CAP Reform update – where are we now?
13th July 2012
Negotiations are very much underway at European Union (EU) level with over 1,500 pages of new draft regulatory proposals and amendments emerging at EU Ministerial, Parliamentary and Commission levels. Here Mark Morison, partner with property specialists Roger Parry and Partners LLP looks at recent developments within each of these tiers of government.
At Ministerial Level
Under the Danish Presidency papers have been published containing the consolidated views of member states and the Presidency:
- Broad support exists for greater reference year flexibility (currently set at 2011) and the continuation of regional area models with existing entitlements (i.e. England). Greater flexibility is sought for Member States who need to convert to a flat-rate model, with a more gradual adjustment with an end date beyond 2019.
- Further detail needed on the concept and a call for flexibility and cost effectiveness. The 30% level of direct support is to be discussed with some arguing for a lowering of the proposed percentage.
- Many consider the proposed 7% Ecological Focus Areas (EFAs) to be too high. Some seek to widen the scope of the provision to include landscape features on permanent grass, perennial energy crops and nitrogen fixing crops. Proposal for partial regional implementation and exemptions for farms less than 10 hectares.
- An exemption for smaller farms (<10ha) and special farms (75% grassland) is being suggested under the cropping diversity proposal as well as amendments to the definition of a crop and the proportions of the three crops required.
- A proposal has been made to widen the definition of permanent grass at Member State level, leaving the decision on how to apply the rules at local level (combining national/regional and farm level approaches).
- It is recognised that many farmers have already adopted a high level of greening through agri-environmental scheme participation (none-more-so than in the UK) and that the inclusion of this land within the greening measure would be a step in the right direction. However, some still argue that a total inclusion of scheme land within the greening requirement is wrong as it will make the measure too easy to achieve.
- Many delegates support a young farmer scheme on a voluntary basis.
- The ‘active farmer’ test needs to focus on land rather than the individual with the economic test deleted and substituted with Member State powers to exclude those only marginally involved in farming.
- Capping is opposed by some and most favour a simplification of the proposals.
- A majority want any small farmers scheme to be voluntary, some questioning whether it is right for small farmers to be exempt from cross compliance.
At Parliamentary level
- Under Mr Santos leadership the European Parliament draft report proposes that the link between the basic payment and greening payment should be broken.
- Member States on a regional area system should be permitted to re-cycle entitlements allocated rather than create new sets. New allocations will require a farmer to have activated at least one entitlement between 2009 and 2011 and be classed as engaged in agricultural production activity in 2011 (‘active farmer’).
- The right to receive entitlements should be transferrable to more than one farmer and there should be a national reserve to cover new entrants post 2011.
- Conversion to a flat-rate scheme should be stepped down to a 20% requirement in year 1 (as opposed to 40%).
- Unspent greening budget would then be used in Pillar 2 funding (agri-environmental). Agri-environmental participation would automatically entitle applicants to greening payments on included land.
- The 7% set aside requirement would apply to farms greater than 20 ha. Boundary features, buffer strips, fallow land and nitrogen fixing crops should count towards the requirement.
- A proposed exemption is made from cropping diversity requirements for holdings with less than 50 ha of arable land and with more than 80% permanent and historical grassland. Farms with an arable area of 5-20 ha would only need to grow 2 crops and farms greater than 20 ha the proposed 3 crops.
- The definition of permanent grass should be widened to include historical pastures (defined as ‘land used to grow grasses or other forage naturally or through cultivation and that has not been included in the crop rotation of the holding; it may include other species or features of importance for the characterisation of the land as historical pasture’) and be based on the 2014 declaration.
- The ‘active farmer’ economic test should be scrapped and replaced with a mandatory requirement for Member States to police. They would produce a ‘negative list’ containing non-active farmers (those where agricultural activities are deemed an insignificant part of overall economic activity).
- Payment capping thresholds should be amended to increase deductions to 80% (up 10%) for those receiving €250,000 - €300,000.
- Capping should not apply to co-operatives handling grouped payments for beneficiaries.
At Commission level
The Commission have published a paper highlighting where they would be prepared to amend greening proposals which met with much Ministerial criticism. The European Commission’s role is to ensure its proposals are clear and to identify areas where it is willing to develop concepts. This is the purpose of the paper which makes the following proposals:
- Farmers under certain conditions will be considered to be fulfilling one of several greening requirements through agri-environmental participation. Commitments must be whole farm with measures that correspond and go beyond the greening measures.
- The definition of permanent grass could be extended to include non herbaceous species still suited to grazing and the time span for ‘out of rotation’ would be extended to 8 years.
- Exclusion from cropping diversity requirements would be set between 3 and 10 ha, with a further for holdings of less than 50 ha of which a significant part is grassland. The 70% maximum would be retained with an amalgamation of third and subsequent crops to reach the 5% minimum requirement.
There remains completion of much debate and lobbying. Generally more flexibility and simplification is sought but it will be sometime yet before anything concrete emerges on which to base business management decisions. If you wish to discuss how the proposals could affect your business then please contact Mark Morison, Roger Parry and Partners LLP on 01691 655334.