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CAP reform: Commission eyes subsidy cuts for big farms

Est. 3min

21-11-2007 (updated: 28-05-2012 )

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The Commission has presented a series of reform recommendations designed to modernise the EU’s Common Agricultural Policy (CAP). A tighter subsidy regime and a greater shift of funds from direct payments to rural development support are among the proposals on the table.

The Commission’s long-awaited reform plans for the CAP, also known as the ‘health check’, were presented in Brussels on 20 November by Mariann Fischer Boel, EU commissioner for agriculture and rural development.

The proposals are non-legislative, but set the stage for discussion and deliberation in advance of formal legislative proposals expected in the spring of 2008. 

More decoupling, less money

Dubbed a “blueprint for streamlining and further modernising” the CAP, the health check builds on the 2003 round of reforms by proposing an extension of de-coupling requirements to virtually all agricultural sectors.

Farmers with sizeable land holdings who receive large payouts would also face significant subsidy cuts under the plans:

  • 10% cuts for payments above €100,000;
  • 25% cuts for payments above €200,000;
  • 45% cuts for payments above €300,000. 

Landowners in Germany, the UK and the Czech Republic would be particularly affected by the plans. France’s large agricultural sector will also be significantly affected by the plans, but French President Nicolas Sarkozy recently announced his commitment to reforming the sector (EURACTIV 12/09/07).

No more ‘pseudo farming’

Under the current system, farmers or landowners engaged in agricultural activity who own more than 0.3 hectares are eligible for CAP subsidies. The Commission wants to raise the thresholds – potentially to above one hectare – in order to reduce the risk of fraud by ‘pseudo farmers’. 

“If you keep one goat in your backyard you are not a real farmer,” Fischer Boel told journalists in Brussels on 20 November.

Set-asides and money for environment

More extensive modulation also features in the plans: by 2015, the Commission wants to gradually shift 13% of direct aid to the Rural Development Fund, up from its current level of 5%. 

Water management plans and other climate change-related measures should be added to cross-compliance requirements as part of the health check, which calls for an end to ‘set-asides’, meaning land which farmers are required to leave fallow in order to protect natural environments and species.

Currently, 10% of EU agricultural land must be set aside. The Commission wants to abolish set-asides entirely for a period of one year, to let farmers grow more cereal in response to increased demand and rising food prices. 

But the EU executive remains vague about environmental safeguard alternatives to the set-asides, and is looking for input during the upcoming discussions. 

One possibility, according to the Commission’s agriculture spokesperson Michael Mann, would be to use the increasing amount of funds modulated from the direct payments towards environmental purposes. Another possibility is a voluntary scheme whereby farmers would protect land next to key waterways, Mann told EURACTIV.

Budget talks

The CAP budget for the period beyond 2012 will be dicsussed in 2008-2009, but the health check “in no way” prejudges the outcome of the budget talks, according to the Commission. 

The Commission hopes the health check reforms, which would apply to the period 2009-2012 and pave the way for further reforms in the post-2012 period, will be adopted by the Agriculture Council under the French EU Presidency before the end of 2008.

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Positions

Most MEPs  in Parliament's Agriculture Committee "broadly welcomed" the plans but warned against budget cuts. 

MEP Lutz Goepel, agriculture spokesman for the EPP-ED group, recommends a "'progressive modulation' (reduction) of direct payments of one percent from €10,000 up to a maximum of four percent for payments from €300,000". 

Goepel also also called for "additional systems of risk provision, which would have to be co-financed on a national level" in order to adjust to "growing fluctuations on the world markets and rising costs for raw materials", he said in a 20 November statement.

Socialist MEP Luis Manuel Capoulas Santos said his group is for "a greener and more competitive European agriculture, one which is open to the world but regulated, with strong social, environmental and food safety rules, one which shows solidarity with developing countries and can take up the challenge of biofuels".

Speaking for the Conservatives in the Parliament, MEP Neil Parish  said "not enough is being done to fight over-zealous regulation", and called for more funds to be moved from direct payments to rural and environmental development.  

COPA-COGECA, Brussel's largest agricultural lobby, welcomed the Commission's intention to simplify CAP-related bureaucracy but is "very concerned about any further cuts in farmers' direct payments", and is calling for "a period of stability" rather than further CAP reforms in order to adjust to increasing volatility on world food markets, the organisation said in a press statement.

NFU, the National Farmers' Union of England and Wales, believes "the suggestion of scaling back larger single farm payments, however seductive, is [...] misguided". 

"It would introduce more complexity instead of simplicity, especially as farmers would be bound to try to adjust their businesses in order to avoid its impact", the NFU said in a statement.

The European Environment Bureau (EEB) argued that the Commission is maintaining the status quo and criticised it for not tabling a more ambitious reform proposal that includes "an evaluation of the effectiveness of the cross-compliance system for protecting the environment, rather than focussing only on simplifying the system", the group said in a 20 November statement.

Bird Life International said the Commission's proposals to abolish set-asides "will severely damage wildlife and water quality precisely at the time when climate change is adding further pressure on already weakened ecosystems".

Background

The last round of CAP reform efforts was launched in 2003 and featured a 'decoupling' of agricultural production from subsidy payments in order to prevent over-production and waste. 

The new system involves a Single Payment Scheme (SPS), in which subsidies are allocated according to indicators such as land size rather than production volume. Cross-compliance measures, whereby farmers are required to meet certain environmental, food safety and animal welfare standards, were also introduced as a pre-condition for receiving payments under the SPS.

In addition to cuts in intervention prices for several sectors, the reforms also featured a shift or so-called 'modulation' in monies from the first "pillar" of the CAP (direct aids and market support) to its "second pillar", rural development. This measure was presented as an instrument to "green" the CAP, which accounts for over 40% of the EU budget.

Timeline

  • Feb. 2008: Parliament to deliver opinion on health check;
  • May 2008: Commission to present legislative proposals;
  • End 2008: possible adoption by EU agriculture ministers - reforms would take effect immediately;
  • 2008-2009: CAP budgetary discussions for the post-2012 period.

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