European Budget Impact On Agriculture - An Update On Cap Reform And More

CAP reform is entering a busy period, although it may still be some time off before any real farm level detail is known.

Readers of this bulletin will be aware these reforms of the Common Agricultural Policy (CAP) have been running in parallel with the setting of the entire EU budget for 2014-2020 and before reforms could gather any pace in earnest, a budget deal needed to be agreed.

EU budget agreed

In early February, EU leaders agreed on a budget for the years 2014-2020, officially known as the multi-annual financial framework (MFF), paving the way for reforms of the CAP to gather pace. In headline terms future spending will be around 3% lower than in the current 2007-2013 seven year period. The table below makes a comparison between the current budget, what the European Commission was originally looking for in the MFF, and what the result is. All figures are spending commitments at 2011 prices.

Total agricultural spending has dropped by around 9% in real terms over seven years - i.e. to around 39% of the total MFF. Pillar 1 (the single payment scheme and then becoming the basic payment scheme (BPS)) and Pillar 2 (rural development) ended up with similar percentage reductions. Direct payments across the entire EU-27 will be €278bn, so around three-quarters of CAP spending. There are no splits of funding by country available as yet. In terms of Pillar 1 though, there is a commitment to close the gap between countries in terms of average payment rates per hectare. As the UK is around the average then there may well not be much re-distributional change for us - i.e. payments would just be subject to the overall 10% CAP cut.

Capping

All issues to do with money were incorporated into the discussion on the MFF. Therefore capping of direct aid has been included in the deal. The text states simply that "capping of direct payments for large beneficiaries will be introduced by Member States on a voluntary basis". Defra has, in the past, been against capping.

Greening

Again, because...