The following notes on the state of play of key aspects of the Common Agricultural Policy reform are provisional, and dependent on the outcome of ongoing negotiations between the Parliament, the Council and Commission.
We hope to conclude negotiations by the end of the Irish Presidency at the end of June, although major issues such as greening, capping and internal convergence are still far from resolved. Meetings are taking place this week, and a further meeting between the Parliament, Council and Commission is scheduled for Monday in Luxembourg.
There also remains the major caveat of the agreement on the Multiannual Financial Framework (MFF), which was agreed to by the European Council in February but still has not been signed off by the Parliament. The implications for CAP reform are two-fold:
1) the CAP Regulations cannot be officially concluded until the MFF is finished i.e. so that the budget for the CAP is in place;
2) the MFF contains important decisions about CAP policy on capping, the flexibility between pillars and external convergence between Member States (MS) which ought to be decided in CAP negotiations - but because they are included in the MFF agreed upon by Heads of Government, Council refuses to negotiate with Parliament on their content.
As a result, it is possible that an agreement on CAP will be reached minus these issues, which will be postponed for further discussion later.
- Definition of Permanent Pasture: This will likely be defined as land used to grow grasses or other herbaceous forage, but with the important derogation that Member States can include land which can be grazed and which forms part of established local practices where herbaceous forage is traditionally not predominant. There is still disagreement between Council and Parliament over whether this should be land not included in the crop rotation and not ploughed for five years or seven years.
- Active Farmer Test: MS can set up minimum activity requirements to prevent "sofa farmers" from receiving payments. In addition (though it is not yet decided if this will be mandatory or voluntary for MS), "negative lists" will be drawn up of enterprises such as golf courses and airports which cannot receive direct payments, unless the enterprise can prove it is actively farming. MS may also decide not to award direct payments to enterprises whose agricultural activities form only an insignificant part of their economic activities, or whose principal activity is not agricultural.
- Capping of Direct Payments: This is deadlocked: the Council (who refuse to move from their position as it was decided by the MFF) want capping rules to be voluntary for MS, while the Parliament wants mandatory capping at 300,000 EUR, with deductions for salaries and funds for contract services. Any funds from capping will go to Rural Development.
- Flexibility between Pillars: Parliament and Council have agreed a 15% maximum transfer from Pillar I to Pillar II. There will also be a possibility of transferring money from Pillar II to Pillar I, but Council want a much higher percentage than the Parliament - up to 25% of Pillar II money for the UK.
- Basic Payment System: We are fighting to include a clear reference to enable MS, in addition to granting the basic payment in the first year to those who had entitlements in the base reference year, to grant entitlements to those who can prove that they were actively farming in the base year (most likely 2013) - so new entrants can access entitlements on the same basis as established farmers in 2015.
- Internal Convergence: Negotiations are complex, with different formulae being discussed, but it is clear that MS will not have to make a transition to a completely flat rate area payment per hectare by the end of the CAP period in 2020 i.e. a certain historical element will continue to be factored in - with a possibility of limiting individual farmer losses to 30% of their direct payment as well.
- National Reserve: We aim to include the ability for MS to top up artificially low value entitlements, as well as grant new entitlements, to new entrants up to the national or regional average. We also want MS to have the ability to top slice direct payments every year, not just in the first year, so that the NR is properly financed. All new entrants without entitlements must be able to benefit, not just those who set up in the last five years.
- Greening: While considerable negotiations still need to take place it seems clear that there will be derogations and alternatives, so that farmers do not necessarily have to do all three greening measures (crop diversification, permanent pasture, Ecological Focus Area). There will be a list of "equivalent practices" drawn up by the Commission (including measures like winter soil cover, catch crops, steep slope management, and keeping wet soils under grass), based on agri-environmental measures in Pillar II, which farmers can use to qualify as "equivalent" to greening (in return they would face a reduced agri-environmental payment, in order to avoid illegal double payments); farmers could also participate in environmental certification schemes approved by the Commission as having equivalent impact to greening.
- Crop Diversification: Farmers with less than 10 hectares of arable land will be exempt. Farmers with between 10 and 30 hectares will have to grow 2 crops, and over 30 hectares three - but the main crop can cover 75% of the arable and two crops 95%. There will potentially be further exemptions from the measure, such as when more than 75% of the agricultural area of a farm is grassland.
- Permanent Pasture: The latest discussion document suggests a general requirement at Member State level to not let the permanent pasture ratio fall by more than 5%: if so, farmers will face obligations to reconvert land into permanent grassland on their holding.
- Ecological Focus Area: There are still major differences between the institutions on EFA, but general agreement that there should be derogation for smaller farms and farms with more than 75% of their area as grassland. There is also consensus that part of EFA should be met through collective shared efforts by farmers to create "EFA corridors".
- Young Farmer Payment: There are also major differences on the young farmer payment, with Council wanting a voluntary scheme and Parliament and Commission wanting a mandatory scheme, to assist farmers under 40 years of age. Details on calculation of the top up payment also need to be worked out.
- Coupled Support: Council and Parliament are deadlocked, with Parliament wanting coupled support to be a maximum of 15% of the national envelope, for all agricultural sectors, and Council wanting coupled support only for certain sectors at 7%, with a 12% rate for certain MS (not the UK).
- Rural Development: The Scottish Rural Development Programme will be determined by the priories of the Scottish Government in cooperation with the farming and other rural communities. However, a number of possible schemes for investment and support have been laid down by the EU Regulation. There will be agri-environmental schemes (with higher support rates for measures for climate change mitigation and adaptation, biodiversity and short supply chains); support for afforestation with compensation for income foregone; a young farmer set up scheme; support for a wide variety of on-farm and off-farm investments; advisory services; schemes for animal welfare upgrades and organic farming; and support for producer groups, amongst other possibilities.
- Less Favoured Areas: While there will certainly be a continuation of the Less Favoured Area payments, there is disagreement between Parliament and Council about the timing of the introduction of the new biophysical criteria: Parliament would like to push back the reform by two years and roll over the old schemes in the meantime.
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