as proposed, which will lead to a sharp drop in aid for some holdings. It argues in favour of a more gradual change.
Spain also voiced concerns at territorial imbalances brought about by this internal convergence. France argued in favour of moving gradually out of the historic reference system, and stated that convergence is not acceptable as proposed, because it could jeopardise farms, particularly in the cattle sector. In the view of the Netherlands, the first phase is important, although specific sectors should be taken into consideration, with a gradual approach for the calf-rearing sector. Italy believes that it will be impossible to achieve convergence in seven years, given the extremely differentiated levels of aid. Greece pleaded in favour of greater flexibility.
The principle of active farmer is very important to ensure that support under the CAP is better targeted. The current rules allow entities which carry out no agricultural activity to receive public support. This situation, which has been criticised by the Court of Auditors, cannot be tolerated, said Dacian Ciolos. He spoke out against the compromise solution presented by the Presidency, which basically consists of allowing the countries to decide on the notion of active farmers. In the view of the commissioner, the Presidency's solution “means a return to a status quo which is far from satisfactory”, whereas he feels that “the mechanism should be at Community level and apply equally to all and apply only to active farmers”. He presented the ministers with an alternative idea: working on a combination of the principle of a negative list with the criteria proposed for active farmers. “Using a list of this kind, certain entities which manage airports, railway companies, real estate companies, companies managing sports fields etc would be excluded, unless they can prove that they are active farmers”, Ciolos explained. This means that the total amount of their direct payments would have to correspond to at least 5% of the total revenue coming from non-agricultural activities. The burden of proof would rest solely with the entities listed in the system. This means that it would be no longer necessary to individually scrutinise all farmers receiving more than €5,000.
Several delegations (Poland, Austria, Hungary, the Netherlands, Italy, Lithuania and Ireland) supported the Presidency's proposal, whilst remaining open to the negative list proposed by the Commission. For Belgium, Latvia and Romania, the Commission's new proposal is a step in the right direction. Sweden said that the active farmer should comply with certain rules. The Czech Republic, Luxembourg, Finland and Germany are in favour of the Presidency's proposal. France and Greece did not oppose the idea of examining the Commission's new proposal, as long as the countries are able to add criteria. Bulgaria says that the negative list identifying operators excluded from the aid system would simplify the procedure. In the view of Cyprus, the Commission's proposal automatically to include less than €5,000 a year should be kept in the text, even if the regulation could include a negative list of non-eligible land, leaving the rest up to the individual discretion of the countries. (LC/transl.fl)