This article is part of our special report Germany’s roadmap for greener CAP subsidies.
EU farm ministers agreed to a new Common Agricultural Policy (CAP) in July that favours “greener” farming practices, with terms like “eco-schemes” and environmental “conditionality” taking centre stage during the negotiations. But what does this concretely mean for German agriculture? EURACTIV Germany reports.
So-called “eco-schemes” are incentives paid to farmers who voluntarily adhere to environmentally-friendly practices while “conditionality” links direct payments to certain minimum standards with regard to environmental protection and animal welfare.
Those two principles will in future apply to the CAP’s first pillar, which deals with direct payments to farmers.
During the last funding period from 2014 to 2020, Germany could access around €4.85 billion each year for these direct payments.
Under the new CAP, which is set to come into force after a two-year transition period in 2023, 25% of direct payments will only be paid to farmers if they demonstrably commit to environmentally-friendly practices determined in concrete terms by the member states.
Germany must submit its strategic plan to the European Commission by 1 January 2022.
“Eco-schemes are a grab bag,” says agricultural economist Sebastian Lakner. “You can make a very effective environmental policy out of it, but you can also make it so weak that it is basically a rather ineffective measure,” he told EURACTIV.de.
But because eco-schemes are voluntary for farmers and offer the possibility to design measures in a more targeted way, Lakner considers them to be more appropriate than greening, the support instrument used under the previous funding period which linked some of the direct payments to environmental objectives.
Green criteria under the second pillar
Under the CAP’s second pillar, subsidies that agricultural actors receive from the European Agricultural Fund for Rural Development (EAFRD) are also tied to green criteria. For the previous 2014-2020 period, Germany received about €1.35 billion per year.
Through various programmes, the EU co-finances rural development projects that focus on issues like competitiveness, structural change, sustainable management and better resource efficiency.
EU countries must spend at least 30% of EAFRD funding to finance so-called voluntary agri-environment-climate measures (AECM) in the fields of agriculture, organic farming and animal welfare.
For the last funding period in Germany, 47% of the funds from the EAFRD budget were allocated to environmental objectives such as climate protection and forestry, according to figures from the federal food and agriculture ministry.
But funding objectives vary considerably between federal states. Bavaria, for example, allocated 75% of its funds to the funding area of environment/climate/forestry, while Schleswig-Holstein only allocated 29% to this objective.
During the previous funding period from 2014 to 2020, the concrete distribution of EAFRD funds went mostly to environmental and climate protection measures: 21% of the budget was thus spent on agri-environmental and climate protection measures, while 11% was used to promote organic farming during the same period.
Cooperation between federal, state governments
In Germany, federal states largely decide how to distribute second pillar funds.
The national strategic plan, which is to be submitted to the European Commission by the end of the year, will include these state programmes which must align with at least four of the EAFRD’s six priorities. These include innovative management practices, the promotion of resource efficiency, and the restoration, conservation and enhancement of ecosystems associated with agriculture and forestry.
“In principle, this is a policy instrument that can be well designed and used to implement meaningful and effective measures,” said Lakner. However, this requires sufficient administrative capacity in the federal states to implement and control the programmes, he warned.
According to the agricultural economist, the design of the AECM for the new funding period is also complicated by the fact that many measures that were traditionally funded via the second pillar are now already part of the eco-schemes, for example, to promote fallow land and flowering strips.
“This means I now have to pay much more attention to the fact that measures of the eco-schemes and the AECM work together when I design policy from a country perspective,” he explained.
EIP-AGRI: Innovative partnerships for greater sustainability
To help farmers implement the green EAFRD objectives, the EU also launched a new funding instrument back in 2012: the European Innovation Partnership on Agricultural Production and Sustainability – or EIP-AGRI for short.
According to the BMEL, Germany was the first EU member state to implement this instrument for the 2014-20 funding period.
EPI-AGRI enables farmers, foresters, researchers, agri-business advisors and other rural actors to network in order to jointly realise innovative projects, for example on resource efficiency or the sustainable supply of food and feed.
[Edited by Frédéric Simon]