Common Agricultural Policy Reform - A Work In Progress

On 12 October the EU Commission released legal proposals for the Common Agricultural Policy (CAP) post-2013. Negotiations will now continue through 2012 and into 2013. The proposals are for the new scheme to commence on 1 January 2014, although if this timetable slips it could conceivably be 2015 before the reforms are in place.

Since the first 'communication' was released by the Commission a year ago there have been some amendments to the plans. It also appears that cuts in the next EU budget for agriculture do not look as bad as once feared; with spending on agriculture falling from just over 40% of the budget to about 36%. Although it must be remembered these are only proposals and may change. The same can be said about the CAP plans and past experience shows us a lot can shift during negotiations. Careful consideration must be given if businesses are thinking about making decisions based on these proposals.

Looking at the reforms, the familiar two pillars will be retained, with direct payments making up pillar 1 and rural development in pillar 2, although 30% of direct payments will be made up of a compulsory 'greening' element. The table shows how the money available for direct payments, the national ceiling (NC), can be split up by member states. The Basic Payment Scheme (BPS) and the 'greening' measures will be the two main elements of any new scheme.

Basic Payment Scheme

A new BPS will replace the existing SPS. It will be largely familiar with entitlements activated on a yearly basis by eligible land.

Existing entitlements will be cancelled and an application for new entitlements will be based on the eligible area as made by 15 May of the first year of the new scheme (2014).

Entitlements will only be granted to claimants who activated at least one SPS entitlement in 2011.

The 'historic' payment method, as still used in Scotland and Wales, will be phased out over five years, but only 60% of the payment being based on 'historic' entitlements will be allowed in the first year. Farmers in Scotland and Wales with high-value entitlements may experience a sudden fall in their payments.

Environmental elements

Under the proposals, 30% of direct payments will be conditional on producers undertaking the following 'greening' measures.

Where the arable area exceeds 3ha, claimants will need to grow three different crops, each crop to be between 5% and 70% of the total cropped area. Claimants must maintain the area of permanent grassland on the...

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