Germany’s CAP subsidies to favour small farmers, greening

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Germany is to change the way it distributes the €6.2 billion of farming subsidies it receives every year from the EU, disbursing more towards small and medium-sized enterprises and eco-farming practices. EURACTIV Germany reports.

The new plan, agreed by agriculture ministers from the 16 German Länder, states, on 4 November, small and medium-sized farms will get extra support, while larger producers will receive fewer funds.

“German farmers will be given planning security up to the year 2020 and can make decisions about their future”, said Peter Bleser, state secretary in the Federal Ministry of Agriculture.

The distribution of funds was hotly contested, as subsidies for German farmers will be cut by 10%. In the end though, all the Länder unanimously voted for the compromise.

According to the agreement, German farmers will receive a total of €6.2 billion. Funds will be divided into two pillars: direct payment to farmers and support programmes for rural infrastructure and eco-farming.

€220 million (4.5%) will be redistributed from the first pillar to the second. Ministers from the Green Party had originally called for 15%.

Greens 'total blocking' averted

“The decision […] is on the trail of a green compass, regrettably only at the sluggish pace of the CDU-SPD," Green MP Friedrich Ostendorff said. The Christian Democratic Union (CDU) and the Social Democratic Party (SPD) lacked the will and the courage for effective implementation of real reform, he said.

“The German Farmers Federation (DBV) was not able maintain its position of totally blocking the reform”, Ostendorff said. Ostendorff doubted that a mooted governing grand coalition between the SPD and the CDU would promote greening significantly.

However, Robert Habeck, minister of agriculture for the northernmost Schleswig-Holstein state, was more positive.

“The tough negotiations have paid off," Habeck said after the conference, which took place in Munich.

“Today’s agriculture ministers conference has been successful in enabling national support toward a different subsidies policy for agriculture. Above all, we will use these extra funds toward creating a resource-saving, advanced agriculture sector which will benefit animal welfare, environmental protection and sustainability.”

Until now Germany’s large producers, particularly in the east, were the main beneficiaries of EU subsidies. Under the new plan, these companies would continue to receive support to recover their disadvantage after the country's reunification in 1989 but this “reunification bonus” will expire in 2020.

The latest agreement will provide more assistance to small farmers. These will receive an extra €50 bonus for each of the first 30 hectares of land.

A drop in the ocean

"The supplement for the first hectares is a small compensation for the fact that the Federal Government, the Farmer’s Federation and agriculture ministers in eastern Germany vehemently opposed every form of capping”, said Martin Häusling, a German MEP for the European Greens.

“According to EU law, the supplement must be paid to avoid capping. Thanks to Green ministers, it has become more than just a drop in the ocean.”

Younger farmers, below 40 years of age, can also look forward to more support. They will receive an additional €50 per hectare, though this is limited to the first 90 hectares per company and a maximum of five years.

In September, EU ministers agreed on a reform of European Common Agricultural Policy (CAP) from 2014 until 2020. Formal agreement of the Council and the Parliament is expected to occur by the end of this year. For the time being, the European Commission is working out the legal instruments necessary for implementation in the member states. 

Launched in 1962, the Common Agricultural Policy, or CAP,  is a system of EU agricultural subsidies and programmes comprising the biggest single budget outlay for the EU – some 38% of the overall budget compared to nearly 70% in the 1970s.

Under the agreement on the EU’s €960-billion budget for 2014-2020, spending for agriculture and rural development will be around €380 billion, with some €280 billion set aside for direct payments to farmers and around €80 billion for rural development. The rest goes mainly for export support.

The European Commission proposed overhauling the CAP in October 2011, recommending fundamental changes in the 2014-2020 framework, including:

  • Reform of direct payments to support farmers (Pillar 1) and the budget for rural development and conservation (Pillar 2);
  • The end to quotas and other forms of market support;
  • A greater emphasis on environmental measures, with up to 30% of the funding granted to farmers who diversify production, rotate their land or maintain permanent pastures.

Agreement on the first major reform of the CAP in a decade won political approval in June 2013 after months of haggling. The long road to a deal means many policies won’t be implemented before 2015. [read more]

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