Complete review of greening, retention of the system of capped direct payments, new risk management instruments and further incentives to encourage young people into farming: that is the broad thrust of what Agriculture Commissioner Phil Hogan will propose on 29 November.
The draft communication on the future of food and farming, a 21-page document, is a means of defending the budget of the CAP within the forthcoming post-Brexit Community budget that will be presented in mid-2018. Formal legislative proposals for the next reform of the CAP will then be presented in the second half of next year, following an impact assessment that is expected in the spring.
Value of direct payments. The new CAP, which is supposed to be implemented from 2021 but which is likely to suffer some delay in view, for example, of Brexit, has to make it possible to provide healthy food for 500 million European citizens while, at the same time, protecting natural resources and maintaining the European family farming model across the whole of the EU. With this in mind, the draft seen by EUROPE reaffirms the importance of direct payments which “partially fill the gap between agricultural income and income in other economic sectors”. Directorate General Agriculture also rules out the idea that has been put forward by some in recent times of co-financing of direct payments, a measure that could have an adverse impact on the way the single market operates. Instead, it advocates capping direct payments at between €60,000 and €100,000 per farm per year, while taking account of the labour force to avoid damage to employment. The goal is to increase support for the smallest farmers, including through redistribution of aid. The Commission is proposing, then, to pursue efforts to achieve convergence in the level of support so as to “reduce the difference in average support rates between Member States, contributing to minimising the East-West divide in CAP support”. Measures such as capping and convergence were proposed in the previous CAP but were not adopted.
Complete design for greening. The greening chapter covers protection of the environment and climate action and it is here that the Commission proposes the most radical changes. In its draft communication, it argues that there has to be a merger of the three instruments that currently are used to green the CAP: cross-compliance, voluntary agri-environmental and climate measures under the second pillar, and measures greening direct payments introduced in the 2013 reform (and making up 30% of direct aid). The idea would be to abandon all these often overlapping measures and put in place a more flexible system that is results-based rather than means-based. This would allow the member states to discuss and agree a body of compulsory and voluntary measures in the first and second pillars in order to achieve the objectives set out in a strategic plan approved by the Commission.
Direct payments would then be made conditional on implementation of environmentally- and climate-friendly practices which would become the reference base to which more ambitious voluntary practices could be added. This new “conditionality” (obligatory foundation) could be defined in more detail by the member states to better reflect their specific situations and needs but they would have to ensure that the agreed objectives were achieved. To realise this aim, they would have flexibility between the two pillars of the CAP and could, for instance, transfer a greater percentage of first pillar financing to the second without having to undertake co-financing. “The new green architecture will encourage the promotion of co-operative/collective approaches, involving Farmers and Stakeholders in result-oriented design”, states the Commission in its draft.
Risk management and young farmers. The draft makes provision for an EU-wide permanent risk management platform to be set up in the short term. This forum would allow farmers, public authorities and stakeholders to share experience and best practice in order to improve implementation of existing tools. Within the framework of the future reform, it proposes consideration of new instruments to address the increasing price volatility: financial instruments (attracting private capital to help overcome temporary cash shortfalls), support for the re-insurance of mutual funds and incentives for precautionary savings (putting money aside in good years).
A further challenge for the future CAP is attracting young people to the sector. “The CAP should give flexibility to Member States to develop tailor made schemes that reflect the specific needs of their young farmers”, states the document. A Community system of start-up premiums for young people who wish to start their own farm – by means of a supplementary payments or increasing current lump-sum payments – could be set up.
International trade, migration and innovation. The draft contains two further chapters – one devoted to international trade, which states that “specific agricultural sectors cannot withstand full trade liberalisation and unfettered competition with imports”, and the other on migration, which says that the CAP can play a role in helping legal migrants to integrate in rural communities which provide opportunities for seasonal workers, for example.
Lastly, the draft highlights, a raft of other points: increasing innovation, technological development and digitisation in agriculture and meeting consumer expectations in terms of health (including tackling antibiotic resistance), nutrition and reducing food waste.