Common Agricultural Policy (CAP). The Commission proposed 4 regulations on direct payments, rural development, market organisation and horizontal aspects.

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Common Agricultural Policy Reforms

On 12th October 2011 the European Commission put forward a set of legal proposals for reforms of the Common Agricultural Policy (CAP). The Commission proposed 4 regulations on direct payments, rural development, market organisation and horizontal aspects.

The proposals, ‘A CAP towards 2020’, are designed to make the CAP an effective policy for more competitive and sustainable growth and help create vibrant rural areas. The Commission’s proposals aim to take account of the growth and diversity within the European Union together with the disparity in culture and wealth of the 27 Member States.

Another key aspect of these reforms is that, for the first time, both the European Parliament (EP) and the Council of Ministers (who represent the 27 Member States) will decide on an equal footing the new agriculture legislative package. The Lisbon treaty which came into force on 1 December 2009 has given additional powers to the European Parliament through the ‘co decision’ procedure.

European Commission Proposals Overview

A brief summary of the Commission proposals include:

1. Better targeted income support to distribute farmers’ income in a fairer, simpler way.
2. Tools to address crisis situation such as floods and drought
3. The Commission is proposing to spend 30% of direct payments on environmentally friendly measures like crop diversification and the preservation of environmental reservoirs.
4. Additional investment in agricultural research.
5. Measures to create a more competitive and balanced food chain
6. Encouraging Agri-environmental initiatives.
7. Helping young farmers set up in business, focussing on those under 40.
8. Stimulating rural employment and entrepreneurship with a series of measures designed to stimulate economic growth.
9. Better addressing fragile areas by helping farmers in areas suffering from natural handicaps.
10. Simplification of administrative procedures.
CAP and the MFF
The CAP accounts for 40% of the EU budget and therefore the fate of the reforms hinges on the agreement of the Multiannual Financial Framework (MFF) for the EU between 2014 and 2020. A summit was held in Brussels in February 2013 where the Council reached a preliminary agreement on budgetary priorities of the EU. However the agreement still needs approval by Parliament.

As a result of the provisional agreement on the MFF, the CAP reforms have been able to gather pace.

Current Situation

On 19th March 2013 the Council and the EP reached a common negotiating position; although this is a significant step, there is still a lot of wrangling to be done. Some of the key areas up for debate are as follows:

Direct Payments

Direct payments are payments granted to farmers under certain schemes. The Commission plans to link 30% of direct payments to the environment was supported by MEPs. MEPs also agreed that Member States may transfer 15% of their direct payment entitlement  into their rural development budget.

Coupling

Coupling is the link between direct payments and producing particular crops or keeping particular livestock. MEPs supported increasing the scope of coupled support to 15% of a Member State’s entitlement.

Cross-Compliance

Cross-compliance has been a familiar concept in the UK since the last set of CAP reforms. Cross-compliance is a set of conditions farmers need to meet to qualify for their direct payment. Under the latest proposals, the majority of MEPs have voted to keep large parts of cross-compliance, despite reservations from MEPs in the Agricultural committee.

Capping

The EP agreed to a mandatory capping of payments at  300,000 euro. This is a fairly controversial measure with different views coming from each Member State. Many argue that it is hard to justify large, wealthy land owners receiving large CAP subsidies and that those subsidies should be directed to smaller, family owned farms. Opponents to capping argue that the bigger the farm, the bigger the costs and therefore it makes no sense to impose a cap.
From a UK perspective, capping may unfairly penalise UK farmers who have larger farms compared to other Member States. 
Young Farmers

The Commission is  proposing that the basic payment to farmers be topped up by an additional 25%. This is another area where the EP and Council look to clash. The MEPs want the scheme to be compulsory whereas the Council has  decided that it wants it to be optional for each Member State.

Greening

The Commission wants to allocate more money for farmers who undertake environmental projects and/or tackle climate change.  The Department for Environment, Food and Rural Affairs has won the right for the UK to implement its own greening measures, rather than the measures being created in Brussels. Many farmers are against this move in that they believe UK farmers will lose out compared to their European counterparts.
Issues relevant to Cumbria

One of the main parts of the CAP reforms that may affect farmers in Cumbria is ‘Areas facing natural constraint’; this replaces the previous ‘Less Favoured Area’ scheme.

Member States may grant an additional payment of up to 5% of their national entitlement for ‘areas facing natural constraint’; large parts of Cumbria would be classed as such.

However, this is an optional measure and currently the decision whether England  would use such a measure will depend on the outcome of the wider CAP reforms.

Next steps

The Commission intended for the regulations to be implemented on 1st January 2014 but have recently admitted implementation is likely to take place in early 2015.
As of 11th April 2013 the final negotiations between the EP and Council began with 2 ‘trilogue’ meetings taking place in Brussels. The purpose of the trilogues is to facilitate the adoption of the legislative proposal during which the EP, the Council and the European Commission negotiate.

There will be around 30 trilogue meetings over the coming months with a view to have an agreed set of proposals before the end of the Irish Presidency of the Council, being 30th June 2013.

 

About the author

Published: Friday 3rd May 2013
Categorised: Agribusiness, Corporate Law

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