CAP Agreement Concluded

The final elements of the CAP reform package have now been agreed.  The headline point is that ‘degressivity’ will remain at 5% on direct payments above €150,000 – despite moves by the European Parliament to increase the rate of deduction.  Other issues agreed include the rules on co-financing and transfers of funds between Pillars of the CAP.

As reported in our CAP deal analysis note of the 18^th July, a number of ‘financial issues’ had been left to one side in the final agreement.  EU Farm Ministers and the EU Commission were fairly clear on the compromise position that had been reached.  However, the European Parliament (EP) was maintaining that discussions on these points was not finished.  Talks have been ongoing throughout September and the Parliament has now finally accepted pretty much the original position. 

At farm level the most important point is degressivity.  The provisional position was that 5% of aid above €150,000 would be removed and the money used for Rural Development.  This has now been affirmed.  However, this is only a minimum for all EU Member States and countries can choose to implement higher deductions if they wish.  An example of this is the Welsh ‘capping ‘plans (see July article).  It was also agreed that countries chosing to use the ‘Redistributive Payment’ would not need to implement even this minimum 5% degressivity level. 

The rate of modulation possible was also being discussed.  Again, the previous position of a maximum 15% transfer from Pillar 1 to Pillar 2 has now been accepted.  The other main financial issue covered the rather technical point of co-financing rates.  The EP achieved a small change in this area. 

Now the loose ends have been tidied-up, the EU legislation can be formally adopted.  We would expect the Council Regualtions to be agreed inlate October or November.  The more detailed ‘Implementing Regulations’ should follow shortly afterwards.  These would start to provide greater clarity on how the Basic Payment Scheme is going to work in practice.