Brussels, 20/11/2008 (Agence Europe) - On Thursday 20 November, after 20 hours of negotiations, EU agriculture ministers reached a qualified majority political agreement on the common agricultural policy (CAP) health check. Latvia said that, because of the differences in subsidy levels between old and new member states, it could not support the compromise texts, and some delegations could abstain when it comes to formally adopting the regulations.
From the end of 2012, apart from the premium for suckler cows and premiums in the sheep and goat meat sector where subsidies will remain partially linked to production, there will be no more exceptions allowed on decoupling of aid. The compromise also provides for a 5% rise in modulation level between 2009 and 2012, freeing additional funding for rural development, a reduction in subsidies for large farms, an annual increase of 1% in milk quotas until 2013 (and the retention of private storage for butter), retention of intervention for common wheat and a transitional measure to help tobacco producers.
“We have … a toolbox that allows us to provide better protection for farmers by means of insurance schemes and to give extra help to producers who really need it, as is the case in sheep farming,” added Michel Barnier, the French agriculture minister who chaired the Council. Agriculture Commissioner Mariann Fischer Boel highlighted the debate that had taken place on rebalancing aid between old and new member states. The new member states obtained inter alia: - extension of the Single Area Payment Scheme (SAPS) until 2013; - the phasing in of cross compliance rules (payment of subsidies once certain criteria are met) in new member states. Fischer Boel said that the agreement recognised that there was unequal treatment by authorising an additional payment of €90 million per year to these countries.
There are also accompanying measures to help milk producers as they move towards the abolition of quotas in 2015. Germany got what it wanted: around €300 million to support its dairy producers, of which €200 million will come from modulation and €60 million from unused agricultural subsidies (German farmers receive some €5.4 billion annually in direct aid and market expenditure). The commissioner said, however, that the money came from modulation and was not, strictly speaking, a milk fund since there is no new money. The increase in, milk quotas will be 1% per year over five years and a market analysis is to be carried out by the Commission in 2010 and 2012. Italy was authorised to implement a single 5% increase (in 2009). This will allow it to absorb its national quota excess, which is something of the order of 6%.
The compromise also takes account of the reservations of several countries (Germany, the United Kingdom and the Czech Republic) over aid degression (reduction in subsidies paid to large farms). In addition, a large number of countries (Greece, Spain, Finland, Ireland, Luxembourg, Belgium and others) argued strongly that the compulsory rise in the rate of aid modulation should be as low as possible. At the request of Poland in particular, temporary support for soft fruit production will continue until 31 December 2011.
Here is a summary of the main results of the CAP health check:
Modulation. Currently, modulation (reducing subsidies and increasing finding for rural development) stands at 5% of aid, with a €5,000 franchise (exoneration). The compromise will see modulation rise by 5% in four steps: +2% in 2009, +1% in 2010, +1% in 2011 and +1% in 2012. Modulation, then, will rise from the current 5% to 10% in 2012. The Commission proposed an increase from 5% to 13% in 2012.
Progressive modulation. In addition to the above basic modulation, a further 4% will be applied for subsidies amounting to over €300,000. “I'm delighted” that this principle has been retained, commented Fischer Boel. It shows, she said that most countries think it fair that “the biggest give a little more”.
Rural development and new challenges. The level of Community co-financing applied to funding derived from the increase in modulation and used to respond to new challenges (climate change, renewable energy, water management, biodiversity, accompanying measures for the dairy sector and innovation) had been increased to 75% (and to 90% in convergence regions). The cap on investment aid for young farmers has been increased from €55,000 to €70,000.
Single Payment Scheme. There are arrangements to allow countries to use part of the money from decoupling for new payments (grassland premium, support for the sheep and goat meat sector). There is also provision for the abolition of compulsorily leaving 10% of land fallow (set-aside). The effects on the environment of removing this fallow land will be compensated by the addition of a standard on creating buffer strips along the banks of rivers and streams, under “Good agricultural and environmental conditions”.
Speed of decoupling. Suckler cow premiums and sheep and goat premiums will be the only exceptions to the general rule on full decoupling of aid. Decoupling should be completed by 1 April 2002 for processing aid for dried fodder, by 1 July 2012 for the premium for potato starch and by 1 July 2012 for processing aid for flax and hemp. Aid for the following products will be decoupled from 1 January 2010: arable crops, durum wheat, olive oil and hops. Support for the following sectors will be decoupled by 1 January 2012 at the latest: beef and veal payments (except for the suckler cow premium), rice, nuts, seeds, protein crops and aid for starch potato growers.
Intervention instruments. In the dairy sector, the new regulation retains present arrangements, in a simplified form: buying-in of butter and skimmed milk powder at fixed prices from the beginning of the intervention period (1 March to 31 August) up to a maximum offered quantity of 30,000 tonnes of butter and 109,000 tonnes of skimmed milk powder. The continuation of buying-in beyond these quantities is to be by tender and at the discretion of the Commission. With regard to common wheat, intervention for bread-making wheat will take place from 1 November to 31 May, at the intervention price of €101.31 per tonne up to a maximum of 3 million tonnes. Once this quantity has been reached, intervention will take place by way of buying-in by tender. The compromise maintains intervention for durum wheat, rice, barley and sorghum with a ceiling set at 0 (in line with the maize model).
Cross-compliance. The cross-compliance animal welfare criteria will apply from 1 January 2013 for the 10 member states which joined the EU in 2004 and from 1 January 2016 for Romania and Bulgaria.
Specific aid (Article 68). With effect from 2010, member states may decide to use up to 10% of their national payment rights ceilings to provide aid to farmers, including in compensation for specific disadvantages in the dairy, beef and veal, sheep and goat meat and rice sectors in economically vulnerable and environmentally sensitive areas. Support under these measures is limited to 3.5% (2.5% in the initial proposal) of national aid caps. Exemptions to the 3.5% rules are provided for Finland and Slovenia (in the beef and veal sector).
Risk management. Member states will also be able to make a financial contribution to the payment of insurance premiums (crops, animals and plants) covering economic losses resulting from climatic conditions, animal or plant diseases and infestation by parasites. Countries will also be able to provide funding for mutual funds (in the event of animal or plant diseases or climate problems). No public financial contribution must exceed 65% of the costs incurred in setting up and operating these schemes (insurance and mutual funds). Co-financing from the Community budget will be limited to 75%.
Dairy sector. The increase in quotas agreed is the same as the Commission's initial proposal: 1% annually between 2009 and 2013 inclusive. The Commission is also to assess the market situation in 2010 and 2012. The Commission has undertaken to reduce the fat adjustment co-efficient from 0.18 to 0.09. This will allow countries, such as the Netherlands, Belgium, Luxembourg and Italy, to increase their milk quotas by roughly 1%. New rules have been introduced on super levies (fines in the event of quotas being exceeded). During marketing years 2009-2010 and 2010-2011, countries which exceed their quotas by more than 6% will have to pay 50% more in penalties. The system of private storage for butter is retained.
Tobacco. The agreement confirms that decoupling has to be complete by 2010. With effect from financial year 2011, additional Community support of €484 million will be available for rural development measures in tobacco producing regions. Further, there will be new provisional rural development measures introduced: income support in 2011 (maximum €4,500 per farm per year), 2012 (maximum €3,000) and 2013 (maximum €1,500) for farms which are restructuring.
Flax and hemp. For long fibres, aid will be €200 per tonne from 1 July 2009 and €160 per tonne from 1 July 2010 (with full decoupling by 1 July 2012). For short fibres, aid will be €90 per tonne from 1 July 2009 (with full decoupling by 1 July 2012. (L.C./transl.rt)