Brussels, 28/03/2013 (Agence Europe) - On Thursday 28 March, COPA-COGECA criticised the Commission's proposal aiming to reduce direct aid to farmers in 2013 (see EUROPE 10816).
“Farmers have made investment commitments for the year 2013 and had not accounted for this new cut. It comes as a complete shock”, said COPA-COGECA Secretary General Pekka Pesonen. With production costs barely covering market prices and market volatility on the rise, this cut in aid is the last thing that farmers and cooperatives need, he added. With nearly 40 million people employed in the EU agri-food sector, this initiative (proposal to implement financial discipline) “threatens growth and jobs in EU rural areas and deepening the crisis in rural areas”, Pesonen states. He calls on MEPs and EU ministers to revise this decision and to ensure that there is a strong EU budget in the future to ensure a viable agri-food sector to meet growing food demand.
COPA-COGECA reiterates that this proposal aiming to cut direct aid by 4.98% comes after the European Council had cut agricultural spending in the compromise on the 2014-2020 financial framework by €800 million (in relation to what the European Commission had planned).
80% of farmers exempt. In accordance with European budget rules, the Commission is obliged to present a “financial discipline” proposal before the end of March if the provisional budget for the following year exceeds the ceiling forecast. Created with the CAP reform in 2003, the mechanism has never been triggered until now, even if it has often been close to it. Taking account of the CAP 2014-2020 budget cut (-12% at the current stage of the negotiations) and of the re-inclusion, in the envelope of the first pillar, of the crisis reserve, the ceiling for 2014 of €41.59 billion (on the basis of 2011 prices) is exceeded. Consequently, the Commission proposes a cut in the direct aid which will be paid in 2014 of nearly 5%, in other words a reduction of €1.47 billion.
European farmers who receive less than €5,000 in aid will be exempt, according to the proposal. Thus, over 80% of beneficiaries will not be affected by this measure. This threshold is also in line with the compulsory modulation mechanism which applied for the 2007-2013 period, and is consistent with the Commission proposal on direct payments in the context of the CAP reform.
In its general stance on the CAP reform, the Agriculture Council planned that financial discipline would apply to payments exceeding €2,000. This is a difference which will pose problems in the negotiation to adopt the proposal on financial discipline.
This proposal relates to applications for direct payments in 2013, which the farmers must submit by May 2013, before receiving the aid in question typically in December the same year (from the 2014 budget). Financial discipline will not apply to Bulgaria and Romania (and Croatia) because the system of CAP direct payments is still being phased in in these countries.
Under the regulation, the proposal must be adopted by the European Parliament and Council before 30 June 2013. If not, the Commission will be empowered to set the adjustment rate. The Commission will update its forecasts for market and direct payment spending for 2014 in the autumn. If necessary, it will propose an adjustment to the rate of financial discipline, which would then need to be adopted by the Council by 1 December at the latest.
The draft budget for 2014 is still being worked upon by Commission staff. It will be published in the spring. As a precautionary measure, the financial discipline proposal is based on the European Council conclusions on the multiannual financial framework for 2014-2020. However, the final calculation of the financial discipline rate depends on the EAGF (European Agricultural Guarantee Fund) sub-ceiling under Heading 2 to be fixed in the Council regulation on the multiannual financial framework for 2014-2020. (LC/transl.fl)