16-12-2013 13:52 PM | Arable, Cereal, Crops, Finance, News

CAP: Reforms approved by the Council



CAP: Reforms approved by the Council
Today, the Council adopted the common agriculture policy (CAP) reform package following a first reading agreement with the European Parliament.

This reform sets out the new rules for the CAP in the next seven-year period, in order to equip the European agricultural sector for the opportunities and challenges of the future. The main objectives of the reform are to make the CAP greener and better targeted, with a more equitable distribution of income support to farmers across the Union and a more effective rural development policy.

EU Agriculture & Rural Development Commissioner Dacian Ciolos stated: "I welcome the adoption of the CAP Reform regulations by EU Ministers. This follows on from our political agreement earlier in the year.

"As far as the implementation of the reform is concerned, the Commission has worked extremely hard with Member State and EP experts in recent weeks to clarify the Delegated Acts, and it seems that we are now very close to a stable text. The onus now turns to Member States to decide how they intend to implement the reform, based on the options provided in the agreement."


The CAP reform package comprises four main legal texts:

– the regulation establishing rules for direct payments to farmers (95/13). This regulation provides the basic rules for granting direct income support to farmers in order to reward them for the provision of public goods and services. It also contains a number of specific support schemes (particularly for young farmers, small famers and farmers in areas with natural constraints) and rules for granting a limited amount of coupled support (linked to production);

– the regulation establishing a common organisation of the markets in agricultural products (96/13). The single common market organisation (Single CMO) regulation aims to streamline, expand and simplify the current provisions on public intervention, private storage, exceptional measures and aid to specific sectors, as well as to facilitate cooperation through producer and interbranch organisations;

– the regulation on support for rural development (93/13). The rural development regulation covers voluntary measures for rural development, adapted to national and regional specificities, whereby member states draw up and co-finance multiannual programmes under a common framework in cooperation with the EU;

– the regulation on the financing, management and monitoring of the CAP (horizontal regulation) (94/13). The horizontal regulation lays down rules concerning expenditure, the farm advisory system, the management and control systems to be put in place by member states, the cross-compliance system and the clearance of accounts.

The package also includes a transitional regulation for the year 2014 (103/13) to bridge the gap between the existing legal framework and the elements of the reform for which it was decided that they will apply only from 2015 (particularly as regards direct payments and rural development), in order to give Member States sufficient time to roll out the new policy on the ground.

The European Parliament adopted its legislative resolution on these five regulations at its plenary meeting on 20 November this year.

Finally, as part of the CAP reform package, the Council also adopted a regulation determining measures on fixing certain aids and refunds related to the common organisation of the markets in agricultural products (15173/13). This regulation sets out the market management measures to be decided upon by Council on its own under Article 43(3) TFEU.

The reformed CAP remains a strong common policy structured around its two complementary pillars: direct payments and market management (first pillar) and rural development (second pillar). It contains important new elements which will make European agriculture greener, fairer and better targeted.

The most important element of the new CAP is the newly introduced "greening" payment: in future, 30% of direct income support for farmers will be granted only if they observe certain farming practices that are beneficial for the environment and the climate, particularly growing at least three different crops on their arable land, maintaining a minimum area of permanent grassland, and preserving areas and landscape features with a particular ecological value ('ecological focus area').

In order to avoid penalising those that already farm in an environmentally-friendly manner, the regulation provides for a "greening equivalency" system to acknowledge certain farming practices whose benefit for the environment and the climate can be considered equivalent to the specific greening practices included in the regulation.

It also provides for a more equitable distribution of direct payments envelopes between Member States by progressively reducing the biggest differences in the average level of direct payments received by farmers across the Union ('external convergence'). At the same time, there will be a progressive rebalancing of direct payments levels at national or regional level ( 'internal convergence'), with adequate flexibility for Member States to avoid any disruptive financial consequences for farmers in particular sectors or regions. Member States will also be able to grant a greater portion of their direct payments envelopes in the form of coupled support (linked to production) to farmers in sectors or regions which face particular difficulties and where farming activity is important for economic, environmental and/or social reasons.

In order to better target direct payments to those farmers most in need of support, there will be a mandatory 5% reduction in any support amount above EUR 150 000 received by large farmers (who can benefit from economies of scale). At the same time, Member States will have the possibility to increase the support received by smaller farmers by granting them a higher amount on the first hectares ('redistributive payment' ). The existing 'financial discipline' mechanism (which provides for the possibility to make linear cuts to the direct payments received by farmers) will be maintained in order to ensure that the CAP budget does not exceed the established budgetary ceiling. However, farmers whose direct income support does not exceed EUR 2000 will be exempt.

The new CAP also contains a mandatory support scheme in favour of young farmers (for which Member States may use up to 2% of their direct payments envelopes) and the possibility for Member States to set up a simplified scheme for small farmers whose support does not exceed EUR 1250.

It will allow Member States to better target CAP funds to their specific needs by introducing the possibility of transferring funds between the two CAP pillars.

Member States have also the possibility to grant additional payments for less favoured areas if needed. Rural development co-funding rates are tailored to each specific situations from the less developed regions to the transition regions or the outermost regions. Furthermore, ational allocations for rural development per Member State can be adjusted.

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