Brussels, 20/03/2013 (Agence Europe) - Shortly before midnight on Tuesday 19 March, the agriculture ministers of the member states succeeded in reaching agreement on a partial general approach on four regulations (direct payments, market measures, rural development and horizontal regulation) reforming the common agriculture policy (CAP). 30 trialogues (Commission, Council and Parliament) will be held, starting on 11 April, seeking to reach full political agreement on CAP reform by the end of June.
Only two countries voted against the general approach: Slovenia, which would have preferred a free system for the redistribution of sugar quotas and Slovakia, which called for the aid maintaining a link with production (so-called “coupled” aid) to be set at 15% of the national envelope.
It will have taken no fewer than three compromise texts to reach the objective of an agreement within the Agriculture Council on the reform of the CAP, which accounts for more than 35% of the total budget of the EU. It was above all the second of these (see EUROPE 10810) which made it possible to get things moving on important issues such as the greening of agricultural aid, sugar quotas and coupled aid.
“This has been no mean feat”, commented Irish Minister for Agriculture Simon Coveney following the conclusion of the agreement, given the different priorities and specific natures of the countries. “I have a solid mandate and we are going to be able to move to the next stage and wrap the process up”, he said.
Dacian Ciolos, the European commissioner for agriculture, believes there are points on which the Council's position has moved closer to the Commission's proposal, such as an end to sugar quotas in 2017 (even though the Commission originally scheduled this for the end of 2015), greening (zones of ecological interest) and sanctions against those failing to observe the rules on the greening of aid. He welcomed the reasonable position of the Council on the coupling of aid which should, in his view, be “limited and targeted towards specific needs”. Ciolos regretted the Council's lack of ambition on the internal convergence of aid (redistribution of aid between farmers of a single country) and on the issues of flexibility with regard to greening.
Here is an overview of the Council's general approach on CAP reform:
Regulation on direct payments
Basic payment scheme: historical references are to be to be dropped the new member states will have the option of keeping in place their single area payment scheme (SAPS) until 31 December 2020 and granting national transitional and degressive aid, dropping from 70% of the envelope of the sector in question in 2015 to 20% in 2020.
Current obligations as regards the conditionality of aid have been kept in place.
An option has been brought in to top up aid for the first 50 hectares of all farms (up to a limit of 65% of national or regional average payment).
Internal convergence of direct support. The agreement leaves open the option for the member states to decide on the appropriate pace for the convergence of direct aid. All payments per hectare below 90% of the national or regional average in 2014 will plug a third of this gap by 2019, with the initial stage limited to 10% of the national or regional upper limit.
External convergence. Member states with direct payments per hectare below 90% of the EU average will plug a third of this gap over the next period, with a minimum level of €196 per hectare at current prices to be achieved by 2020 (in line with the agreement on the multi-annual financial framework of the EU for 2014-2020).
Financial discipline. Changes on financial discipline and the funding of the crisis reserve will be applicable only to payments in excess of €2,000. Before the end of the month, the European Commission is to propose to trigger, for the first time, the current financial discipline mechanism (reduction of direct aid), as expenditure forecasts have proven to be higher than the agricultural budgetary envelope for 2014.
Greening. Provision is made for the payment of 30% of the direct payment in exchange for the observance of certain agricultural practices which are beneficial for the climate and the environment. If these criteria are not met, an additional penalty (on top of the withholding of the green payment) equal to 25% of the “green” payment is provided for.
Three criteria have to be observed in order to receive this “green” payment: - diversification of crops: for holdings of more than 30 hectares, the main crop may not cover more than 75% of arable land and the two main crops together must not cover more than 95%. Farms of less than 30 ha may plant only two crops, the larger of which must not exceed 75% of the surface area; - keeping in place permanent pastures: farmers must keep surface areas devoted to permanent pastures at their 2014 level. They may convert a maximum of 5% of their permanent pastures. If the ratio between permanent pastures and agricultural area drops by more than 7% over a year at national, regional or sub-regional level, the member states will require farmers who have acted without authorisation to convert their land back into permanent pastures to come back below the threshold of 7%; - surface area of ecological interest: when the admissible agricultural surface area of a farm, not including land given over to permanent pastures, covers more than 15 hectares, farmers must give 5% of the surface area over to agri-ecological structures. This percentage may be raised to 7% further to publication by the Commission of an impact assessment. No more than half of this percentage may be implemented at regional level. This obligation may also be implemented collectively between a number of holdings, as long as the land in question is adjacent. The member states may choose from a list of crops considered to be surface areas of ecological interest: set-aside, terraces, buffer strips, agri-forestry area, permanent crops with fewer than 250 trees per hectare, permanent crops grown on a slope of more than 10%, short-rotation coppice, plants with nitrogen-fixing qualities. The 5% obligation may be dropped in areas where forests cover more than 50% of surface area, with a ratio of forests to crops of greater than 3 to 1.
There is provision for a system of equivalence: farms certified to practise organic farming are considered to be “green by definition” and are not required to observe the greening criteria. Certified practices in the framework of second-pillar agri-environmental measures or under national or regional certifications may be seen as equivalent to the greening criteria. If a farm sets in place an agri-environmental measure which is deemed equivalent to one of the greening criteria over more than 75% of its area, this greening criterion shall be considered to have been met.
Young farmers. Member states will have the option of granting young farmers (up to the age of 40) an additional payment over a period of up to 5 years, of up to 2% of the national envelope.
Smallholdings. It willbe possible for the member states to apply a simplified regime, up to a limit of 10% of the national envelope, for farmers receiving a total in payments of between €500 and €1,000.
Coupled support. There is an option to grant coupled support up to a limit of 7% of the national envelope, with this limit raised to 12% for member states already granting this kind of support or for those applying the single area payment scheme. This coupled payment may be paid in the following sectors: cereals, oilseeds, protein crops, grain legumes, flax, hemp, rice, shell fruit, starch potatoes, milk and dairy products, seeds, sheep and goat meat, beef meat, olive oil, silkworms, dried fodder, hops, sugarbeet, sugarcane and chicory, fruits and vegetables and short-rotation coppices.
Transfer of funds between the two pillars. The text authorises the member states to earmark up to 15% of their envelope for rural development, by way of additional support. They may also transfer up to 15% of the rural development envelope into direct payments (up to 25% in the case of Bulgaria, Estonia, Finland, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia, Spain, Sweden and the United Kingdom).
Limits. As provided for in the agreement on the financial framework, the upper limits on aid to large farms will be optional. The member states may opt to reduce the level of direct payments to be granted to a single farmer on the basis of a percentage and tranches set at national level. The lowest amount applicable to the first tranche may not be less than €150,000.
Active farmers. No direct payments will be granted to natural or legal persons or to groups of natural or legal persons whose agricultural land consists mainly of land kept naturally in a state which makes it suitable for pasture or crops, and who do not carry out minimal levels of agricultural activity on this land. A provision is also made to exclude from the payment activities such as the management of airports, railway companies, sports grounds and leisure facilities, etc.
Regulation on the common market organisation
The regulation provides for a revision of the public intervention systems and private storage aid to make them more reactive and efficient. The Commission may adopt exceptional measures in the event of significant disturbances or threats of disturbances to the market, animal disease and loss of consumer confidence or specific problems (funded by the crisis reserve).
Wine. There is a provision for a new planting authorisation scheme applicable from 1 January 2019 to 31 December 2024. The text lays down the maximum value for the annual increase of planted surface area at 1%, with the member states having the option of setting in place a lower safeguard threshold at regional or national level (additionally, the authorisation will expire after three years if not used).
Sugar. The compromise aims to extend the quotas until the growing year 2016-2017 (in other words, until 31 December 2017.
Milk. The “milk package” (tightening up the negotiation powers of producer organisations and option to manage supply of cheeses with designation of origin) is included in the common market organisation. A meeting to discuss the post-milk quota situation will be held in September.
Hops. Specific measures to be kept in place.
Fruits and vegetables. Extension of aid to operational funds to associations of producer organisations.
Export refunds. Scheme to be kept in place.
Rural development regulation
25% of the funds must be earmarked for environmental protection measures (water, soil, biodiversity, etc) and measures to fight climate change. The greening of aid constitutes the baseline of the agri-environmental measures.
Less-favoured regions. Mountainous areas are considered to be less-favoured regions. As regards the others, the designation of areas subject to natural constraints is carried out on the basis of eight bio-physical criteria defined by the European Commission (soil quality, climate, slope, etc). An area is considered to be less favoured if 60% of the agricultural land corresponds to one of the criteria or 80% to two criteria. The member states have a margin of flexibility and may delimit 10% of additional land depending on their own criteria. Areas to be excluded from the mechanism due to these new criteria will receive degressive aid on a transitional basis.
Insurance and mutual funds for risk management. Aid has been brought in to set up mutual funds for producers wanting to take steps to defend themselves against market fluctuations, at a rate of €0.65 for every euro paid by the farmer. The text lays down aid in favour of harvest insurance in cases in which the drop in income is greater than 30% of the average annual income of the farmer in the event of natural disasters, unfavourable climatic phenomena, diseases or parasitic infestations (up to a maximum of 70% of losses).
It is worth noting that, as regards the details for the division of the rural development funds between the member states, the agreement has been postponed due to demands expressed by the United Kingdom related to its rebate on its contribution to the EU budget. This question has been referred to the Ecofin Council.
Transparency. The text includes a provision for the names of the recipients of aid under the CAP to be published, with an exemption for farms receiving low amounts (between €500 and €1,000).
Initial reactions. COPA-COGECA has welcomed the fact that the European ministers have reached an agreement on their negotiating mandate, but nonetheless called for more practical, ambitious measures to be included in the final package in June. Pekka Pesonen, the secretary general of COPA-COGECA, said that the measures aiming to green the CAP still further are “more practical and flexible than was originally proposed”. The decision of the heads of state and/or government to avoid taking land out of production “must be included in the final package”, he said. Reasons for COPA-COGECA's satisfaction: continuation of the SAPS, increased coverage of products for the recognition of producer organisations, inclusion of the management instruments of the wine-producing sector in the reform, but the annual growth percentage should not exceed 0.5%, as against 1% in the text, COPA argues. The organisation is disappointed that the sugar quota system of the EU has not been extended until 2020.
The sugar producer organisations would also have preferred sugar quotas to have been extended until 2020. (LC/transl.fl)