CAP Reform

05 May 2021

The Common Agricultural Policy is undergoing its sixth major reform since its inception in 1962. In recent years, the European Union has put the environment at the core of all its major policies, and agriculture is no different. Farmers will have to play their part, but generally, the new policy is more simplified and modern.

The European Council and the European Parliament established their negotiating positions on CAP in October 2020. The process is continuing at the technical and political level, and a breakthrough could come by May. In the meantime, the current rules have been extended, ensuring the continuation of direct payments and the funding of new projects and, most importantly, giving some certainty to farmers.

It has taken many years to get to this point, and the new CAP covers a wide range of issues, but there are some key changes;

Strategic Plans

Firstly, member states will have a bigger role to play in the CAP rollout. Each country must put forward strategic plans explaining how they intend to meet the nine CAP objectives. To assist member states, the Commission has published a list of recommendations for Ireland, focusing on the objectives of the Farm to Fork and Biodiversity strategies - key pillars of the EU Green Deal. Farm to Fork aims to improve the EU food system while the Biodiversity plan focusses on conserving and restoring ecosystems.

Eco Schemes

The structure of CAP is also changing, with eco-schemes taking centre stage. They set out to reward and incentivise farmers for taking action towards more sustainable practices. Both the Council and Parliament have proposed amendments to the Commission’s original proposal, which would ring-fence a minimum budget for eco-schemes at 20% (the Council) or 30% (the Parliament) under Pillar 1 national envelopes for direct payments. The Commission has made suggestions about how Irish farmers could benefit from such schemes such as conservation of peatlands and funding animal welfare initiatives.

Convergence

Perhaps one of the biggest sticking points is the issue of convergence or ‘levelling’ of payments to farmers. Over the last 6 years, convergence has reduced payments to those with the highest entitlements while those with entitlements valued less than 90% of the national average gained increases. The Commission proposes that entitlements reach at least 75% of the national average by 2026, something the Council agrees with. Still, Parliament takes a different view, calling for all entitlements reaching the 75% mark by 2024 followed by full flattening by 2026. Internal convergence in Ireland is on pause for the moment - allowing for some breathing space.

Young Farmers

The new Common Agricultural Policy is good news for young farmers. The Parliament is calling for at least 4% of direct payments to support young farmers - double the 2% proposed by the Commission. The Commission also proposes to remove the requirement that a young farmer should be establishing a holding or have done so within the previous five years. Member States would set the definition of a young farmer, subject only to an age limit that cannot be greater than 40. Separately the EU recovery instrument allocates 8 billion to agriculture – 55% of which will be allocated to young farmer start-ups and on- farm investments.

In 2016, for every farmer younger than 35, there were more than 6 farmers older than 65. Persuading more young people to begin farming is a challenge, and the supports available in the new CAP will be crucial for generational renewal.

Genuine Farmer

Another important issue is around defining a ‘genuine farmer’, and there are differing views. Essentially, it comes down to distinguishing between the ‘active farmer’ and the ‘armchair farmer’. The concept of active farmers was introduced in 2013, and the legislation set out a negative list of activities – such as those who operate airports, waterworks, railway services and recreational grounds. Until 2017, those operating activity on the list were not considered “active farmers” unless they could prove their farming activity was not marginal. In 2018, this provision became optional. The Commission’s new CAP proposal re-labels the active farmer as a genuine farmer - something the Parliament supports. In Ireland, a consultation on the issue will take place in the autumn.

Getting Over The Line

The Common Agricultural Policy accounted for 34.5% of the 2020 budget, so it is perhaps not surprising that various interest groups all want input. However, amid all the noise, we must ensure that farmers’ voices are heard as they will be the ones most impacted. There will always be winners and losers, and although the CAP is not perfect, it is a step in the right direction.

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