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CAP Policies: Direct Payments

22 July 2009
by inadim -- last modified 23 July 2009

The 2003 reform of the EU's Common Agricultural Policy (CAP) introduced a new system of direct payments , known as the single payment scheme, under which aid is no longer linked to production (decoupling). The new system of direct payments introduced in 2005-2006 is the single payment scheme (SPS), the most important system of direct payments.


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Single payment scheme (SPS)

The main aim of the single payment is to guarantee farmers more stable incomes. Farmers can decide what to produce in the knowledge that they will receive the same amount of aid, allowing them to adjust production to suit demand.

To be eligible for the single payment, a farmer requires payment entitlements. These are calculated on the basis of the payments received by the farmer during a reference period (historical model) or the number of eligible hectares farmed during the first year of implementation of the scheme (regional model).

Decoupling options

Member States may decide to reduce the value of payment entitlements and continue to make direct payments linked to production for arable crops and hops and to the number of animals for sheepmeat and goatmeat and for beef and veal.

Other aid schemes

In addition to the single payment, farmers may receive aid under other specific support schemes linked to the area under crops or to production, depending on whether the Member State concerned decides to implement these schemes.

Specific support schemes have been introduced or maintained for the following products: durum wheat, protein crops, rice, nuts, energy crops, starch potatoes, milk and milk products, seeds, cotton, tobacco, olive groves and grain legumes and there is a separate payment for sugar (only for those new Member States applying the Single Area Payment Scheme (SAPS)).

These other aid schemes have only a minor impact on agricultural expenditure.

Single Area Payment Scheme (SAPS)

This simplified scheme was proposed for the new Member States, ten of which have implemented it. It involves the payment of uniform amounts per eligible hectare of agricultural land, up to a national ceiling laid down in the Accession Agreements.

Cross-compliance

To receive direct payments, farmers must meet certain standards concerning public, animal and plant health, the environment and animal welfare and keep their land in good agricultural and environmental condition. Where farmers fail to meet those standards, the direct payments they can claim are reduced or even withdrawn completely for the year concerned.

Member States must also ensure that there is no significant reduction in permanent pasture as a percentage of their total agricultural area.

Source: European Commission