EU agriculture ministers on 20 November reached political agreement on a ‘Health Check’ of the EU’s Common Agricultural Policy. The Health Check will modernise, simplify and streamline the CAP and remove restrictions on farmers, thus helping them to respond better to signals from the market and to face new challenges. Among a range of measures, the agreement abolishes arable set-aside, increases milk quotas gradually leading up to their abolition in 2015, and converts market intervention into a genuine safety net. Ministers also agreed to increase modulation, whereby direct payments to farmers are reduced and the money transferred to the Rural Development Fund. This will allow a better response to the new challenges and opportunities faced by European agriculture, including climate change, the need for better water management, the protection of biodiversity, and the production of green energy. EU Member States will also be able to assist dairy farmers in sensitive regions adjust to the new market situation.
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As milk quotas will expire by April 2015 a ‘soft landing’ is ensured by increasing quotas by one percent every year between 2009/10 and 2013/14. For Italy, the 5 percent increase will be introduced immediately in 2009/10. In 2009/10 and 2010/11, farmers who exceed their milk quotas by more than 6 percent will have to pay a levy 50 percent higher than the normal penalty.
The CAP reform “decoupled” direct aid to farmers i.e. payments were no longer linked to the production of a specific product. However, some Member States chose to maintain some “coupled” i.e. production-linked – payments. These remaining coupled payments will now be decoupled and moved into the Single Payment Scheme, with the exception of suckler cow, goat and sheep premia, where Member States may maintain current levels of coupled support.
Currently, EU Member States may retain by sector 10 percent of their national budget ceilings for direct payments for use for environmental measures or improving the quality and marketing of products in that sector. This possibility will become more flexible.
The money will no longer have to be used in the same sector; it may be used to help farmers producing milk, beef, goat and sheep meat and rice in disadvantaged regions or vulnerable types of farming; it may also be used to support risk management measures such as insurance schemes for natural disasters and mutual funds for animal diseases; and countries operating the SAPS system will become eligible for the scheme.
EU members applying the simplified Single Area Payment Scheme will be allowed to continue to do so until 2013 instead of being forced into the Single Payment Scheme by 2010.
90 million will be allocated to the EU-12 to make it easier for them to make use of Article 68 until direct payments to their farmers have been fully phased in.
Member States applying the Single Payment Scheme will be allowed either to use currently unused money from their national envelope for Article 68 measures or to transfer it into the Rural Development Fund.
Currently, all farmers receiving more than 5,000 in direct aid have their payments reduced by 5 percent and the money is transferred into the Rural Development budget. This rate will be increased to 10 percent by 2012. An additional cut of 4 percent will be made on payments above 300,000 a year. The funding obtained this way may be used by Member States to reinforce programmes in the fields of climate change, renewable energy, water management, biodiversity, innovation linked to the previous four points and for accompanying measures in the dairy sector. This transferred money will be co-financed by the EU at a rate of 75 percent and 90 percent in convergence regions where average GDP is lower.
Investment aid for young farmers under Rural Development will be increased from 55,000 to 70,000.
The requirement for arable farmers to leave 10 percent of their land fallow is abolished. This will allow them to maximise their production potential.
Aid to farmers is linked to the respect of environmental, animal welfare and food quality standards. Farmers who do not respect the rules face cuts in their support. This so-called Cross Compliance will be simplified, by withdrawing standards that are not relevant or linked to farmer responsibility. New requirements will be added to retain the environmental benefits of set-aside and improve water management.
Market supply measures should not slow farmers’ ability to respond to market signals. Intervention will be abolished for pig meat and set at zero for barley and sorghum. For wheat, intervention purchases will be possible during the intervention period at the price of 101.31/tonne up to 3 million tonnes. Beyond that, it will be done by tender. For butter and skimmed milk powder, limits will be 30,000 tonnes and 109,000 tonnes respectively, beyond which intervention will be by tender.
Member States should apply a minimum payment per farm of 250, or for a minimum size of 1 hectare or both. Alternatively, they may apply a coefficient on 250 and 1ha, based on the comparison between the EU average farm size and payment and the national average.
A series of small support schemes will be decoupled and shifted to the SPS from 2012. The energy crop premium will be abolished.
