Horizon blog: What CAP reform means for EU farmers

Friday, 23 July 2021

The UK may have left the EU at the start of 2020 but, as our main trading partner, matters there are still important for UK agriculture. Earlier this month a number of reforms of the Common Agricultural Policy were agreed, including a raising of the bar for cross-compliance and more measures for the environment. AHDB’s insider in Brussels Tania Gesto-Casás assesses the recent announcements.

After three years of negotiations, the EU institutions reached an agreement last month on the reform of the Common Agricultural Policy (CAP), covering the period 2023 to 2027. The result is a policy the European Commission has presented as “fairer, greener and more flexible” but what does that mean for EU farmers?

One of the novelties is the inclusion of social conditionality provisions. This means that under the new CAP, farmers could potentially be penalised if they do not respect certain elements of the European social and labour law, mainly in terms of health and safety at work. Legislators have also tried to promote greater fairness by including mandatory requirements for Member States to close the gap between the levels of payments for farmers from different parts of the same country. In addition, there is an obligation to ensure that at least 10 per cent of the national direct payments’ envelope is redistributed specifically among small and medium-sized farms, to complement their income support. Young farmers (up to 40 years old) will also receive at least three per cent of the total Member States’ budgets for income support.

Another key objective of this reform was to ensure a stronger contribution from the CAP to the green transition. To that aim, the current greening and cross-compliance rules have been replaced by more ambitious baseline requirements for beneficiaries to receive support. This includes, for instance, an obligation to devote four per cent of arable land to non-productive areas and features, including land lying fallow; special protections for wetlands and peatlands; and a ban on cutting hedges and trees during birds’ breeding season. There will also be new tools, such as eco-schemes – voluntary schemes for farmers which will reward them for implementing climate- and environmentally-friendly practices and animal welfare improvements.

One of the key changes relates to the introduction of a new way of working based on the recognition that one size does not fit all. Under the new CAP, Member States will have the flexibility to shape rules and funding allocations according to the specific needs and characteristics of their farmers in the national Strategic Plans, as long as they are in line with EU standards and objectives. This means, for instance, that each Member State will be able to determine the conditions to be considered an “active farmer” and therefore to be entitled to receive CAP payments. 

Some things have not changed though. Strengthening the position of farmers in a competitive agri-food sector remains a priority and the new CAP maintains the overall market orientation, reinforced by a new agricultural reserve that will be introduced to fund market measures in times of crisis with an annual budget of at least €450 million. In addition, and following the experience of the dairy crisis, voluntary production reduction measures will be possible at an early stage, before the crisis sets in.

Reactions to the agreement have been mixed across the EU. Farmers believe the reformed policy will represent an unprecedented challenge for them. Although the overall size of the CAP budget for the upcoming period is broadly maintained (€387 billion), farmers will have to work with the new enhanced conditionality, while environmental and climate measures will take up a bigger share of the budget. Environmental NGOs, for their part, were also very critical but for different reasons. They consider it a mere “greenwashing” exercise that basically maintains the status quo.

Overall, it is fair to say the new CAP will be an evolution, rather than a revolution but as it is often said, the devil is in the detail. A full assessment will only be possible when the political agreement is translated into legal texts and secondary legislation, determining the implementation of the policy.

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