CAP tracker: Lessons from the ground

As the EU’s Common Agricultural Policy is being implemented on the ground, we can start drawing lessons from practical successes and challenges for the future of the bloc’s farm subsidies.

Since January 2023, we have seen for the first time how the new Common Agricultural Policy (CAP) reform is playing out on the ground and what it really means for farmers.

After farmers across Europe took to the streets over issues ranging from the bureaucracy of CAP requirements to alleged imbalances in the food chain and competition from third countries, the EU institutions moved quickly to review the legal texts of the 2021 reform and find short and medium-term solutions to farmers' concerns.

On 22 February, the Comission presented a paper on possible actions to cut red tape, setting out short- and mid-term measures that could be taken to achieve simplification.

Shortly afterwards, on 15 March, the EU executive a simplification package to loosen monitoring, control and environmental requirements in the CAP. The proposed measures include changes to some of the Good Agricultural and Environmental Conditions (GAEC) standards - on which CAP payments depend - and giving member states more flexibility in implementing the policy.

The Commission also proposed to exempt farms of less than 10 hectares from compliance checks and penalties.

In a rush to approve the simplification package before the institutions enter a lame-duck period ahead of the European Elections in June, EU lawmakers sped up the legislative process, leading environmental NGOs to accuse them of disregarding democratic principles.

The political groups on the European Parliament's Agriculture Committee (AGRI) agreed on 19 March to use an urgent procedure that would allow the plenary to swiftly approve the package.

Also paving the way for a quick adoption, EU countries endorsed the proposed measures in a deal on the sidelines of the EU Agriculture and Fisheries Council on 26 March, making only minor adjustments to the Commission's original text.

The European Parliament gave its final green light to the simplification package on 24 April. MEPs from the Socialists and Democrats (S&D), the Greens, and the Left failed to introduce changes to the text, which made it possible to bypass interinstitutional negotiations.

Meanwhile, environmental NGOs have slammed the proposal, saying the changes were a "poisoned gift" for farmers that would make them more vulnerable to climate change while failing to address their economic situation.

The EU Council rubber-stamped the measures on 13 May and they entered into force on 25 May following their publication in the Official Journal of the European Union.

The changes will be in force until the end of the current CAP period in 2027, and farmers can apply some of them retroactively for the claim year 2024.

On 30 May, the EU executive made it easier to exempt farmers from the requirements to receive subsidies in case of exceptional weather events - which was one of the pledges made by the Commission in February - by clarifying the concept of “force majeure”.

Cases of "force majeure" include natural disasters, but also outbreaks of plant and animal diseases

In another move to ease discontent with the CAP's administrative burden, the EU executive on 11 June published a proposal lifting member states’ obligation to ensure that most farm monitoring is carried out using geo-tagged photos by 2027.

Here, EURACTIV’s agri-food team brings you the latest on the CAP.

Future of CAP

EU agriculture minsiters were due to adopt their conclusions on the future of agriculture at a meeting on 24 June, but failed to do so because of a spat over CAP subsidies.

The Belgian Presidency of the EU, which has chaired Council meetings since 1 January, was hoping to get ministers to endorse the text to guide the upcoming negotiations on the future Common Agricultural Policy (CAP).

But the document did not reach the full consensus needed, with only 25 member states supporting it, Romania voting against, and Slovakia abstaining.

The two countries wanted a committment to speed up the CAP’s external convergence mechanism, which aims to gradually align payments between member states.  The process started with the 2014 CAP reform and is still ongoing.

Although the proposed text mentioned the need to “ensure a fair distribution of CAP support, in particular direct payments, among member states,” Bucharest was not satisfied with the wording.

In the absence of agreement, the text was published as “the Presidency conclusions”, a formulation with less political weight.

Meanwhile, the future of the farming sector is being discussed in a different setting, the "strategic dialogue".

The initiative was unveiled by European Commission President Ursula von der Leyen in September to propote “less polarisation” in agricultural policymaking by bringing stakeholders together to exchange views.

A total of 29 food producers, NGOs and farming organisations have been meeting since January and will present their conclusions by the end of the summer. 

Farmers’ income and quality of life in rural areas, sustainable agriculture, innovation and competitiveness of the EU food system will be the main topics of the endeavour.

While the initiative is halfway through, sources close to the talks told Euractiv that stakeholders are not yet close to defining concrete agreements. 

With Ukraine’s accession a more realistic prospect than before, the issue of how to integrate such a global agricultural powerhouse into the EU’s farming subsidies programme is also starting to be raised.

One solution could be to extend to Ukraine the external convergence process, which seeks to align all payments between member states only gradually. The process is considered controversial as it is meant to create artificial disparities among CAP beneficiaries on the basis of the country they live in.

According EU Agriculture Commissioner Janusz Wojciechowski, EU farming subsidies should be compulsorily capped to cope with the accession of Ukraine. The Commissioner said the bloc should prevent Kyiv’s membership from adding to Europe’s growing trend of land concentration, given that that the average Ukrainian farm is even larger than those in the EU.

Meanwhile, Germany has repeatedly called for far-reaching reform of the CAP. German Agriculture Minister Cem Özdemir sounded the alarm ahead of a Council meeting on 11 December, saying that the EU’s farm subsidy programme would be at risk if it were not reformed before Ukraine’s accession. According to Özdemir, unconditional, area-based direct payments to farms should be phased out in favour of financial rewards for providing public services, such as climate and biodiversity protection. 

Generational renewal, the EU's unfinished business: With farmers under the age of 40 accounting for only 11.9% of farm managers in the EU in 2020, the need to ensure generational renewal is becoming a key issue in the agricultural sector. Euractiv interviewed Peter Meedendorp, a young farmer from the Netherlands and  President of the European Council of Young Farmers (CEJA), to find out more about the challenges young farmers face when trying to make a living in agriculture.

According to Meedendorp, the EU should do more to ensure that young farmers have access to investment, land and high quality services in rural areas.

Monitoring CAP strategic plans

With the approval of the Dutch CAP plan in December 2022, after weeks of debate, the new EU’s farming subsidies programme entered into force on 1 January.

As this is the first time that farmers and EU countries had to implement their own CAP plan, some teething issues expected.

In April, EU Agriculture Commissioner Janusz Wojciechowski presented a state of play of the CAP plans during a Council meeting with agriculture ministers (AGRIFISH). The Commissioner stressed that “implementation seems to be well on track.”

But all that glitters is not gold.

The current 2021-2027 programme is also expected to support the transition towards a greener, more sustainable future for farming, as set out in the EU’s flagship food policy, the Farm to Fork strategy.

But member states have emphasised the need for more flexibility and subsidiarity. EU ministers, for example, have been pushing for further flexibility on environmental measures in the EU’s farming subsidy programme, a move that green groups have strongly condemned.

In addition, a study commissioned by the European Parliament’s agriculture committee concluded that most EU member states’ national strategic plans prioritise economically supporting farms at the expense of environmental measures.

Meanwhile, there are also question marks over whether this CAP reform is living up to its promises to provide a fairer deal for farmers. An analysis, carried out by farming and rural policy platform ARC2020, exploring the CAP Strategic Plans of France, Germany, and Ireland, found two interconnected problems that need to be addressed at policy and political level.

On one hand, it found that the plans have "not systematically and coherently addressed all the elements of unfairness" and, overall, just made "small adjustments to avoid the required meaningful shift from the previous direct payment arrangements". On the other hand, DG AGRI’s analyses and communications, while useful to provide a synthesis across countries, fail to account for the "trade-offs, loopholes, and nuances of each member states’ decisions" compared to their baselines situations and needs, the report added, noting that, in some cases, these communications and analyses are full of "incomplete information and red herrings".

Take a look back at the planning and implementation of the first CAP national strategic plans in our previous CAP tracker.

CAP strategic plans for 2024

While the EU countries’ strategic plans for the implementation of the CAP were approved by December 2022, tweaks are still possible - in consultation with the European Commission - on a yearly basis.

Another debate on the agenda when it comes to the CAP in 2024 is the question of derogations, that is temporary exceptions, to some of the environmental conditions farmers have to fulfil to get the full amount of CAP subsidies.

For 2023, the Commission allowed countries to temporarily loosen the rules for crop rotation and the use of fallow land – farmland areas set aside for biodiversity - to allow for higher agricultural production in the face of the Ukraine war and its impact on food markets.

Over the past months, a number of member states have called to grant similar derogations also in 2024, some of them citing the continued impact of the war, others the recent adverse weather conditions in many EU states.

However, the Commission admitted in July that it had no information on the practical impact of the existing derogations and on whether they led to the desired outcome.

Eleven EU member states called for an exemption on the GAEC 8, which requires farmers to devote a proportion of their arable land to non-productive areas and features. The French delegation – backed by Bulgarian, Croatian, Cypriot, Estonian, Greek, Hungarian, Italian, Portuguese, Slovak and Slovenian delegations – announced the proposal at an informal meeting in Spain in early September and presented it to the EU Agriculture and Fisheries Council on 20 November. 

But when it comes to derogations, the EU’s agricultural regulations are quite clear: they cannot exceed one year. To get around this restriction, France proposed a “partial application” of this cross-compliance.

For the French minister, this “flexibility” measure would strengthen the EU’s food security, offsetting the slowdown in Ukrainian grain exports and the drop in production by European farmers hit by extreme weather events over the past two years.

“It is imperative that we continue to support Europe’s production potential. Imports of cereals (wheat, barley and maize) should reach 22 million tonnes in 2022, while this year we have reached 40 million tonnes,” said French Agriculture Minister Marc Fesneau, calling for domestic production to be brought back under control.

Agriculture reserve

The agricultural reserve – previously known as ‘crisis reserve’ – is a €450 million fund included in the CAP scheme that can be used to finance exceptional measures to counteract market disruptions affecting production or distribution.

So far, the crisis reserve has been triggered on five occasions for 2023: €44 million went to farmers affected by an avian influenza outbreak in Italy and Poland; €56 million went to Poland, Romania, and Bulgaria due to market disruptions by imports from Ukraine, €100 million have been additionally distributed to the five ‘frontline’ countries neighbouring Ukraine, and finally a €330 million package will be divided up between the remaining 22 member states to help with ‘adverse climatic conditions’.

In total, the distributed amount is more than that allocated to the fund, for which €80 million will be borrowed from 2024’s agriculture reserve, according to a Commission's spokesperson.

Agri MEPs across the political spectrum complained about the size of the Common Agricultural Policy’s agricultural reserve in a meeting last November. Renew MEP Martin Hlaváček warned the potential of subsidies and crisis tools “is decreasing in relative terms”, noting there is a “reasonable prospect that we will [face] higher risks and higher needs for mitigation“. 

Similarly, EU Agriculture Commissioner Janusz Wojciechowski said in December that the agricultural reserve was “not up to the scale of the problems” facing the EU. Instead, he called for a “common intervention policy”.

Wojciechowski proposed a "third pillar" for crisis intervention in the CAP budget, and said he hoped the Commission's "strategic dialogue on the future of agriculture" - unveiled by von der Leyen in September and launched on January 25 - would help achieve this. 

Eco-schemes

One of the main innovations of the reformed CAP when it comes to make EU farming greener are the eco-schemes - extra premiums which farmers can receive in return for implementing certain voluntary sustainable measures.

Each EU country is responsible for coming up with its own catalogue of these schemes for farmers to choose from, as well as deciding on the financial incentives attached to each of them. Since the measures are voluntary, these decisions are key for whether farmers will participate and whether the instrument will thus fulfil its function.

We put together an overview over the kinds of measures implemented and how well this is going in a range of EU countries here.

Germany has been somewhat of a problem child when it comes to the functioning of the eco-schemes: In June, first data gathered by the country’s regions showed that far fewer farms than hoped for are currently participating in the eco-schemes, with the uptake for some schemes being less than 1% of the planned amount. However, most EU countries have not used the extra freedom they have under the new CAP to implement measures that effectively benefit the environment, according to a new study.

Social conditionality

The new Common Agricultural Policy (CAP) reform agreement introduced a new concept of social dimension that bears the potential to build a third “pillar” for the EU’s farming subsidy programme in the near future.

That is the social conditionality - or social pillar - in which CAP payments will, for the first time, be linked to compliance with minimum standards on working conditions.

But the CAP’s social dimension will not start applying from day one. This new mechanism will be compulsory only as of 2025, and will start being implemented only by those EU member states who are ready from 1 January 2023 - currently France, Italy, and Austria.

However, some concerns have already arisen.

The level of sanctions, decided at the national level, has been deemed ‘very low’ and ‘unacceptable’ by some stakeholders, who call on the European Commission to reach a coordinated and harmonised sanctioning system across Europe.

EU countries will need to create their own national framework on how to implement social conditionality – sanctions, controls and levels of diligence.

CAP refresher

The EU’s common agricultural policy, or ‘CAP’ as it’s known, aims to support farmers and improve agricultural productivity, ensuring that there is a stable supply of affordable food and that the EU’s farmers are able to make a reasonable living, while also safeguarding the environment.

After years of discussions, lawmakers gave their green light to the reform of the CAP during a plenary session in Strasbourg on 23 November. The reform passed with a wide majority, despite mounting calls from campaigners to scrap the CAP.

The CAP has undergone a series of transformations over the years to meet changing economic circumstances and citizens’ requirements and needs, which have put the CAP under pressure to provide answers to an increasing number of challenges, including climate change, biodiversity loss and soil degradation.

These proposals aim to make the CAP more responsive to these current and future challenges while continuing to support European farmers for a sustainable and competitive agricultural sector.

The future CAP revolves around nine specific objectives reflecting its economic, environmental and socio-territorial multifunctionality. These include:

• supporting viable farm income and resilience across the Union to enhance food security
• enhancing market orientation and increasing competitiveness, including a greater focus on research, technology and digitalisation
• improving the farmers’ position in the value chain
• contributing to climate change mitigation and adaptation, as well as sustainable energy
• fostering sustainable development and efficient management of natural resources such as water, soil and air
• contributing to the protection of biodiversity, enhancing ecosystem services and preserve habitats and landscapes
• attracting young farmers and facilitate business development in rural areas
• promoting employment, growth, social inclusion and local development in rural areas, including bio-economy and sustainable forestry
• improving the response of EU agriculture to societal demands on food and health, including safe, nutritious and sustainable food, food waste, as well as animal welfare

The CAP achieves this via:

• Income support through direct payments. This is designed to ensure income stability and remunerate farmers for environmentally friendly farming and delivering public goods not normally paid for by the markets, such as taking care of the countryside
• Market measures to deal with difficult market situations such as a sudden drop in demand due to a health scare, or a fall in prices as a result of a temporary oversupply on the market
• Rural development measures with national and regional programmes to address the specific needs and challenges facing rural areas

The CAP is organised into two pillars.

Pillar 1 addresses farm income support and market management and is completely financed through the EU budget by the European agricultural guarantee fund.

Pillar 2 addresses rural development, including agri-environment-climate measures, and is co-financed jointly by the EU budget through the European Agricultural Fund for Rural Development and by member states. 

Click here to learn more about common concerns related to the CAP.