"La PAC dans tous ses Etats", conférence le 20 novembre 2014

1. « La PAC dans tous ses États »
Déclinaison de la PAC et impacts dans sept pays européens
Italy
The CAP reform in Italy and its impact on dairy
and beef farms profitability
Kees de Roest, Claudio Montanari, Alberto Menghi
Research Center Animal Production ‐ CRPA
Jeudi 20 novembre 2014

2. Italie
Contents of the presentation
The dairy and beef chain
►Number of dairy and beef farms, milk and beef production
►Geographical distribution
Impact of the new CAP
►Option chosen for the new CAP and changes with before
• Coupled and decoupled premia
• Second pillar resources
• Role of PDO cheeses
Development after 2015

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Number of farms and dairy cows
Dairy cows per herd size
cows 1 - <10 cows
cow s 10 - <50 cow s
cow s 50 - <100
cow s 100 - <500
cows >=500 cows
Almost 50,000 dairy farms
1.5 million dairy cows
11.3 million ton milk

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Milk production and PDO cheeses
2009 2010 2011 2012 2013
Milk deliveries ('000
t) 11,144 11,238 11,458 11,502 11,306
Self sufficiency rate
(%) 67.7 67.2 67.2 69.1 70.3
PDO cheeses ('000 t) 449 464 491 496 483
% of national milk
deliveries 49.3 50.7 54.1 54 52.5

5. Italie
The beef sector in Italy (2013)
Total cattle population= 5.74 milion heads
Suckler cows herd = 380,000 heads
Beef production = 855,000 tonnes (3rd
producer in EU)/2,73 mil heads
Self‐sufficiency rate
(production/consumption)=59%
Consumption = 20.8 kg per inhabitant

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Geographical distribution of beef cattle (male and female from 1
to 2 years)
Veneto 32%
Piemonte 20%
Lombardia 18%
Emilia Romagna 5%

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Geographical distribution of suckler cows (380,000
heads)

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Italian beef supply balance sheet
.000 tonnes 2009 2010 2011 2012 2013 Var13/08
Consumption 1,392 1,393 1,292 1,237 1,136 ‐17.1%
Self sufficiency 60.3% 60.4% 58.2% 59.0% 58.1% ‐4.7%
Source: elaborated by CRPA on Ismea and Istat data

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France is the main supplier of feeder cattle for Italy (75% of
livestock import)
Source: BDN data

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Reform of the CAP 1st pillar: the implementation in Italy
1. Adoption of partial convergence model for the basic
payment, that will avoid a flat-rate payment at national level,
gradual reduction of basic payment until 2020
2. Payment for greening calculared as % of basic payment
3. Payment for young farmers financed with 1% of the ceiling.
4. Coupled payment financed with 11% of the ceiling (dairy; beef,
sheep, olive oil, protein crops, sugar beet, rice, durum wheat,
processing tomatoes).
5. No other voluntary components will be introduced.

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The new national ceilings for direct payments (2015‐2020)

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How is basic payment calculated according to the model of
partial convergence?
The initial amount of the basic payments will dipend on
the direct payments received by farmers in 2014.
The value per hectare will be reduced by a coefficient:
Basic payment ceiling 2015/Direct payments ceiling
2014=
2,263 mln €/ 3,953 mln € = 57%

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How is basic payment calculated according to the model of
partial convergence? (2)
Example:
Single farm payment received in 2014= 1,800
€/hectare
Initial value of basic payment= 1,800*57%= 1,026
€/hectare
The basic payment wil not be reduced more than 30%
of the initial value

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The new coupled payments and the sectors involved
Resources for beef sector
resources will rise from 51,5 to 107
mln € compared to current
situation:
‐ payment for suckler cows will
increase by around 25% due to the
more selective eligibility criteria
(registration in breeds herdbooks)
‐ but in finishing farms coupled
payment are likely to remain
unchanged because more cattle
will be elegible under the new art.
52

15. Italie
Change of CAP premia for dairy farmers
• Substitution of decoupled premia historically coupled
to milk quota with basic payment and greening
• Substitution of premium coupled per kg of milk (max €
1.5 per 100kg) for milk quality (art.68) with premium
per calf born (art. 38) (€ 56 per calf born)

16. Italie
Change of CAP premia for dairy farmers
Milk production (kg) 793,087
Number of dairy cows 88
Family income (€) 73,570
Annual Working Units 3
2014 2015
Decoupled premium
(€/100kg) 2.80 22,206 18,875 Base + greening
Art.68 (€/100 kg) 1.10 8,724 4,928 Art. 38
% of family income 42 32

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Possible development after 2015
• No significant increase of national milk production
because of environmental constraints and high land
prices
• Further concentration of milk production in large to
very large farms (over 500 dairy cows)
• Decline of small to medium sized dairy farms (lack of
successors)
• Use of regulation of supply by PDO Consortia
(Interbranch organisations) following Reg. 261/2012

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The current role of direct payments for specialised beef finishing
farms (medium size of 450 heads)
Source: CRPA extimate

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How coupled payments for beef farms will change

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How decoupled payments per hectare will change after 2014

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Profitability, net and gross of decoupled payments

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Second pillar measures in the 20 RDPs
• Operational Groups for Innovation (EIP)
• Investment premia
• Reduction of GHG emissions
• Animal welfare

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Conclusions beef sector
• Severe cut of the decoupled payments for intensive beef farms, although
mitigated by the model of partial convergence and by greening granted as % of
basic payment
• Specialized finishing farms will still receive amounts above the national average,
but will suffer a reduction in the order of 48% compared to the current amount
of the single farm payment
• The reduction of the support might speed up phenomena of abandoning or
conversion,
• Currently to the finishing farms are directed 27.5 mil. € for coupled payments
(art. 68 Reg 73/2009). Despite the increase of the ceiling from 2015, the amount
per head is expected to increase only slightly because 63% more cattle head are
eligible under art.38 Reg. 1307/2013