EU adopts 'modern and flexible' farm policy

EU farm policy reform must distribute funding more fairly and make 'greening' measures flexible while cutting red tape said the EU Agriculture Committee as it moved forward with its draft CAP proposals.

The Common Agricultural Policy must be properly funded to continue to ensure secure supply of high-quality food to EU citizens and enable farmers to protect the environment better, said MEPs, voting on the four legislative proposals.

The draft position will head to the full European Parliament scheduled for March.

This will be the first EU farm policy reform shaped by Parliament as a full co-legislator with member states.

"This is the moment of truth" said committee chair Paolo De Castro.

"The Agriculture Committee has said today how the new CAP should look. It should be more efficient, greener and able to respond to the enormous challenges ahead of us. Such ambitious goals entail higher costs. So any further cuts to the CAP budget are simply inacceptable."

He also called on EU leaders to agree on their proposal for the EU's long-term budget, which is "essential to design the final shape of the future CAP", as soon as possible.

Deputy President of the NFU Meurig Raymond commented: "The NFU was deeply disappointed with the Commission’s proposals when they were issued almost 18 months ago, but this week’s vote has brought about significant improvement in many areas, removing some of the worst excesses of unnecessary bureaucracy and red tape from the proposals."

The National Farmers' Union lobbied against the economic active farmer test which would have meant farmers having to disclose their non-agricultural receipts to qualify for CAP payments.

Greening

New environmental rules - which will make 30% of national budgets for direct payments conditional upon compliance with greening measures - must be made more flexible, the MEPs said.

There were three key measures: crop diversification, maintaining permanent pasture and creating ecologically focused areas will remain but with exceptions.

MEPs made clear that farms with under 10 ha of arable land should be exempt and the rules should be relaxed for holdings of 10 - 30 ha.

"We asked MEPs to make the greening proposals more workable and to ensure that the efforts of farmers already in agri-environment schemes was taken into consideration. We asked that if a farmer chose not to do the greening requirements, that he would only lose his greening payment" said Raymond.

"We asked for changes to the way in which entitlements will operate in the future CAP and a properly functioning national reserve."

Farms that are certified under national of regional environmental certification schemes, and hence are already using environment-friendly practices, would be exempt from 'greening' provided that the measures they apply have an impact that is at least equivalent to that which the mandatory greening ones would have.

"We have managed to bring greening into the first pillar of the CAP, making it possible for every farmer in the EU, not just those in countries that can afford to fund it under rural development programmes. This greening is clearly subject to EU rules, and now needs to be paid for by real EU money for a public good", Luis Manuel Capoulas Santos said.

Capping direct payments

MEPs endorsed Commission proposals to cap direct payments to any one farm at €300,000, and reduce payments to those receiving between €250,000 and €300,000 by 70%, and payments to those receiving between €200,000 and €250,000 by 40%.

Payments to farms receiving between €150,000 and €200,000 would be cut by 20%

Other amendments, seeking to reduce payments to bigger farms even further or on the contrary calling for the capping to be completely rejected, failed to win the support of a majority in committee.

MEPs nonetheless adapted the rules proposed by the Commission so as to exclude cooperatives and other groups of farmers who distribute payments received to their members (AM770) and ensure that capped money remains in the region where it was capped and is used for rural development programmes.

Fairer funding

To ensure that direct payments go only to active farmers, the committee included a list of entities, such as airports and sports clubs, which should be automatically excluded from EU funding unless they prove that farming contributes a substantial share of their income.

Member states could extend or adapt this list.

MEPs also said that differences among EU member states in the levels of EU funding that farmers receive should be reduced slightly faster than the Commission proposed.

Under the new rules, no member state's farmers should receive less than 65% of the EU average.

"The committee has voted for a stronger redistribution of aid among member states, as it is difficult to accept differences of roughly €300 per ha between farmers in different member states", said Luis Manuel Capoulas Santos (S&D, PT), rapporteur for the Direct payments and Rural development regulations.

The rate of payments to farmers within each member state could also be made equal by 2019, but to avoid sudden sharp falls in support that could jeopardise the viability of many farms, member states should still be allowed to deviate from the average by up to 20%.

Risk Management

Risk management tools should be funded from the budget for rural development programmes, not from the direct payments budget as is the case today, said MEPs, agreeing with the Commission's proposal. The income stabilisation tool should take the form of financial contributions to mutual funds or to buy insurance against the risk of severe drop in income.

They also call on the Commission to do a mid-term review of the risk management tools and table a legislative proposal, if needed.

"We asked for a more proportionate risk based penalty system, which includes an early warning system for breaches of a more minor nature, as well as removal of the sheep EID from the cross compliance penalty system" Raymond said.

"We asked that the exchange rate used to calculate the value of farm payments be done on the basis of the average of a month as opposed to being set on one day, as is currently the case."

"And for our sugar growers we asked MEPs to reinstate the necessary safeguards and provide a period of stability following the last major reform."

Backwards' step

The NFU said MEPs took an 'incredibly backwards step' to increase the potential scope for coupled support payments which 'will result in market distortions' if not closely controlled by the Commission.

"Similarly MEPs voted to increase the flexibility to move money between the two pillars of the CAP up to 15 per cent, the only slight glimmer in that area, being that MEPs did respond to the incredibly important NFU call that this money would have to be match funded by national Treasuries. MEPs also voted to support capping of the payments to the largest beneficiaries, which will disproportionately hit UK farmers given our larger than average farm sizes."

The Country Land and Business Association also raised caution: "The proposals put forward by MEPs could easily lead to UK farmers receiving considerably less than their counterparts on the continent" said its President Harry Cotterell.

"The Common Agricultural Policy should have rules that, wherever possible, are common to all its members."

Bargaining position

To better equip farmers to cope with market volatility and manage crises but also to strengthen their price bargaining position, producer organisations should be given significantly wider powers and new tools, say MEPs. Farmers' organisations should be allowed to use crisis-prevention and crisis-management instruments including, as a last resort, market withdrawal.

Furthermore, they should have the right to negotiate, on behalf of their members, input and delivery contracts without falling foul of competition law said MEPs.

"The idea that farmers should band together must not translate into cartels but it should allow them to break free from economic dependence and guarantee them a decent standard of living. Establishing strong producer organisations for all sectors, with much greater freedom of action than originally proposed by the Commission, is an appropriate way to achieve that aim", said Michel Dantin (EPP, FR), reporter for the Common markets organisation regulation.