CAP Reform Agreement 26th June, 2013

    CAP Reform Agreement 26th June 2013

    This initial brief summary is provided by the Sheldon Bosley Rural Land Agency Team, with a further more detailed analysis, particularly as far as the agreement affects the UK, to be published later.
    The main elements of the Agreement are as follows:-

    1. Direct Payments – Historical referencing to direct payments is to be phased out. This has already occurred in England.

    2. Basic Payment Scheme (BPS) – Member States will dedicate 70% of their direct payments to the new Basic Payment Scheme (minus any amounts committed for Young Farmers top ups and other options such as Less Favoured Area top ups, the Small Farmers Scheme, to Redistributive Payments and as “Coupled” payments).

    Redistributive Payment – Member States can take up to 30% of the funds, in the National Envelope, to redistribute to farmers on their first 30 hectares (or up to the average farm size if higher than 30 hectares), this will have a significant redistributive effect. A further possible option is to apply a maximum payment per hectare. We believe that this is unlikely to have significant application in England.

    Young farmers – The basic payment awarded for new entering Young Farmers (those under 40) should be topped up by an additional 25% for the first years of installation. This is to be funded by up to 2% of National Envelope funds and is compulsory for all Member States.

    Small Farmers Scheme – This is optional for Member States and will provide an annual payment fixed by the Member State of between €500 and €1,250, regardless of the farm size.

    “Coupled” Option – Member States will have the option providing limited amounts of “Coupled” payments, i.e. a payment linked to a specific product. This is intended to address the potentially adverse effects of convergence to a Flat Rate scheme, so is unlikely to apply in England.

    Area of Natural Constraints (ANC’s)/Less Favoured Areas (LFA’s) – Member States may grant an additional payment for areas with Natural Constraints, (up to 5% of the funds available in a National Envelope).

    3. Greening – In addition to the basic scheme (SAPS), each Holding will receive a payment per hectare for respecting certain agricultural practices beneficial for the climate and environment. Member States are to use 30% of the funds in the National Envelope in order to pay for this.

    Greening measures include:-

    • Maintaining permanent grassland (possibly on a National percentage basis).

    • Cropping – A farmer must cultivate at least two crops when his arable land exceeds 10 hectares, and at least three crops when his arable land exceeds 30 hectares, with no crop covering more than 75% of the arable land and no crop left than 5%.

    • Maintaining “Ecological Focus Areas” of at least 5% of the arable area of the Holding. This applied to farms with an area larger than 15 hectares (excluding permanent grassland). This figure will rise to 7% after a Commission Report in 2017.

    • Green Equivalency – This is a measure set up to avoid penalising those already addressing environmental and sustainable issues, for example organic producers will have no additional requirements as their practices are shown to provide a clear ecological benefit. Agri-Environment Schemes may incorporate measures that are considered equivalent but “Double Funding” will need to be avoided. Some traditional arrangements can be expected.

    4. Financial Discipline – This refers to potential reductions in annual direct payments to ensure that the total budget is not exceeded in any one year, but would not apply to the first €2,000 of any farmer’s direct payments.

    5. “Active Farmers” – There is a negative list of professional business activities which should exclude those businesses from receiving direct payments (such as airports, railway services, water works, real estate services, permanent sports and recreation grounds), unless those businesses can demonstrate they have a genuine farming activity. Member States can extend the negative list to include further business activities.

    6. Eligible Hectares – The rules foresee setting 2014 as a new reference year for land area, but there will be a link to beneficiaries of the direct payment system in 2013 in order to avoid speculation.

    7. Rural Development – There will be a streamline menu of measures to be funded under the Rural Development programme, more information to follow.

    8. Monitoring and Evaluation of the CAP – The Commission will present a report before the end of 2018 and every 4 years thereafter on the performance of the CAP.

    9. Transitional Arrangements – New regulations will come into force on January 1st 2014, and there will be a Transition year for direct payments in 2014. New elements such as Greening and Young Farmers Top Ups will only apply from 2015 onwards. Transition Rules are also envisaged for Agri-Environmental payments.