CAP Reform News April 18, 2013 12:00 am A fair amount of progress on CAP reform has been made this month. This looks positive for a ‘political’ agreement to be reached by the end-of-June deadline set by the Irish Presidency. There is still a lot of ground to be covered, but the respective positions of the European Parliament and EU Farm Ministers appear to be converging, making a speedy conclusion possible over the next three months. Positions Agreed We reported in the January Bulletin on how the Agriculture Committee (COMAGRI) of the European Parliament had reached a compromise. The full Parliament voted on the CAP reform dossier at the start of the month. Only a few minor changes from the COMAGRI position were made. European Farm Ministers also agreed their negotiating position at their meeting on the 19th March. This allows ‘Trialogue’ meetings between the Farm Council (Ministers), the Parliament and the EU Commission to begin. The aim is to have an agreement concluded by the 24th or 25th June. Summary The table below givesa summary of the final positions adopted by the Parliament and the Farm Council and compares them with the original Commission proposals. It is an update of a similar table we published back in June 2012. It can be seen that there has been quite a lot of movement and that the positions are not too far apart on many issues. However, it is worth reiterating that ‘nothing is decided until everything is decided’. SUMMARY OF CAP REFORM – MARCH 2013 Original Commission Proposals Oct 2011 European Parliament EU Farm Ministers FUNDING Pillar 1 30% of the gap between a Member State’s average payment rate and 90% of the EU average payment should be closed by 2020 Complex, but essentially a faster rate of convergence between member States than the Commission proposals. As per Commission. Pillar 2 Vague – proposal only states allocation will take into account ‘objective criteria’ and ‘past performance’ Split of funding between Member States not covered. Budget deal (MFF) gave specific RD ‘sweeteners’ to some countries but overall allocation unclear. Modulation Transfer of 10% of funding between Pillars allowed. Transfer up to 15% allowed. No requirement to match-fund modulation money As per EP Financial Discipline Current rules retained No €5,000 exemption for smallest claimants Only farms receiving less than €2,000 per year would be exempt BASIC PAYMENT SCHEME (BPS) ENTITLEMENTS AND PAYMENTS Entitlement Roll-over Re-grant of entitlements in first year of new Basic Payment Scheme (BPS) Countries with regional payment systems (i.e. England) can ‘recycle’ existing entitlements – i.e. no new grant As per EP 2011 Link Only able to establish new BPS entitlements if applicant made a valid claim in 2011 2009 and 2010 can be used as well as 2011. ‘Golden ticket’ can be split 2010 or 2011 to be used. ‘Golden ticket’ can be split Original Commission Proposals Oct 2011 European Parliament EU Farm Ministers Number of Entitlements New BPS entitlements will be equal to land claimed in first year of the BPS scheme (2015) As per Commission As per Commission BUT alternative of issuing entitlements based on the number claimed in 2012, 2013 or 2014 Limiting Extra Entitlements No measures No measures Can be limited to an increase of 35% over number of entitlements declared in 2009. Also possible to limit the number of payment entitlements on grassland in LFA/AwNC areas Historic to Regional Phasing (‘Internal Convergence’) 40% regional in first year, five years of phasing to flat rate 10% regional in first year. Change in entitlement values 2014 to 2019 can be limited to 30%. No requirement for full convergence by end of period – payments could be in the range 80% to 120% of regional average 10% regional in first year. No minimum rate of convergence by 2019 set out ‘GREENING’ ‘Equivalence’ Only organic farmers exempt from greening requirements Situation unclear as ‘equivalence’ measures rejected by full EP. Likely to be reinstated during negotiations however Farms where 75% of the land area was covered by national or regional environmental schemes could be automatically eligible for greening payments Greening Penalties Have to undertake greening otherwise penalties apply to BPS Failure to undertake greening only affects 30% greening element Failure to undertake greening only affects 30% greening element but additional 25% penalty would apply Double Funding Not mentioned Not allowed Seems possible – although text is unclear Crop Diversification Farmers with more than 3 Ha of ‘arable’ land required to have 3 crops – min and max percentages Only 2 crops required for arable areas of 10-30 Ha. Three crops above 30 Ha and no crop to cover more than 75% of the farm area As per EP. Various other exemptions. Spring and winter varieties to be treated as different ‘crops’ Permanent Grassland 95% of grass five years old or longer in the first year of the scheme must be retained Test to be 7 years rather than 5. Obligation can be applied at a national or regional basis rather than at farm level 5 year test retained. Obligation can be applied at a national or regional basis rather than at farm level Ecological Focus Areas 7% of area eligible for BPS must be in EFA. ‘Landscape features’ can count towards EFA EFA only to apply to holdings above 10 Ha. 3% EFA rising to 5% in 2016 with a possible rise to 7% by 2017. Nitrogen fixing crops, cover crops, energy crops to eligible EFA land EFA only to apply to holdings above 15 Ha. 5% EFA with a possible rise to 7% by 2017. Eligible land as per EP Original Commission Proposals Oct 2011 European Parliament EU Farm Ministers TOP-UPS Coupled Payments Up to 5% of a country’s BPS funds could be used for coupled payments. Rising to 10% where such payments had been at more than 10% in 2010-13 Coupled payments should be able to comprise 15% of BPS funds 7% funds possible to coupled payments or 12% where use was above 10% historically (note: Scotland’s current use would not be above the 10% threshold) Small Farm Supplement No measures An additional payment may be made on the first 50 hectares of entitlements (or average farm size) annually. This top-up to be no more than 65% of the regional average payment and limited to 30% of BPS funds Largely as per EP Small Farmers Scheme Compulsory for Member States Should be voluntary Should be voluntary Young Farmers Scheme Compulsory for Member States Should remain compulsory – and scope extended Should be voluntary Areas with Natural Constraints Top-up payment from Pillar 1 funds possible limited to 5% of funds As per Commission As per Commission PAYMENT LIMITS Capping BPS reduced in bands from €150,000. Nothing additional after €300,000. Labour mitigation element As per Commission Optional for Member States Active Farmer Two-part test: 1. Direct payments must be at least 5% of total farm receipts 2. claimed areas must be kept in good condition or have minimum agricultural activity levels (MS to set rules) Delete 5% test. Have a mandatory EU-wide ‘negative list’ of no-eligible claimants which Member States could amend. Member States must draw up rules to ensure payments are only made on areas being actively farmed Member States must set out rules on minimum activity levels for payments to be made. Member States to decide whether to have a ‘negative list’ of ineligible claimants OTHER POINTS Sugar Quota To be ended after 2014/15 Extended to 2019/20 marketing year Extended to 2016/17 marketing year Exchange Rate Use the September month average currency rates to convert payment for non-Euro countries. Use current 30th Sept date. LFA Reclassification Move to ‘Areas with Natural Constraints’ as part of Rural Development package More details on re-designation requested. Possible delay to 2016 Member States need more flexibility on how the new areas are defined For more details see our Technical Note of 25th October 2011. As per the full Parliament compromise As per the Farm Council compromise. Note, the Budget Deal signed by Heads of State in February (see Bulletin 02(13)) is a ‘Council of Ministers’ decision and therefore elements of that deal influence the Farm Council’s position where relevant – i.e. capping, modulation etc.
