Future farming policy | Common Agricultural Policy 2021 – 2027
The European Commission’s draft legislative text includes capping of payments and major cuts to environmental and rural development spending.
The European Commission has published its legal document on EU farming policy and support after 2020; this sets out in legal terms the proposals that were published in November. The proposals are still open to negotiation and change so do not treat them as definitive, and also the budget is still to be finalised. One of the main changes claimed by the EU Farm Commissioner is a shift from ‘rules and compliance’ to ‘results and performance’. We will wait and see. These changes are important to the UK as it is still unclear when a British farming policy will apply from, given major uncertainties remaining in the UK-EU withdrawal negotiations, and so we may have to comply with these rules until our British policy is ready. The main points are:
CAP Strategic Plans
There will be greater power for Member States to design their own policies, under both Pillars 1 and 2 (see below). However, this must be done within a common framework, with each country producing a ‘CAP Strategic Plan’, which sets out how it will meet nine EU-wide objectives:
- Support viable farm incomes to support food security.
- Increase farm productivity, enhance market orientation and increase competitiveness; this will be supported by a greater focus on research, technology and digitalisation.
- Improve farmers’ position in the value chain.
- Contribute to climate change mitigation, adaptation and generation of sustainable energy.
- Foster sustainable management of water, soil and air.
- Contribute to the protection of biodiversity and enhance ecosystem services.
- Attract young farmers and encourage business development in rural areas.
- Promote employment, growth, social inclusion and local development in rural areas, including sustainable forestry.
- Respond to societal demands on food and health, including safe, nutritious and sustainable food, animal welfare, limiting antibiotic use, sustainable use of pesticides (based on a common set of impact and output indicators).
Each CAP Strategic Plan will be approved by the EU and regularly monitored, as is currently done.
Direct payments
(Pillar 1 – proposed budget €265bn, a cut of @ 11% in real terms (based on 2018 prices))
- Introduce a compulsory €100,000 (£87,000) ceiling on direct payments per beneficiary per year; there will be an adjustment for the amount of labour a farm uses to avoid negative impacts on jobs. It is unclear whether the EU will introduce anti-avoidance measures to stop splitting of farm businesses.
- Reductions in payments from €60,000 upwards (this is often called degression), of 25% lower payments for the tranche between €60-75,000, 50% lower between €75-90,000, and 75% lower between €90-100,000. All cut payments will be redistributed within each Member State, to support small and medium sized farms which remain ‘at the heart of the European family farm model’.
- Small farmers will receive an annual lump-sum and not have to complete a claim form, to simplify administration. Member States will decide how to categorise what is a small farm.
- Young farmers may get an additional top-up, including an ‘installation allowance’ of up to €100,000. There will also be support for mentoring of young farmers by older ones, improving inter-generational knowledge transfer or developing succession plans. Member States will also be encouraged to increase access to land for young farmers through more flexible rules on taxation, land law and inheritance.
Environment and rural development
(Pillar 2 – proposed budget €79bn, a cut of @ 26% in real terms (based on 2018 prices))
- The EU claims that 40% of the total CAP budget will contribute to ‘climate mainstreaming’, which means environmental and climate change actions.
- Greening is scrapped and replaced with ‘enhanced conditionality’, which means some elements of greening plus new rules, including mandatory nutrient management plans, crop rotation instead of crop diversification and preserving carbon-rich soils, wetlands and peats.
- A new ‘eco-scheme’ under Pillar 1 to reward farmers who go beyond standard environmental management. It will be a payment per hectare per year. Sounds like Entry-level Stewardship.
- Member States will be able to use their own money to increase spending on rural development to offset the cut in the EU spending on rural development (cut from @€90bn to @€79bn post-2020).
- At least 30% of rural development must be spent on the environment, climate or biodiversity. There will be a financial performance reserve of up to 5% to reward Member States that meet their climate, environment and biodiversity targets.
- At least 5% of rural development must be spent on LEADER, which is community-led local development.
- Risk management tools must be used by Member States, through an EU-wide platform that could include financial contributions to insurance premia and mutual funds for both production and income risks. Member States can also transfer 3% of Pillar 1 funding to risk management tools for sectors that currently don’t have Common Management Organisations (CMOs).
Other issues
- Transfers between pillars: Member States will be able to transfer up to 15% from one pillar to the other, plus an additional 15% from Pillar 1 to Pillar 2 for spending on climate and environment measures.
- Research: there will be an additional €10bn for research and innovation in food, farming and rural development through the EU’s Horizon Europe research programme. This is one of the biggest increases in spending that is proposed.
- Farm advisory services: each Member State must make this service available to farmers to help them deliver any requirements related to the national CAP Strategic Plans.
