On 1st June, the European Commission published its legislative proposals for the CAP post-2020. Central to the proposal is the implementation of a new delivery model, whereby the EU will set high-level objectives and Member States are then be free to decide which measures to adopt under both Pillar 1 and 2 to achieve these objectives.
This so called new delivery model will be laid out within a national “CAP Strategic Plan” which will be complied by Member States on the basis of a needs assessment and which must be approved and its implementation monitored by the European Commission. The aim behind this new approach is to better enable the CAP meet local needs, make it simpler and results-driven.
Key elements of the Policy:
Budget: The EU multiannual budget for the period has cut the CAP budget to €365bn. In constant (2018) prices this would mean a 15% cut to the CAP. Although a further €10bn in funding (a 150% increase) has been pledged to dedicated research and innovation in food, agriculture and the bio-economy under the new EU research programme.
- Market Measures & Risk Management: The current market measures including public intervention, private storage aid and exceptional measures remain unchanged and in addition the school milk and fruit and vegetable schemes will continue. However, there is a greater focus on introducing individual risk management tools (i.e. insurances, mutual funds) within national Rural Development Policies. Specific mention is given to encouraging member states to establish income stabilisation tools in line with ICOS’s 555 proposal, by allowing farmers, within taxation policy to put money away in good years to save for bad ones.
- Environmental and Climate Measures: Overall the proposal promises a higher level of environmental ambition. Within pillar 1 all farmers receiving direct payments will be required to complete basic environmental measures (including a nutrient management plan) and there will be an additional voluntary “Eco-scheme” set by Member States which go beyond these basic requirements. In addition, 30% of pillar 2 funding will be required to be spent on climate and environmental measures (i.e. schemes similar to GLAS).
- Direct Payments: There will be a cap of direct payments at €100,000, adjusted according to paid and unpaid labour and degressive payments to €60,000 with the money saved being redistributed to smaller farmers. Funding will also be targeted at “genuine farmers” which will be defined individually by Member States. At the EU Agricultural Council discussion this week, Ireland raised doubts about this definition, questioning whether it will in fact led to more complexity and fragmentation of the single market.
- Young Framers: 2% of the direct payment national envelope will go towards young farmer top-ups and in addition the start-up/installation grant will increase from €70 000 to €100 000.
- Rural Development Policy: There will be a 10% reduction in rural development co-financing rates. To compensate grants will be complemented with financial instruments (i.e. low cost, longer term, flexible loans, through EIB finance) which will be used to support entrepreneurs who are investing in rural areas and in particular initiatives within the bio-economy (e.g. biofuels; fertiliser production, etc) and circular economy and for on-farm investments aiming to restructure, modernise, diversify and adopt new technology (precision machinery and big data technology).
CAP Reform Timeline
- 11 June: Commissioner Hogan presented the proposal to the Parliament- a Rapporteur (report writer) will be chosen shortly from the Agricultural Committee, they will set a timeline for their amendments to the file, likely for the end of the year.
- 28-29 June: EU Leaders Council Summit, where the EU budget and CAP financing will be discussed.
- July: Austria will take over the EU Council presidency and will lead reform discussions in the council for the following 6 months
- It is hoped that both the Budget and CAP reform proposals will be finalised before May 2019, when the EU Parliament elections will take place. This will require a provisional agreement in early Spring.
European Affairs Executive
28 May 2021