The EU agreed on a deal to reform the Common Agricultural Policy CAP) last week, after disagreements on rules to curb agriculture’s climate impact upended talks in May.
alks to reform the CAP have dragged on for nearly three years, with negotiators split over how to spend its €387bn budget of payments to farmers and support for rural development, about a third of the EU’s total 2021-27 budget.
The deal must be approved by the full European Parliament after EU Agriculture Ministers signed off on it yesterday. The new CAP rules apply from 2023.
Eco schemes
Under the deal, at least 25pc of the direct payments budget in the next CAP will be set aside for new eco schemes.
Farmers will need to take part in these schemes to retain the funding. The schemes will be developed by each member state and must go beyond the current environmental requirements and obligations on farmers.
However, if farmers’ take-up of eco schemes is low during the phase-in years of 2023 and 2024, Member states will be allowed to re-allocate one fifth of unused eco-scheme funding per year (5pc of yearly national direct payments budget, maximum 10pc of 2023-24 budget) for other purposes.
Any unused amounts beyond 5pc of the national direct payments budget for those two years combined will have to be compensated back to the EU.
It was also agreed that at least 35pc of the rural development budget (Pillar 2) must be allocated to all types of environmental and climate-related schemes and measures.
Convergence
The deal will see further efforts to close the gap between levels of payments for farmers from different parts of the same member state.
Negotiators agreed that national governments should ensure that all per-hectare direct payments within their territories reach at least 85pc of their average direct subsidies by 2026.
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Member states will be obliged to allocate at least 10pc of their national direct payments envelope to complementary redistributive income support for small and medium-sized farmers.
However, member states can avail of a derogation from this if they can demonstrate their farm payments are already distributed fairly.
Detail on how this will impact farmers in Ireland has yet to be agreed.
Capping
Under the deal, member states can set up a mechanism to reduce annual direct payments to farmers above €60,000 by up to 85pc, and cap them at €100,000.
And, if needed, they could also decide to introduce additional levels of reduction for additional tranches.
However, if such a mechanism is introduced, can allow farmers to deduct agriculture-related salaries, taxes and social contribution, from the total amount before the reduction.
Young farmers
The deal would also see EU countries use at least 3pc of their combined direct payments and rural development budgets to support young farmers.
The per-hectare top-up should be granted for the first five years following its application.
Active farmer
A definition of an active farmer — ie, a person eligible for EU direct payments — will be included in national strategic plans.
When defining active farmers, member states should ensure that EU support is granted only to those engaging in at least a minimum level of agricultural activity, and apply objective criteria to this end — for instance income tests, labour input on the farm or types of services the company is providing.
Each member state can also draft a negative list of entities that would be automatically excluded. However, the definition of ‘active farmer’ will not exclude pluri-active farmers or part-time farmers.
GAECs
The deal will see stricter rules on farmers in order to draw down payments.
‘Conditionality’, which, as a baseline requirement for receiving direct payments, will replace current greening and cross-compliance.
Proposed new rules define nine so-called Good Agricultural and Environmental Conditions (GAECs), two more than in the current CAP.
GAECs will be mandatory for both member states and farmers.
What happens next?
Current CAP rules were extended after December 31, 2020 and replaced by transitional rules until the end of 2022.
Following the political agreement, the text still need to be technically and legally fine-tuned. It will then have to be approved by the Parliament, first by the committee and then in the plenary, and the Council.