On Friday 1 June, the European Commission presented its legislative proposals on the future of Common Agricultural Policy (CAP) beyond 2020. The main objectives are: simplification (more subsidiarity granted to member states) and better targeting of support (to compensate for reduced budget).
Addressing the press, Phil Hogan, European Commissioner for Agriculture, stressed the fact that the drop in the farm budget for 2021-2027 was limited to 5%.
Hogan highlighted the higher climate action and environmental ambitions: 40% of the total CAP budget should contribute to climate action and at least 30% of each national allocation intended for rural development will be devoted to environmental measures and in favour of the climate. One of the major lines of reform is the capping of direct payments at €100,000 per farm.
Three regulations. Reform consists of three regulations: firstly, a regulation governing aid for strategic plans to be established by member states (covering direct payments, market measures and rural development); a “CAP financing, management and monitoring” regulation (horizontal regulation); and a text amending common market organisation.
Last arbitration. The three documents were the subject of arbitration between the different Commission services concerned (see EUROPE 12027). The once-contemplated 60% threshold for the direct payments envelope devoted to basic income support has finally been removed. The capping of €60,000 in aid has been increased to €100,000 (sliding scale between €60 000 and €100 000). Hogan said he had taken comments by EU countries into account.
Strategic plans. The main innovation of this new CAP are strategic plans covering both the first and the second pillars of the CAP, to be developed (based on common European objectives) and managed by member states, once they are approved by the Commission.
Strengthened conditionality. A new condition integrating greening introduced in 2013 will apply to all direct aid. This will be on the basis of 13 regulatory requirements (including the nitrates, birds, habitats, and animal welfare directives) and 12 good agri-environmental conditions, including five new ones (crop rotation, preserving permanent pastures, sustainable management tools for nutrients, etc.) defined at European level. Member states must specify at national or regional level the rules to be followed for farmers.
Capping. Direct aid capping is imposed over and above €100,000 in support for one and the same farm, for each year. A sliding scale is applied as of €60,000: a 25% reduction from €60 000 to €75,000; -50% reduction from €75,000 to €90 000; -75% between €90 000 and €100 000. These caps are increased by all salaries (including taxes and social contributions) per unit of full time workers and per each “free” worker (family) on the basis of the average of standard salaries linked to agricultural work at national or regional level. The funds thus recovered are used by the member state to finance: 1) redistributive aid; 2) other decoupled aid; 3) transfers to the second pillar.
New aid structure. Direct payments are made up of several elements: a basic payment per hectare, a payment to young farmers, a redistributive payment for the first hectares, and a voluntary payment for environmental commitments beyond the basic rules.
Basic payment. The member states may decide not to apply a uniform rate of support per hectare on their territory but must nonetheless set in place a convergence provision providing that, in 2026, no right to single payment should have a value below 75% of the average value at the national level or at that of the homogeneous region. Member states, however, may set a maximum admissible drop of at least 30%.
Redistributive payment. The first hectares of each farm benefit from an increase fixed per hectare or for different hectare ranges and for a maximum number of eligible hectares. All such thresholds are defined at national level. The amount of the aid may not exceed that of average national direct aid per hectare.
Young farmers. Decoupled complementary aid may be granted to young farmers by way of the 2% minimum of national allocations that must be devoted by member states to such support.
Voluntary eco-provision. Member states should offer eco-schemes going beyond the basic requirements of conditionality in favour of climate and the environment within the first pillar. Such practices must be different from the agri-environmental measures set out in the second pillar. These payments are either additional payments to basic direct payments, or payments compensating all or part of the additional costs and income losses borne by the beneficiaries who set them in place.
Coupled payments. Some sectors in difficulty may receive coupled support limited to 10% of national direct aid and 2% for protein crops (compared with 13% and +2% today).
Operational programmes. Programmes may be implemented for the main agricultural sectors chosen by the member states according to the model which already exists for the wine, fruit and vegetables, cotton, apiculture, hops and olive sectors, which keep their specific provisions. The measures under these programmes of at least three years submitted by producer organisations may include: production planning, supply concentration, research, promotion, adaptation and action against climate change, etc.
Rural development. As for direct payments, the programmes must be adopted within the framework of the national strategic plans. Co-funding of the measures of the second pillar is fixed at 70% in very outlying regions, 70% in less developed regions, 65% in naturally disadvantaged zones, and 43% for the rest. By derogation, the rate becomes 80% for: - agri-environmental measures, Natura 2000 measures and “cooperation” measures. Also, the rate is by way of 100% for amounts transferred from the first pillar. At least 5% of the national financial package must be devoted to Leader measures, 30% to measures in favour of the environment (other than measures in favour of naturally disadvantaged areas), and 4% at most for assistance measures for the setting up of national strategies.
Risk management tools. The rate of triggering loss is 20% with support of 70% of CAP at most.
Crisis reserve. The annual level of this reserve foreseen to provide emergency aid to sectors in crisis is fixed at €400 million.
Transfers between pillars. Member states may transfer up to 15% of their financial envelopes to the second pillar, or the other way round. (Original version in French by Lionel Changeur)