CAP reform June 2013 agreement
SPS Payment Check
SPS: Dual use and obvious errors
2012/13 USDA forecast
Our first look at 2012 - 2013
Cereal S & D trends
Summary of CAP proposals for 2014
Below is a summary of the latest CAP reform proposals. They have raised a number of issues and technical implications at farm level which are discussed in more detail in the October issue of InsideTrack. To subscribe to InsideTrack contact Simon Ward on +44 (0)1954 252859 or email@example.com
Formal proposals 12 October 2011
The objective is to implement the reform in 2014 but there could be delays. To achieve this objective, legislation would need to be finalised late 2012 or early 2013.
Most farmers will receive subsidy in two parts: a Basic Payment Scheme (BPS) element and Environmental (‘greening) element.
Each Member State has a payment ceiling for direct payments (the ‘National Ceiling’). This is provided net of EU modulation so is not exactly comparable with the current ceiling.
A ‘Net Ceiling’ is introduced equal to the ‘National Ceiling’ minus deductions for capping. We anticipate that further clarification of this mechanism will be produced shortly.
One third of the difference in payment level between Member States is to be removed, phased in from implementation to 2019. The UK payment level increases slightly.
An important part of the reform is that the EU Commission will be able tovary the Member State payment ceilings in the light of economic conditions.
The value of the payment at farm level may be set at a national or regional level, based on aspects such as agricultural potential or environmental criteria.
Existing entitlements are to be cancelled on 31 December 2013. New Basic Payment Scheme entitlements will be required for the year beginning 1 January 2014. Award will be based on the eligible area, following application by 15 May 2014. Applicants must have also activated at least one entitlement in 2011, or have the right to the 2011 payment transferred or be eligible from the National Reserve.
Entitlements will be tradable although the detailed rules are not known. As at present, entitlements are lost if not activated for two years.
There will be additional assistance for those disadvantaged by specific circumstances during the implementation process (see ‘National Reserve’).
Environmental Payment (‘greening payment’)
- 30% of National Ceiling
All of the following measures have to be met in order to qualify for the Environmental Payment (except by organic farmers):
- Crop diversification. Where the arable area is over 3 ha, cultivation must include three different crops (any individual crop area to be between 5% and 70%).
- The area of permanent grassland must be maintained. Permanent grassland is grass that has been established for 5 or more years, excluding land previously classified as set-aside. The area of permanent grassland must not fall by more than 5%.
- Ecological focus area. 7% of the area (excl. permanent pasture) is to be placed in ecological management (e.g. fallow, landscape features, buffer strips and eligible forested areas).
There is a suggestion that failure to comply might result in a penalty over 30%.
Areas with natural constraints
- Up to 5% of National Ceiling
This will apply to LFAs, although the definition of LFAs has also been made more rigorous and could result in a change to the boundaries.
- Up to 5% of National Ceiling (10% or more on application by Member State)
For specific agricultural sectors which undergo“certain difficulties and are particularly important for economic and/or social reasons”. The payment would be based on a fixed area and yield or number of animals.
The legislation has a presumption that up to 5% of the National Ceiling would be used but on application to the Commission, the provision may be over 10%.
- Up to 3% of National Ceiling (unless more is required to aid young farmers)
A National Reserve for new entrant farmers and to assist farmers in areas subject to restructuring or prevent land abandonment. It is also available to farmers deemed to be treated unfairly as determined by court ruling or administrative statement made before the latest date for application.
Entitlements that revert to the Member State (such as those not activated for two years) replenish the National Reserve. If reversion leads to a reserve of over 3%, the balance may be used to increase the BPS subsidy (see below).
- Up to 10% of National Ceiling
The amount paid must either: not exceed 15% of the national average payment, or equal the national average payment per ha multiplied by three, subject to a maximum of €1,000 and minimum of €500 (in both cases based on the 2020 payment). The payment replaces all elements of the main scheme.
Small Farmer entitlements must be activated and cannot be transferred. Participants are exempt from the environmental conditions under the Environmental Payment and Active Farmer income requirement.
By implication, a Small Farmer is somebody who finds it worth accepting the Small Farmer payment rather than the payment that would be received through the main regime.
- Up to 2% of National Ceiling
An additional payment of 25% is made to Young Farmers for a maximum of five years. The award may be for areas up to the average farm size in the Member State (54 ha UK). Where the funding is exceeded, allocation is scaled back.
Young farmers have to be under 40, have appropriate skills and have taken over control of the holding in the previous 5 years.
Flexibility between pillars
- 10% of National Ceiling from Pillar 1 to Pillar 2
- 5% of National Ceiling from Pillar 2 to Pillar 1
Reorganisation of the allocation of Rural Development funding to Member States may mean that not all this transfer will need to be taken up by the UK to make up for loss of voluntary modulation.
- As necessary to keep within the EU budget
It is not applied to the first €5,000 per claimant
Basic Payment Scheme (BPS)
- Remainder of National Ceiling
The BPS is the remainder of the National Ceiling net of all other provisions.
All Member States will be expected to move to a flat-rate system by 2019, with no less than 40% of the payment being area-based in the first year (but see ‘Coupled Support’) (where changing from a historic system). The remainder of the entitlement value is allocated proportionately to the value of entitlements held under the SPS at 31 December 2013. .
By 2019 payments will have the same unit value in any one region.
Payment will still be dependent on meeting cross-compliance conditions but rules are expected to be simplified.
Capping and Progressive Modulation
€150,000 up to €200,000
€200,000 up to €250,000
€250,000 up to €300,000
Capping and progressive modulation apply to the BPS only and is calculated net of all salaries paid in previous year.
Money deducted as a result of capping is transferred to Pillar 2.
There will be no other forms of modulation.
Active Farmer definition
Payments over €5,000 will not be made to “applicants who have no real or tangible agricultural activity.” The proposal defines an Active Farmer as one whose subsidy is greater than 5% of their receipts from non-agricultural activity and, if their agricultural areas are mainly areas naturally kept in a state suitable for grazing or cultivation, they carry out the minimum activity defined by the Member State.
Minimum claims are set at €100, or 1 ha, although Member States have some discretion.