Brussels, 28/06/2002 (Agence Europe) - Unless there are changes during the inter-service consultation exercise, the European Commission is expected to approve pretty radical proposals on 10 July for the mid-term review of the Common Agricultural Policy (CAP). The Commission is planning, for example, to introduce a system of a single income payment per farm, decoupling aid from production, to make the modulation system compulsory and introduce ceilings for direct aid in order to release funds to be placed under the second pillar of the CAP (rural development), and also to cut the cereal intervention price by 5% and scrapping intervention purchases of rye. The Commission also aims to simplify schemes for beef farms and strengthen monitoring of the granting of aid for the export of live animals. As Europe has already reported, four options are on the table in terms of the future of the dairy sector.
An overview of the Commission's proposals:
New aid philosophy. A single income payment per farm, decoupled from production, would be introduced from 2004 onwards, calculated in line with payments received during a reference period. The granting of such aid would be governed by various criteria, such as preserving the environment, animal welfare, food safety and good agricultural practices. It could cover virtually all farms (arable, oilseeds and protein plants, linseed, potato starch, pulses, beef and sheep farms) but would not apply to the new payments for areas where reforms will be introduced with the mid-term review (such as rice, durum wheat and dried fodder). The Commission may propose that the new aid be extended to other sectors in the future (dairy, sugar, olive oil and specific fruits and vegetables). The setting up of an audit system for "professional" farms is also foreseen. This would be compulsory for farms receiving more than EUR 5000 a year.
Ambitious vision of rural development . Compulsory aid modulation in the form of a cumulative 3% a year cut from 2004 onwards (to achieve a total cut of 20% in six or seven years) would be applied over and above the first EUR 5,000 per year of aid (which would be exempt from this cut) for two full time workers (or working "unit"). Member States would be authorised to add a further exempt amount of EUR 3,000 per additional full time worker. The savings made in this manner (estimated at between EUR 500 and 600 million a year from 2005 onwards) would be reimbursed to Member States for rural development projects. After modulation and exempt amounts have been taken into account, there will be a ceiling for aid of EUR 300,000 per farm in order to have additional funds for rural development. Budget amounts transferred from the first pillar (market support) to the second will be used to fund new programmes focussing on food quality and safety and animal welfare and to enrich existing programmes that are far from proving their value (least favoured zones, agri-environmental measures, forestry and early retirement schemes). Fixed aid may be granted to each farm to encourage farmers to respect detailed food safety criteria (organic production, geographical indications, etc). Aid of up to EUR 200/hectare could be paid for programmes connected with food safety, environmental protection or animal welfare.
Fall (compensated) in cereal price and abolition of intervention for rye: the additional cut in the intervention price for cereals of 5% from 1 July 2004 (from 101.31 to 95.53 euro/t), should be accompanied by an increase in aid "as provided for by Agenda 200". At the same time, abolition of the monthly increases in the sector would again be proposed.
To remedy the problem of too great a quantity of rye stored in Germany, the Commission may agree to abolish the intervention price for the crop. The additional aid for durum wheat (which is especially suffering from a problem of quality) would be reduced to 27% (or from 344.5 to 250 euro/t) in traditional production areas and abolished in the others. A 15 euro/t premium (not submitted to modulation) would be introduced for high quality durum wheat delivered to the food industry (under contracts responding to strict criteria). The intervention price for rice would be reduced by 50% in a single go to reach the price of 150 euro/t and a system of aid to private storage would be implemented when prices fall below this. At the same time, direct aid would be taken from 52 to 177 euro/t for in a way to pay tribute to the role of rice production in traditional wetlands. The current aid regime for dry forage would be de-linked to production within a limit of a budgetary envelope of 160 million euro (in addition, aid to processors would be replaced by a reduced payment to 32 euro/t). Aid schemes for nuts would be simplified with the introduction of a lump sum aid of 100 euro/ha not subject to modulation that may be complemented by Member states to the tune of 109 euro-ha (the maximum ground surface guarantee would be 800,000 hectares).
These proposals will all be presented at the 15 July Agriculture Council, before Commissioner Franz Fischler takes them on a round of the capitals to explain and comment on them to Member States. The Commission will adopt the legislative proposals in the autumn in view of reaching an agreement at the March 2003 Council. The provisions adopted should take effect early 2004.