Brussels, 20/01/2003 (Agence Europe) - On Tuesday or Wednesday, the European Commission will adopt seven legislative proposals on the mid-term review of the Common Agricultural Policy (CAP) foreseeing a gradual cut in direct aid from 2006 onwards. The rest of the proposals take up most of the principles and guidelines announced in Commissioner Franz Fischler's Communication of last July, such as the decoupling of direct aid, introducing a compulsory farm audit system, strengthening rural development policy, and cutting cereal and rice prices. The dairy quota system will be maintained until 2015 with a few changes to aid.
Using aid modulation, the Commission suggests gradually cutting aid as follows: 1) for farms that have received less than EUR 5000 in aid, no reductions will be applied (EUR 5000 exemption); 2) for farms that have received between EUR 5001 and EUR 50,000, aid will be cut by 1% in 2006, 3% in 2007, 7.5% in 2008, 9% in 2009, 10.5% in 2010; 12% in 2011 and 12.5% in 2012, for the tranche of aid between EUR 5001 and 50,000; 3) for farms that have received more than EUR 50,000, aid will be cut by 1% in 2006, 4% in 2007, 12% in 2008, 14% in 2009, 16% in 2010, 18% in 2011 and 19% in 2012. Under this system, amounts resulting from a gradual reduction starting at 1% in 2006 rising to 6% in 2011 shall be made available to the Member States as additional Community support for measures to be included in their rural development programming. The amounts will be allocated between Member States according to criteria of agricultural area, agricultural employment and GDP per capital in purchasing power. The remaining amounts will be used to cover supplementary needs caused by the new market reforms.
The other measures proposed are as follows:
Decoupling of direct aid. Replacing most direct aid (for arable farms, beef, milk, sheep, potato starch, legumes, rice, seeds and dried fodder) with a single payment per farm based on the overall amount of aid received in the reference period 2000-2002; dividing this amount by the farm's hectares (except permanent harvests, forests and area used for non-agricultural uses as at 31 December 2002) to determine the eligibility for payment; setting national ceilings for the single aid payments; the farmer having the option of using the land concerned as he/she wishes, except for permanent harvests; allocating the national reserve of rights not used over a maximum of five years, except in the event of force majeure or exceptional circumstances; the possibility to transfer rights with or without land between farmers of the same Member State, the Member State in question being able to decide on the regions to which the transfers must be restricted.
Conditionality of aid. Introducing a compulsory penalty system (full or partial cut in aid) for farmers failing to respect certain regulatory standards in terms of the environment, food safety, animal health and welfare or job security on the farm; beneficiaries of aid will be obliged to keep their land in good farming condition.
Agricultural audit. Introducing a compulsory audit system which would initially only apply to farmers receiving more than EUR 15,000 in aid per year or whose annual turnover is over EUR 100,000; other farmers can opt to join the system; and financial support for farm audits from rural development funding.
Arable farms. 5% cut in cereals intervention price down to EUR 95.35/t from 2004/5 with compensatory increase in direct aid from EUR 63 to EUR 66/t (which will be included in the single farm payment) and abolishing the monthly increment system; rye to be excluded from the publish intervention system; production refunds for starches and certain derived products will no longer be applied; the current EUR 9.5/t supplement for protein crops will be turned into a crop specific area payment of EUR 55.57/ha, paid within the limits of a new Maximum Guaranteed Area (MGA) set at 1.4 million ha; starting in 2004, reduction from EUR 344.5 to EUR 250/ha in the supplement for durum wheat in traditional production zones (and premium of EUR 40/ha) and phasing out of specific aid for other regions where durum wheat is supported (of the quality required for making pasta and flour); including 50% of the EUR 110.54/t direct aid payment for starch potatoes in the single farm payment, the remainder being maintained as crop specific payment; integrating direct aid for dried fodder in the single farm payment, with national ceilings based on current National Guaranteed Quantities (NGQ).
Rice: One-step reduction of the intervention price by 50%, to EUR 150/tonne, i.e. an average increase in direct aid of EUR 52-177/tonne. Of this, EUR 102/t will become part of the single farm payment and paid on the basis of historical rights limited by the current maximum guaranteed area (MGA); - establishment of a private storage scheme to be triggered when the market price falls below the effective support price; - special measures triggered off when market prices fall below EUR 120/t.
Nuts: The current system will be replaced by an annual flat rate payment of EUR 100: ha granted for a maximum guaranteed area (MGA) of 800,000 ha divided into national guarantee areas. This can be topped up by an annual maximum amount of EUR 109 per hectare by Member States.
Milk and dairy products: - Prolongation of a reformed dairy quota system until the 2014-15 campaign, through early implementation of one year of reform measures adopted 1999 in the Agenda 2000. Furthermore, the foreseen reduction of 15% on intervention prices (5% annually in 2004, 2005 and 2006) would be replaced by asymmetric intervention price cuts of -3.5%/year for skimmed milk powder and -7% per year for butter. - In 2007 and 2008, two further asymmetric price cuts of the same amount in butter and SMP, accompanied by an additional increase in quotas of all Member States by way of 1% per year (in addition to that of 1.5% already foreseen for the previous three years) on the basis of 1999 reference quantities; - and additional compensation in 2007 and 2008 through direct aid, using the same method of calculation as in Agenda 2000; - suspension of intervention purchases of butter above a limit of 30,000 tonnes per year and, above that limit, it is proposed that purchases may be carried out under a tender procedure.
Set-aside: - producers (except organic farmers) currently subject to the set-aside obligation will be obliged to continue set-aside on an area equivalent to 10% of their current COP farming area; - Member States will be able to allow rotational set-aside where necessary for environmental reasons.
Energy crops (a carbon credit): establishment of aid of EUR45/ha for energy crops, applying for an EU MGA of 1 500 000 ha.
Rural development: establishment of new measures that may be implemented by Member States and the regions that so wish: (1) support of a maximum annual amount of EUR 1,500 per farm for the implementation of quality and production improvement programmes; (2) temporary and degressive support of a maximum EUR 10,000 per holding for application of norms based on Community legislation in the fields of the environment, public health, animal and plant health and occupational safety; (3) annual aid of maximum EUR 500 per livestock unit for stock farmers who undertake to improve the welfare of their farm animals and go beyond usual good animal husbandry practice for a period of at least five years.
Respecting the new budgetary framework
According to the Commission's analyses, the proposals would make it possible to make savings by way of EUR 337 million for the 2006 financial period, and 186 million from 2010. For future new Member States, recommended provisions would be reflected, from 2010 on, by an additional cost of EUR 88 million, which would increase each year to reach 241 million in 2013, giving the growing share of direct aid in total spending for these countries. The Commission's services justify, by way of conclusion, their proposal to reduce (modulation) direct aid for the Fifteen as of the 2007 budgetary year, by the fact that spending should remain below the new budgetary threshold decided last October in Brussels by the Heads of State and Government for funding such aid, as well as market measures in an enlarged 25-member Union.