CAP reform proposals

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  • 1. The Common Agricultural Policy 2014-2020: proposals from the European Commission David Barnes/Drew Sloan Dec 2011 - Jan 2012
  • 2. Purpose of these meetings
    • To inform you about the European proposals for the future CAP
    • So that you can begin to think about preparing for it
    • To set out Scottish Government’s views at this stage
    • To hear your informal views and comments
    • And to enable you to give us well-informed formal feedback via our consultation exercises.
  • 3. Caveats
    • Some things still need clarification from the Commission.
    • Everything in the proposals is subject to change in the negotiations.
    • The consultation exercise is designed to inform SG’s final position, so what we set out tonight is just an interim position.
    • How the new CAP will be implemented in Scotland will be the subject of a separate consultation process nearer the time.
  • 4. What tonight will cover
    • Introduction/background:
      • Procedure
      • Budget
      • Timetable
    • The content of the European proposals:
      • Pillar 1
      • Pillar 2
      • Issues common to both pillars
    • Next steps
    • Q&A
  • 5. Introduction
    • The EU is negotiating its budget and policies for 2014-2020.
    • Three EU institutions are involved:
      • European Commission
      • Council of Ministers
      • European Parliament
    • Only the European Commission can table a proposal: focus tonight is on the Commission’s proposals for the CAP.
    • Council of Ministers and European Parliament then negotiate and decide.
  • 6. CAP Budget and CAP rules will be decided separately
    • CAP budget will be considered alongside the rest of EU budget, by Finance Ministers and Heads of Government.
    • CAP rules will be negotiated and decided by Agriculture Ministers and the European Parliament.
  • 7. CAP budget
    • Commission proposal is roughly a “flat cash” budget for CAP 2014-2020, which means a decline in value in real terms (no uplift for inflation).
    • Commission proposes redistribution of the budget, to boost Pillar 1 payments in new Member States and to make Pillar 2 fairer.
  • 8. Pillar 1 Direct Payments budget
    • Commission proposal for “convergence” to help new Member States: those below 90% of EU average €/ha get an uplift.
    • Proposed UK Direct Payments ceiling is slightly down.
    • Within-UK allocations not yet known.
    • Scotland’s average €/ha is as low as some new Member States.
  • 9. Pillar 2 Rural Development budget
    • Commission proposes to use more objective criteria than in the past to allocate Member State shares.
    • UK allocation not yet known.
    • Criteria should lead to bigger percentage shares of the EU RD budget for UK and Scotland.
    • Total RD budget in Scotland 2014-2020 will also depend on how big the EU RD budget is, and how much national co-financing money is available.
  • 10. CAP rules
    • What’s happened so far:
    • 2009-2010 gathering ideas - Commission consultation exercise, Council discussions, Lyon report.
    • Pack Inquiry into future farm support.
    • Nov 2010 Commission options paper. Council discussions, Dess report.
    • Oct 2011 Commission issues formal proposals designed to meet its objectives.
  • 11. Two Pillars, four regulations
    • Pillar 1
    • Direct Payments
    • Market measures (“Single CMO”)
    • Pillar 2
    • Rural Development (“RDR”)
    Financing and monitoring (“Horizontal” regulation) EU implementing rules (“Delegated Acts”)
  • 12. Commission’s ideal timetable
    • CAP proposals issue 12 October 2011.
    • EU and CAP budgets decided summer 2012.
    • CAP regulations finalised end 2012 or early 2013.
    • EU-level and Member State-level implementing rules and legislation adopted during 2013.
    • New regime 1 Jan 2014.
  • 13. If the timetable slips
    • Pillar 1 Direct Payments and Market Measures – status quo could essentially continue until the new system begins, Eg on 1 Jan 2015.
    • Pillar 2 Rural Development Programmes – risk of a gap between current programmes and new ones unless “bridging” arrangements are agreed.
  • 14. Content of the EU proposals
    • Pillar 1 Direct Payments
    • Next slides from the Commission’s own presentation:
  • 15.  
  • 16. Who would have entitlements under the proposals ?
    • All current entitlements would expire.
    • Entitlements under the new system would be allocated to:
      • farmers who are actively farming in 2014 and submit a claim, and who activated at least one SFP entitlement in 2011.
      • and people eligible for the National Reserve.
  • 17. National Reserve
    • Funded by one-off deduction of up to 3% of Scotland’s total Direct Payments.
    • Priority given to farmers under 40 who started farming in the last 5 years. If necessary to meet this demand, the 3% can be increased.
  • 18. Who is an active farmer ?
    • Direct Payments must be at least 5% of non-agricultural income (unless Direct Payments <€5,000).
    • Must grow crops/keep livestock; or keep the land in condition suitable for grazing or cultivation.
    • Member States/regions can impose minimum activity on land which remains in good condition even without management.
    • Minimum claim size and hectarage.
  • 19. 1. Basic Payment
    • What’s left after the various deductions have been made.
    • Can be regionalised, on objective criteria.
    • In 2014, 40% of the Basic Payment ceiling is area-based. Remainder shared out according to historic SFP.
    • By 2019, must be 100% area-based and all entitlements within a region must be equal.
    • Transition profile fixed in advance, in 2013.
  • 20. 2. Greening
    • If >3ha of cropping, minimum 3 crops each covering >5% and <70%.
    • Permanent grassland (>5yrs) must be maintained as declared in 2014.
    • Each holding must have Ecological Focus Area (buffer strips, landscape features, fallow etc) equal to 7% of arable and temporary grass area.
    • Organic farming qualifies automatically.
  • 21. 3. Young farmer top-up
    • Compulsory for Member States. 25% top-up per hectare, up to a limit on hectares.
    • Limit must be set between 25ha and average holding size in UK (54ha).
    • Under 40, and max. 5 years after establishment.
    • Up to 2% of Scotland’s total Direct Payments.
  • 22. 4. Coupled support
    • Voluntary for Member States/regions.
    • Replaces Article 68 and pre-SFP schemes (SCPS, SAPS etc) which some member States are still using.
    • Limited to fixed no. animals and to payment rates necessary to maintain current production.
    • Up to 5% of total Direct Payments, except for Member States currently using >5%.
  • 23. 5. Area of Natural Constraint (ANC) top-up
    • ANC = new designation for LFA
    • Top-up voluntary for Member States/regions.
    • Up to 5% of total Direct Payments.
    • Payable on all or part of ANC, according to objective criteria.
    • Must be deducted from Pillar 2 ANC support (LFASS).
  • 24. Progressive reductions/capping
    • Payments reduced by:
    • 20% from €150,000 to €200,000
    • 40% from €200,000 to €250,000
    • 70% from €250,000 to €300,000
    • 100% above €300,000
    • Salaries/employment costs are deducted.
    • Greening payments are exempt.
    • Proceeds used in Pillar 2 for innovation.
  • 25. Small farmer scheme
    • Compulsory for Member States, optional for the farmer (one-off decision in 2014).
    • Up to 10% of total Direct Payments.
    • Fixed payment, between €500 and €1,000.
    • Replaces other payments inc. coupled payments.
    • Minimum no. hectares.
    • Exempt from greening and from cross-compliance penalties.
  • 26. Pillar 1 Market measures
    • EU has moved from permanent intervention in the market to safety-net only.
    • Provision for emergency measures in the event of extreme market disruption.
    • Milk quotas already being phased out, sugar quotas proposed to be phased out.
  • 27. Pillar 2 Rural Development: current rules
    • 7-year programmes approved by Commission.
    • Co-financed by EU and domestic money.
    • Axis 1 farm business development (capital, skills).
    • Axis 2 agri-environment (capital and annual), LFA, woodlands, animal welfare.
    • Axis 3 diversification and community projects.
    • LEADER.
  • 28. Pillar 2 Rural Development: proposals for 2014-2020
    • Evolution not revolution.
    • Common Strategic Framework – joined-up approach between RD, EU Structural Funds and EU Fisheries Fund.
    • No Axes, no minimum percentages except 25% of EU funds on environment (inc. organic and LFA).
    • Possibility for sub-programmes within RDPs.
  • 29. Less Favoured Areas
    • Re-titled Areas of Natural Constraint (ANC). Defined as:
    • Mountain areas, or
    • Other areas meeting biophysical criteria (now defined by EU not Member State), or
    • Other areas facing specific constraints (eg islands), up to 10% of total area.
    • No special budget for each category, but different maximum rates.
  • 30. “ Other areas” biophysical criteria
    • Temperature, soil quality, slope, wetness or dryness.
    • Close to criteria used already to define LFA in Scotland, but less fine-grained: applies to whole ward or parish if 66% of area meets the criteria.
  • 31. ANC payments
    • Costs incurred or income foregone as a result of natural constraints, compared with non-constrained areas.
    • Take account of Pillar 1 ANC top-up.
    • Minimum €25/ha, maximum €250/ha (€300/ha for Mountain), degressive above a threshold.
    • Transition arrangements for farmers excluded by the new criteria.
  • 32. Common rules to Pillars 1 and 2
    • Cross-compliance
    • Rules to be followed by Member States (inspections, audit, financial reporting etc): not covered tonight.
  • 33. Cross-compliance
    • As at present, two elements:
    • Statutory Management Requirements (SMRs) and
    • Good Agricultural and Environmental Condition (GAEC).
  • 34. Statutory Management Requirements (SMRs)
    • EU legislation on environment, animal and plant health, public health, animal welfare, which farmers should be complying with anyway.
    • Down from 18 to 13 (15 when Water Framework Directive and Sustainable Use of Pesticides Directive have been implemented). Some animal health SMRs removed.
  • 35. Good Agricultural and Environmental Condition (GAEC)
    • 8 requirements (previously 8 compulsory + 6 optional).
    • Retention of permanent pasture removed from GAEC: moved to greening.
    • Minimum stocking density removed from GAEC: moved to agricultural activity definition.
    • New GAEC: “Protection of wetland and carbon rich soils including a ban on first ploughing”
  • 36. Cross-compliance penalties
    • Take account of severity, extent and timescale. As at present:
    • Penalty can be waived if “minor” non-compliance (but not if risk to public or animal health).
    • Negligence: up to 5%, or 15% if repeated.
    • Intentional: 20% to 100%.
    • Detailed rules set by Commission.
  • 37. Next steps: Scotland
    • Consultation on Pillar 1, Dec to Feb.
    • Already consulted widely on Direct Payments for Pack Inquiry, and we need rapid information on stakeholder views. Questionnaire on SG website, with hard copy alternative.
    • Pillar 2, separate approach, including links with Common Strategic Framework.
    • These consultations are to inform the negotiating position. Separate exercises later to decide how to implement.
  • 38. Commission proposal Parliament 1st reading Council 1st reading Parliament 2nd reading Council 2nd reading Conciliation procedure NEXT STEPS: EU By end-2012 or early 2013 ??!
  • 39.
    • Then:
    • EU implementing rules
    • Local implementation decisions.
    • Local implementation.
  • 40.
    • Questions