Brussels, 30/09/2013 (Agence Europe) - On Monday evening 30 September, the European Parliament's agriculture committee approved the agreements (24 September trilogue and the political agreement of 26 June) on the Common Agricultural Policy (CAP). The plenary vote will take place in the second October session on 21-24 October or at the beginning of November. The Council is expected to adopt the four regulations in December.
The Parliament agriculture committee voted on the following four regulations, which were amended according to the compromises obtained on 26 June and 24 September: direct payments (report by Luis Manuel Capoulas Santos), common organisation of agricultural product markets (report by Michel Dantin), European Agricultural Funds for Rural Development (report by Capoulas Santos) and funding, management and follow-up of the CAP (report by Giovanni La Via).
1. - The compromise from the trilogue of 24 September focuses on the following points:
Degressivity and capping of direct payments. Aid that each farm can benefit from, without including the amount linked to greening, will be reduced for amounts that are above €150,000 by at least 5%. Wage costs can be deducted before applying this cut. This will not be compulsory for member states that allocate less than 5% of their envelope to redistributive payments for the first hectares included in all farms. Funding that is not affected by phasing out will remain in the country or the region concerned and transferred to rural development without co-financing being demanded.
Transfers between the two pillars. Member states will be able to transfer a 15% maximum of the direct payment envelope (first pillar) to rural development (second pillar), without co-financing obligations. They will also be able to decide whether to transfer a 15% maximum from the second pillar to the first p (25% for countries where direct support is less than the EU average).
Rural development co-financing rates. This will be set as a 85% maximum for most aid in less developed and outermost regions and the smaller islands in the Aegean Sea and from 63% to 75% in transition regions and 53% elsewhere. Community co-financing could be more for support measures underpinning the transfer of knowledge, promoting cooperation, setting up producer groups, subsidies for young farmers start-ups, Leader and other similar projects, as well as spending on the environment and climate change.
Allocations for member states in the second pillar. These are included in the basic regulation but can be, as requested by MEPs, adjusted by a delegated act from the Commission if this is technically necessary or if a legislative act allows it.
2. - The agreement of 26 June includes the following elements:
Fairer payments
Member states to continue to allocate funds on the basis of historic. The references must evolve towards a similar payment levels in which funds are allocated per hectare. Member states can choose from among the different options to attain this kind of convergence: adopt national or regional approaches (on the basis of administrative or agronomic criteria) or apply a regional/national lump sum payment by 2019. The agreement includes another option according to which the right of farmers receiving less than 90% of the national/regional average will be increased by 2013, by at least a third of the difference between their payments in 2014 and 90% of the national/regional average.
MEPs have attempted to ensure that by 2019, every farmer will receive at least 60% of the national/regional average. Nonetheless, in an effort to avoid sudden reductions in levels of support, which could threaten the viability of certain farms, Parliament has insisted that member states are allowed to guarantee that no farmer will lose more than 30% of their direct payment level in the first year of implementation.
Greening
30% of national budgets for direct payments to farmers will have to be linked to “greening” measures. MEPs also ensured that 30% of rural development spending would be allocated to environmental action. The option of paying farmers twice for applying the same greening measures was definitively ruled out at the insistence of MEPs. The three main measures proposed by the European Commission, namely crop diversification and maintaining existing permanent grassland and ecological focus areas are confirmed, but certain exceptions should be made to reflect geographical conditions and size of holding. Farmers whose holdings are certified under national or regional environmental certification schemes would be considered “green” only on condition that the measures they apply deliver at least the same benefit as the default greening ones, or go beyond them. The same applies to “equivalent practices” supported by CAP Pillar 2 (rural development) agri-environment schemes, which farmers could choose to apply instead of the three default measures. Organic farmers are already considered “green”, without any other requirements being made of them.
Crop diversification. In line with Parliament's position, farmers with holdings of 10-30 hectares of arable land which is not entirely cultivated with crops under water for a significant part of the year, should be required to plant at least two different crops. None of these crops should cover more than 75% of the arable land. Farms of more than 30 hectares of arable land should be required to cultivate three crops, with the main one covering not more than 75% and two main crops together not more than 95% of the arable land. Holdings in north Scandinavia (north of the 62nd parallel) with more than 10 hectares of arable land should cultivate at least two crops on arable land with none covering more than 75% of the land.
Permanent grasslands. Member states must ensure that the ratio of the land under permanent grassland does not decrease by more than 5% at national, regional or sub-regional level (to be decided by member states) compared to the situation in 2015. According to the agreement, farmers must neither convert nor plough permanent grassland on wetlands, peat and carbon-rich soils, which are located in areas, designated by member states as “environmentally sensitive”.
Ecological focus areas. Farmers with more than 15 hectares of arable land would have to ensure, as soon as the new rules take effect, that 5% of their farm, excluding permanent grassland and permanent crops, is reserved for so-called “ecological focus areas” (EFAs), such as land left fallow, terraces, landscape features, buffer strips, etc. Farms which are more than 75% grassland (provided that the remaining arable area is less than 30 hectares) and farms with crops under water would be exempt. EFAs could be weighted on the basis of their ecological significance, with the technicalities of setting the weighting and conversion factors being left to a delegated act. By the end of March 2017, the Commission would have to present an evaluation report and if necessary a legislative proposal to further increase the percentage of EFAs to 7%. This proposal would be subject to approval by both the European Parliament and the Council.
Greening sanctions. Should farmers fail to apply greening criteria, they would lose the greening component of their direct payments. Furthermore, during the third year after the new CAP enters into force, non-compliance could lead to further sanctions of up to 20% and from the fourth year on up to 25% of their greening payment. The additional penalty would not apply during the first two years of the new CAP, to allow farmers time to familiarise themselves with the new rules.
More flexible allocation of European funding
Direct payment schemes and payment entitlements. In a significant move towards simplification, member states or regions that currently operate either a regionalised or a hybrid system of payments (and therefore already partly meet the aims of the reform) will be able to maintain their payment entitlements. Member states that apply the single area payment scheme (Cyprus, Bulgaria, Romania, Hungary, Slovakia, Czech Republic, Poland, Lithuania, Latvia and Estonia) have received assurances that their payment systems can continue until 2020. These countries may also decide to continue to grant transitional national aid to farmers and sectors that were eligible for it in 2013. In 2015, the amount available for farmers will correspond to 75% of the previous sector-specific budget and will be reduced by 5% each year until 2020, when the support scheme will be phased out.
How best to help young and small farmers
Young farmers. To attract youngsters into farming, the agreement includes an additional 25% payment for young farmers (under 40 years old), but for a maximum of 100 hectares. Member states will have to use 2% of their national budgets to fund the support scheme for young farmers
Small farmers. Member states will be free to decide whether to set up a support scheme for small farmers. If so, then farmers entitled to less than €1,500 in direct payments must be automatically included in the scheme. Small farmers would receive a minimum of €500 and a maximum of €1,500 (compared to the Commission proposal of €1000) or €200-500 in the case of Croatia, Cyprus and Malta.
How to improve risk management
Risk management tools would be placed under CAP Pillar 2 (rural development budget) and would thus be subject to co-financing by member states. They include financial contributions to premiums for crop, animal and plant insurance and also mutual funds to pay compensation to farmers in the event of economic losses caused by adverse climatic events, animal and plant diseases or pest infestation.
The three institutions also agreed to create an income stabilisation tool, to take the form of financial contributions to mutual funds to compensate farmers in the event of a severe drop in their income. By the end of 2018, the Commission should carry out an assessment of the risk management tools and table a legislative proposal, if necessary, to improve their implementation.
Market management
The existing systems for public intervention private storage aid have been revised and made more accountable and efficient (technical adjustments for bovine meat and milk products). These changes in the milk sector come on top of those in the 2012 milk package incorporated in the rule and subsequently strengthen farmers' bargaining position. A safeguard clause has been introduced for all sectors, so that the Commission can take emergency measures to respond to general market volatility. These measures will be financed through a crisis reserve funded by annual reductions in direct payments. Funds that are not used for these crisis measures will be reallocated to farmers the following year.
In the event of serious market crises, the Commission can also authorise producer or inter-professional organisations covered by specific conditions, to temporarily and collectively take certain measures (private operators' withdrawal from the market or storage, for example) to stabilise the sector in question.
In an effort to strengthen farmers' bargaining position in the food chain, the Commission would like the different sectors to be better organised, with certain exemptions to European competition law. Rules on the recognition of producer organisations (PO) and inter-branch organisations will now cover all sectors and increase the possibility of setting up these organisations.
Farmers will also be able to collectively negotiate contracts for providing olive oil, beef meat, grain and certain major crops, subject to certain conditions and guarantees. The Commission will publish guidelines on possible questions linked to competition law.
Milk quotas will expire in 2015 and sugar production quotas are due to expire on 30 September 2017. An agreement has been reached to maintain the system until the end of September 2017. Member states that abandoned all their quotas in 2006 will not be able to recover them, explains the text. After the scrapping of quotas, contracts between beet producers and processors include prices, quantity and other details relating to their delivery.
A system to regulate vine planting should be maintained until 2030. The current system of vine planting rights should be replaced by a vine planting authorisation system, which could be launched as soon as in 2016, but the validity of original rights could be extended for another 3-5 years. Member states would have to make 1% of their total planted area available for new authorisations each year.
Voluntary coupled support
Member states would be allowed to grant support linked with specific production. These payments would be limited to 8% of their national budget for direct payments to finance this support if a member state currently provides coupled support or if the current level of coupled support is higher than 5% up to a maximum of 13%. The Commission enjoys a certain amount of flexibility when it comes to proving whether higher rates are justified.
More proportionate checks and sanctions
The Commission can authorise certain exemptions to European competition rules on condition that they do not undermine the single market. Therefore, agricultural organisations will be able to use instruments such as the one on private storage and promotional sales, withdrawing their products from the market or jointly purchasing the means of production needed to tackle the proliferation of parasites or animal diseases, as well as introduce temporary production plans.
The Council and the Commission rejected the Parliament proposal to grant aid over a three-month period to milk producers that voluntarily reduce their production by at least 5%.
Active farmers
A new “negative list” has been introduced that outlines the professional activities that can be excluded from benefiting from direct payments (airports, railway companies, water distribution companies, real estate companies and permanent sport grounds and clubs). This list will be compulsory for member states, unless the companies concerned can demonstrate that they exercise a genuinely agricultural activity. Member states will be able to complete this negative list and include other activities in it. (LC/trans.fl)