CAP Reform News April 18, 2013 12:00 amA 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 AgreedWe 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.SummaryThe 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 2011European ParliamentEU Farm MinistersFUNDINGPillar 130% of the gap between a Member State’s average payment rate and 90% of the EU average payment should be closed by 2020Complex, 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.ModulationTransfer of 10% of funding between Pillars allowed.Transfer up to 15% allowed. No requirement to match-fund modulation moneyAs per EPFinancial DisciplineCurrent rules retainedNo €5,000 exemption for smallest claimantsOnly farms receiving less than €2,000 per year would be exemptBASIC PAYMENT SCHEME (BPS) ENTITLEMENTS AND PAYMENTSEntitlement Roll-overRe-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 grantAs per EP2011 LinkOnly able to establish new BPS entitlements if applicant made a valid claim in 20112009 and 2010 can be used as well as 2011. ‘Golden ticket’ can be split2010 or 2011 to be used. ‘Golden ticket’ can be split Original Commission Proposals Oct 2011European ParliamentEU Farm MinistersNumber of Entitlements New BPS entitlements will be equal to land claimed in first year of the BPS scheme (2015)As per CommissionAs per Commission BUT alternative of issuing entitlements based on the number claimed in 2012, 2013 or 2014Limiting Extra EntitlementsNo measuresNo measuresCan 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 areasHistoric to Regional Phasing (‘Internal Convergence’)40% regional in first year, five years of phasing to flat rate10% 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 average10% regional in first year. No minimum rate of convergence by 2019 set out ‘GREENING’‘Equivalence’Only organic farmers exempt from greening requirementsSituation unclear as ‘equivalence’ measures rejected by full EP. Likely to be reinstated during negotiations howeverFarms where 75% of the land area was covered by national or regional environmental schemes could be automatically eligible for greening paymentsGreening PenaltiesHave to undertake greening otherwise penalties apply to BPSFailure to undertake greening only affects 30% greening elementFailure to undertake greening only affects 30% greening element but additional 25% penalty would applyDouble Funding Not mentionedNot allowedSeems possible – although text is unclearCrop DiversificationFarmers with more than 3 Ha of ‘arable’ land required to have 3 crops – min and max percentagesOnly 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 areaAs per EP. Various other exemptions. Spring and winter varieties to be treated as different ‘crops’Permanent Grassland95% of grass five years old or longer in the first year of the scheme must be retainedTest 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 Areas7% of area eligible for BPS must be in EFA. ‘Landscape features’ can count towards EFAEFA 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 2011European ParliamentEU Farm MinistersTOP-UPSCoupled PaymentsUp 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 2010-13Coupled payments should be able to comprise 15% of BPS funds7% 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 SupplementNo measuresAn 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 fundsLargely as per EPSmall Farmers SchemeCompulsory for Member StatesShould be voluntaryShould be voluntaryYoung Farmers SchemeCompulsory for Member StatesShould remain compulsory – and scope extendedShould be voluntaryAreas with Natural ConstraintsTop-up payment from Pillar 1 funds possible limited to 5% of fundsAs per CommissionAs per CommissionPAYMENT LIMITSCapping BPS reduced in bands from €150,000. Nothing additional after €300,000. Labour mitigation elementAs per CommissionOptional for Member StatesActive FarmerTwo-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 farmedMember 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 claimantsOTHER POINTSSugar QuotaTo be ended after 2014/15Extended to 2019/20 marketing yearExtended to 2016/17 marketing yearExchange Rate Use the September month average currency rates to convert payment for non-Euro countries.Use current 30th Sept date.LFA ReclassificationMove to ‘Areas with Natural Constraints’ as part of Rural Development packageMore details on re-designation requested. Possible delay to 2016Member 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.
