E.U. reaches agreement on CAP reform

by World Grain Staff
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BRUSSELS, BELGIUM — The European Parliament, the E.U. Council of Ministers and the European Commission have reached an agreement on Sept. 24 on the few issues on Common Agricultural Policy (CAP) reform that remained outstanding after the June 26 political agreement on the reform.

"Having found agreement on most of the CAP reform package in June, I am delighted that we have now been able to finalize the reform as a whole," said E.U. Agriculture Commissioner Dacian CioloČ™. "I would like to pay tribute to ministers and members of the European Parliament (MEP) for the way in which they have been able to find a compromise on these issues which respects the co-decision process. Following tonight's accord I hope we can proceed swiftly to a formal vote in the European Parliament and Council, which will allow the legislative texts and the 2014 transition arrangements to be formally adopted before the end of the year, and apply from Jan. 1, 2014. This is important for European farmers as it provides them greater certainty for the coming year."

Subject to formal approval by both institutions and to the adoption of the legal acts on the overall E.U. budget for 2014-20, the accord is the final part of an overall agreement which gives the CAP a new direction, taking better account of society's expectations.

The main aspects of the agreement reached on Sept. 24 are presented below. They come in addition to the agreement in June.

“Capping” and “Degressivity”: Agreement has been reached on compulsory “degressivity,” and voluntary “capping.” In practice this mean that the amount of Direct Payment support that an individual farm holding receives [not including the Greening payment] will be reduced by at least 5% for the amounts above €150,000. In order to take account of employment, salary costs may be deducted before the calculation is made. This reduction does not need to apply to member states which apply the "redistributive payment" under which at least 5% of their national envelope is held back for redistribution on the first hectares of all farms. 

External Convergence: The national envelopes for direct payments for each member state will be progressively adjusted such that those member states where the average payment (in € per hectare) is currently below 90% of the E.U. average will see a gradual increase in their envelope (by 1/3 of the difference between their current rate and 90% of the E.U. average). Moreover, there is the guarantee that every member state will reach a minimum level by 2019. The amounts available for other member states who receive above average amounts will be adjusted accordingly.

Transferring funds between Pillars: Member states will have the possibility of transferring up to 15% of their national envelope for Direct Payments (1st Pillar) to their Rural Development envelope. These amounts will not need to be co-funded. Member states will also have the option of transferring up to 15% of their national envelope for Rural Development to their Direct Payments envelope, or up to 25% for those member states that get less than 90% of the E.U. average for direct payments.

National allocations: Rural Development allocations per member state are included in the Basic Regulation, but with the possibility of adjusting these amounts through a delegated act if technically necessary or provided for by a legislative act.

Co-funding rates: The maximum E.U. co-funding rates will be up to 85% in less developed regions, the outermost regions and the smaller Aegean islands, 75% in transition regions, 63% in other transition regions and 53% in other regions for most payments, but can be higher for the measures supporting knowledge transfer, cooperation, the establishment of producer groups and organizations and young farmer installation grants, as well as for LEADER projects and for spending related to the environment and climate change under various measures.