CAP reform
Contents
- CAP reform 2014 - 2020: Background
- CAP reform 2014 - 2020: Legislative proposals (12 October 2011)
- CAP reform 2014 - 2020: Provisions for organic farming
- CAP reform 2014 - 2020: Next steps
- CAP reform 2014 - 2020: What ORC is doing
- CAP reform 2014 - 2020: Add your voice to the debate
- CAP reform: History and previous research
CAP reform 2014-2020: Background
Since 2009, European agricultural policy discussions have been dominated by the Common Agricultural Policy (CAP) Reform debate relating to the next seven year policy planning period 2014-2020. The process is now nearing its conclusion, with the European Commission’s legislative proposals published on 12th October.
The context to the Commission’s proposals, including a review of the provision of public goods by agriculture prepared by the London-based Institute for European Environmental Policy, can be found at ec.europa.eu/agriculture/cap-post-2013/index_en.html.
The Commission’s extensive consultation process has highlighted clear differences in perception of the role of the Common Agricultural Policy, with much support from citizens for the idea that agricultural policy can be justified provided that there is a significant emphasis on the delivery of environmental and other public goods, while some industry respondents have argued against any measures that might limit the industry’s potential to be as profitable and productive as possible, particularly in the context of concerns about food security. Environmental groups have been particularly concerned about the 'greenwashing' potential of the reforms. This builds on a position paper developed by a broad range of European environmental groups, including the organic movement, which called for a radical approach to the greening of the CAP.
This divergence of views has also been reflected in the debates at national level, and in the European Parliament, which now has a much greater role in the decision-making process. Some MEPs have strongly supported the public good/greening perspectives, while others have taken a strong pro-industry line. The culmination of the European Parliament’s debates can be found in the Dess report and the conclusions of the EP’s agriculture and rural development committee, which can be found at www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2011-0297&language=EN&ring=A7-2011-0202.
Following the publication of the Commission’s legislative proposals on 12th October 2011, there has continued to be intensive debate and lobbying, with many groups, including governments, other DGs in the Commission, MEPs, environmental NGOs and farming organisations being critical of aspects of the proposals, either for being insufficiently radical, especially with respect to the environment, or for being too radical, bureaucratic and constraining of farmers’ flexibility to farm as they would like.
CAP reform 2014 - 2020: Legislative proposals
Three main priorities are defined for the future CAP: viable/competitive food production, sustainable management of natural resources and climate action, and balanced territorial development. These underpin the specific proposals for Direct Payments, Market Management and Rural Development, all of which include some provisions for organic farming. Key elements of the proposals include:
A. Direct Payments (Pillar 1)
Basic Payment Scheme (up to 70% of available national DP funding 'envelope')- This new scheme will replace the mix of Single Payment Schemes operating in different member states. This will involve a phased ending of payments based on historical receipts, to be replaced by flat rate area payments defined at national or regional level by 2019, with at least 40% of the change to be achieved in the first year.
- The BP Scheme will still be subject to cross-compliance as at present, with some simplications to the requirements (see below).
- The level of the Basic Payment in different member states will be adjusted by means of a complex formula so that those currently receiving less than 90% of the EU average will receive more, with the gap being closed by one third over a period of years. The Commission is aiming to achieve equal distribution of resources after 2020.
- The BPS will be capped for larger holdings (see below).
- In addition to the Basic Payment, each holding will receive a payment per hectare for respecting certain agricultural practices beneficial for the climate and the environment. The implementation of this scheme by Member States is compulsory, but it will not be subject to capping limits for larger holdings that apply to the basic payment.
- The 3 measures foreseen are:
- maintaining permanent pasture, although up to 5% of permanent pasture reference area may be converted to other uses;
- crop diversification (a farmer must cultivate at least 3 crops on his arable lnone accounting for more than 70% of the land, and the third at least 5% of the arable area);
- maintaining an “ecological focus area” of at least 7% of farmland (excluding permanent grassland) – i.e. field margins, hedges, trees, fallow land, landscape features, biotopes, buffer strips, afforested area.
- Organic producers will automatically qualify for the Greening Top-up with no additional requirements as they are shown to provide a clear ecological benefit.
- Member States (or regions) may (optionally) grant an additional payment for areas with natural constraints (as defined under Rural Development rules using new objective criteria for LFAs). This does not affect the LFA options available under Rural Development.
- The Basic Payment to new entrant Young Farmers (those under 40) should be topped up by an additional 25% for the first 5 years, limited to a maximum of the average farm size in the member state.
- Any farmer claiming support in 2014 may decide by October 15, 2014 to participate in the Small Farmers Scheme and thereby receive an annual payment fixed by the Member State of between 500 € and 1 000 €, regardless of the farm’s size. (The figure will either be linked to the average payment per beneficiary, or the national average payment per hectare for 3 ha.) Participants will face less stringent cross-compliance requirements, and be exempt from greening. (Approximately one third of farms applying for CAP funding have an area of 3 ha or less – but this accounts for just 3% of the overall agricultural area in the EU-27.)
- In order to address the potentially adverse effects of redistributing direct payments on a national basis and to take account of existing conditions, Member States will have the option of providing limited amounts of "coupled" payments, i.e. a payment linked to a specific product, e.g. beef.
- Member States will have the possibility of transferring up to 10% of their national envelope for Direct Payments (1st Pillar) to their Rural Development envelope, and the Member States that get less than 90% of the EU average for direct payments now may transfer up to 5% of their Rural Development funds to their 1st Pillar national envelope.
- All Direct Payments will continue to be linked to baseline environmental, animal welfare and plant & animal health standards, but with a reduction in the number of Statutory Management Requirements (SMRs) from 18 to 13 and in the rules on Good Agricultural & Environmental Condition (GAEC) from 15 to 8. Water Framework and Sustainable Use of Pesticides Directives will eventually also be incorporated into cross-compliance rules.
- The amount of support that any individual farm can receive from the Basic Payment Scheme will be limited to €300 000 per year, and the payment will be reduced by 70% for the part from €250 000-300 000; by 40% for the part from €200 000-250 000, and by 20% for the part from €150 000-200 000. However, in order to take employment into account, the holding can deduct the costs of salaries in the previous year (including taxes & social security contributions) before these reductions are applied. NB: The funds “saved” under this mechanism stay in the Member State concerned and are transferred to the Rural Development envelope, for use as innovation & investment by farmers, and European Innovation Partnership operational groups.
- The Greening top-up is not subject to capping.
- The definition of active farmers will be tightened to exclude payments to applicants who have no real or tangible agricultural activity. The proposed definition states that payments would not be granted to applicants whose CAP direct payments are less than 5% of total receipts from all non-agricultural activities, or if their agricultural areas are mainly areas naturally kept in a state suitable for grazing or cultivation and they do not carry out the minimum activity required, as defined by Member States. There is a derogation for farmers who receive less than €5000 in direct payments the previous year.
- 2014 will be a new reference year for land area entitlements, but there will be a link to beneficiaries of the direct payments system in 2011 in order to avoid speculation.
B. Market management mechanisms
- Safeguard clause and crisis reserve to be established to deal with particular problems in specific sectors when needed
- Ending of quotas - sugar quota to be abolished by September 2015, following abolition of milk quotas and wine planting rights.
- Private storage aids will be maintained and extended to include white sugar
- School Fruit and School Milk Schemes will be extended
- Compulsory written contracts for milk producers
- Further development of quality marketing standards (PGO etc., including organic)
- Support for promotion of specific products, including organic
- Strengthened bargaining power in the food chain – recognition of producer organisations and inter-branch organisations expanded to cover all sectors, with some rural development funding support. Organic remains a priority area for fruit and vegetable organisations.
- Aids for incorporating milk powder into animal feed and for silkworms will be abolished
C. Rural development (Pillar 2)
Rural development measures will continue to be part-funded (co-financed) Member States and by the EU through the European Agricultural Fund for Rural Development Fund (EAFRD), which will form part of a new Common Strategic Framework also applicable other European Funds for economic development. The distribution of RDP funding between MS will be modified to take account of ‘more objective criteria’ still to be fixed. The EU co-financing rates will be 85% in less developed regions, the outermost regions and the smaller Aegean islands, and 50% in other regions for most payments, but can be higher for innovation & knowledge transfer, cooperation, establishing producer groups, young farmer installation grants and LEADER projects.
Instead of 3 Axes linked to economic, environmental and social issues, with minimum spending requirements for each axis (plus the 4th LEADER Axis), the new programming period will have the 6 priorities listed below.
- Fostering knowledge transfer and innovation;
- Enhancing competitiveness;
- Promoting food chain organisation & risk management;
- Restoring, preserving & enhancing ecosystems;
- Promoting resource efficiency & transition to a low carbon economy;
- Promoting social inclusion, poverty reduction and economic development in rural areas.
Member States (MS) will need to meet targets for all six priority areas, with 5% of funds held back in a ‘Performance Reserve’ to ensure this. At least 25% of Member States’ Rural Development funding envelope must be allocated to issues related to land management and climate change measures, including organic farming. Sub-programmes with higher support rates may be developed to address the needs of young farmers, small farmers, mountain areas and short supply chains. Within this framework, MS RDPs will be based on a menu of measures including:
Innovation:- This key theme (and more specifically the planned European Innovation Partnership for Agricultural Productivity and Sustainability) will be served by different Rural Development measures such as "knowledge transfer" and "cooperation"; It is aimed at promoting resource efficiency, productivity, the low emission, climate-friendly and resilient development of agriculture, forestry and rural areas. This should be achieved through greater cooperation between agriculture and research in order to accelerate technological transfer to agricultural practice.
- Strengthened measures for Farm Advisory Services (also linked to Climate change mitigation and adaptation, to environmental challenges and to economic development and training).
- Continuation of current grant schemes.
- A combination of measures can include business start-up grants (up to €70,000), training and advisory services.
- Business start-up aid up to €15,000 per small farm.
- Insurance and mutual funds for crop, weather and animal disease (currently available under Article 68 in the 1st Pillar) will be extended to include income stabilisation option, which would allow a pay out up to 70% of losses from a mutual fund if income drops by 30%; For every €1.00 a farmer puts in, the Rural Development funds would provide an additional €0.65.
- Support for setting-up organisations on the basis of a business plan and limited to groups defined as SMEs – support extended to all sectors, not only fruit and vegetables.
- Greater flexibility in contracts, joint contracts, linked to adequate training/information.
- New separate measure for greater visibility, with similar funding conditions to agri-environment payments.
- New definitions of natural constraint areas (to replace LFAs) based on 8 bio-physical criteria; Member States retain flexibility to define up to 10% of their agricultural area for specific constraints to preserve or improve the environment.
- For mountain areas and farmland north of 62º N, aid amounts can be up to 300 €/ha (increased from 250 €/ha);
- Expanded possibilities to support technological, environmental and commercial cooperation (e.g. pilot projects, joint environmental schemes, short supply chains, development of local markets);
- Investments in broadband infrastructure and renewable energy can go beyond small-scale;
- Leader start-up kit to aid setting-up Leader groups and strategies; promoting flexibility for combining with other funds in local areas, i.e. rural-urban co-operation; Leader will be used as the common approach for community–led local development by all CSF Funds;
CAP reform 2014 - 2020: Provisions for organic farming
EU Commisioner Dacian Ciolos has set out his vision for organic farming in a video message to the Dutch organic trade fair BioVak on 19th January 2012. In it he emphasises the benefits that organic farming can offer a reformed CAP, and talks about the role that research and innovation measures should play in supporting organic farming.
A transcript of the English translation can be found here (PDF 100KB).
As indicated above, organic farming will be specifically addressed at two levels. Firstly, organic farmers will qualify automatically for the uncapped Greening element accounting for 30% of Direct Payment (Pillar 10 support, while non-organic producers will need to make specific commitments to crop rotation, maintenance of permanent grassland and dedicating 7% of land to have specific ecological focus. Secondly, organic farming will also now be a stand-alone measure as part of the rural development programme, rather than one of many agri-environmental schemes as it has been from the mid-1990s. There are also several provisions for prioritising organic activities with respect to producer organisations and promotion contained in the proposed Market Management (CMO) regulation.
More precisely, Article 29(4) of the proposed Direct Payments regulation specifies that farmers complying with the requirements laid down in Article 29(1) of Regulation (EC) No 834/2007 as regards organic farming shall be entitled ipso facto to the {Greening} payment referred to in this Chapter. (This} shall apply only to the units of a holding that are used for organic production in accordance with Article 11 of Regulation (EC) No 834/2007, which means that part holdings as well as fully organic holdings will be eligible.
The introductory recitals to the proposed Rural Development legislation specify that payments for the conversion to or maintenance of organic farming should encourage farmers to participate in such schemes thus answering society's increasing demand for the use of environmentally friendly farm practices and for high standards of animal welfare. In order to increase synergy in biodiversity benefits delivered by the measure, collective contracts or collaboration between farmers should be encouraged to cover larger adjacent areas. In order to avoid large-scale reversion of farmers to conventional farming, both conversion and maintenance measures should be supported. Payments should contribute to covering additional costs incurred and income foregone as a result of the commitment and should cover only commitments going beyond relevant mandatory standards and requirements.
Article 30 of the proposed Rural Development Regulation establishes organic farming as a distinct measure and specifies that support under this measure shall be granted, per hectare of UAA, to farmers or groups of farmers who undertake, on a voluntary basis to convert to or maintain organic farming practices and methods as defined in Council Regulation (EC) No 834/2007. Commitments under this measure shall be undertaken for a period of five to seven years. Where support is granted for the maintenance of organic farming, Member States may provide in their rural development programmes for annual extension after the termination of the initial period. Payments shall be granted annually and shall compensate beneficiaries for all or part of the additional costs and income foregone resulting from the commitments made. Where necessary they may also cover transaction costs to a value of up to 20% of the premium paid for the commitments. Where commitments are undertaken by groups of farmers, the maximum level {of compensation for transaction costs} shall be 30%. Support shall be limited to 600 €/ha per year for annual crops, 900 €/ha per year for specialised perennial crops and 450 €/ha per year for other land uses.
While in general terms the new provisions for organic farming are designed to enhance the status of organic farming in the CAP and to be welcomed, there could be some unintended consequences. Firstly, Member States may use the automatic Greening payment for organic farmers as a basis for not implementing or reducing support under the Pillar 2 Rural Development regulations. Secondly, the separation of organic farming as an optional Rural Development measure from other Agri-environment-climate measures that are mandatory for Member States to implement, could provide another opportunity for Member States to discontinue or reduce support for organic farming.
Rather than leading to greater consistency in organic support between Member States, this could lead to a situation where support levels vary even more widely that they do currently, with some countries, or regions within countries, providing no support at all. This could lead to increasing trade distortions between and within Member States, where theoretically there should be a level playing field in the market place. While the inclusion of organic farming within the 25% minimum funding requirement for land management and climate measures will help, consideration should be given to making the organic measure (Article 30) compulsory and/or applying the higher co-financing rates foreseen in Article 65(4) of the proposed RDP regulation as a means to achieve greater consistency between programming regions.
It is also important the new RDP organic measure is not seen in isolation. Where possible, synergies between the various RDP and other policy measures should be exploited, in particular (but not exclusively) between the proposed organic farming measure and the measures addressing agri-environment-climate, Natura 2000/water framework directive, areas facing natural and specific constraints, animal welfare, quality schemes, investment in physical assets, farm and business development, establishment of agro-forestry systems, setting up of producer groups, co-operation, knowledge transfer and information actions, farm advisory services, LEADER and the EIP innovation measures, as well as to Pillar 1 Greening, research, public procurement, promotion and other non-RDP measures. This could be achieved by asking regions to state explicitly how these synergies will be exploited. The inclusion of an organic farming chapter, where appropriate linked to a national or regional organic action plan, in RDP programming documents could also be encouraged.
Reflecting some of these concerns, the IFOAM EU Group has called for organic farming to be prioritised in terms of higher co-financing rates and to be specifically recognised also in the context of knowledge transfer support measures. Further information on positions taken by the European organic movement can be found at www.ifoam-eu.org/workareas/policy/php/CAP.php.
CAP reform 2014 - 2020: Next steps
There will clearly be significant further arguments from all sides as the legislation is finalised, a process which is expected to continue well into 2012. If it is not delayed significantly, it is intended that the national implementation regulations will be put in place in 2013 so that the new policy can take effect from January 2014.
We will be using this page to assess the implications for organic farming and to provide updates on progress as they become available.
CAP Reform 2014-2020: What ORC is doing
In 2010, ORC produced a review for the UN Food and Agriculture Organisation of the European and other OECD experiences with agri-environment schemes in the context of developing schemes that pay producers for ecosystem services and public goods. This has been published as:
Lampkin, N. (2011) Relevance of OECD agri-environmental measures for PES. In: Ottaviani, D. & Scialabba, N el-H (eds.) Payments for Ecosystem Services and Food Security (External PDF 11.2MB). Food and Agriculture Organisation, Rome. pp.45-67.
Drawing on this work, ORC has prepared a summary (PDF 472KB) of the history of CAP and some of the key issues in the reform process from the perspective of the organic sector, which was presented to an IFOAM event on “Government Policies for the Promotion of Organic Agriculture with a Focus on the Asian Pacific Region” as part of the IFOAM World Congress in South Korea in September 2011.
During 2011, the Organic Research Centre and other partners in Europe were engaged with research on the current use and efficiency of organic farming support policies in the EU for the European Commission’s DG Agriculture, the results of which will feed into the implementation phase of the CAP Reform proposals. The final report is available at http://ec.europa.eu/agriculture/external-studies/organic-farming-support_en.htm
Since the publication of the legislative proposals on 12th October, we have been active working with other UK and European organic and environmental groups on the assessment of the proposals and the identification of issues that still need to be addressed. This has included presentations to the OCW conference in October 2011 and the All Party Parliamentary Group (APPG) on Agro-ecology in the House of Lords in November 2011. We have also raised key issues in meetings with government officials, including a UK organic policy forum hosted at Elm Farm in October with representatives of all four UK administrations and stakeholders.
ORC has also submitted evidence to the House of Commons Environment, Food and Rural Affairs (EFRA) select committee inquiry into the impacts of the proposed Greening element of the direct payments, which will be taking oral evidence in November. Our evidence, and other written evidence received, has been published. The results of the Inquiry, will be published in due course.
CAP reform will again be the focus of the opening plenary session of ORC’s Organic Producer Conference in January 2012 and regular updates have been, and will continue to be, provided in the ORC Bulletin.
CAP reform 2014 - 2020: Add your voice to the debate
If you have views on the future development of the CAP and its implications for organic farming, e-mail us at comment@organicresearchcentre.com. We may put comments on this page – let us know if you would prefer us not to.
If you would like to find out more about the CAP, the Groupe de Bruges CAP distance learning course may of interest. It is free and you can enrol here.
CAP reform: History and previous research
Nic Lampkin and Susanne Padel have been involved in a series of EU-funded studies of the CAP and European organic farming policies including Organic Farming and CAP Reform (OFCAP, 1996-1999) and Development of European Organic Farming Policies (EUCEEOFP, 2003-2006). These studies provide a comprehensive and detailed history of the development of European organic farming policies in the context of the CAP since the mid 1980s. Many of the results of these projects are published in the series Organic Farming in Europe: Economics and Policy. PDF Electronic versions of these reports can also be found at www.orgprints.org, while printed versions can be ordered from ORC.21 Oct 2005
Lawrence Woodward writes on the Common Agricultural Policy and questions what CAP is? Download this article here.