FOREIGN AGRICULTURAL SERVICE
Origins of the CAP | The CAP after 2013 | CAP Health Check | CAP Reform Agreement | Single CMO | Reports | Links
Origins of the CAP
The Common Agricultural Policy (CAP) was proposed by the European Commission in 1960 further to the signing of the Treaty of Rome in 1957. The initial objectives of the CAP were set out in Article 39 of the Treaty as being:
- to increase agricultural
productivity by promoting technical progress and
ensuring the optimum use of the factors of
production, in particular labor;
Within this framework, the CAP began by subsidizing production of basic foodstuffs in the interests of self-sufficiency and food security. By the Agenda 2000 and the 2003 reforms of the CAP, the EU sought to allow farming decisions to be more influenced by market signals through replacing subsidies on quantities with direct payments. These payments aim to guarantee farmers a reasonable income, and are often linked to compliance with broader objectives including standards on food safety, animal and plant health, animal welfare and the preservation of traditional rural landscapes. The European Commission’s ‘one vision, two steps’ approach to the CAP implies a first step being a ‘health check’ or mid-term review (adopted in January 2009) of the system, and a second step of a further examination to be implemented after the 2013 financial perspectives.
The CAP after 2013
In 2005, the EU budget was set for the 2007 to 2013 financial perspective. The CAP is due to be reformed by 2013.
On April 12, 2010, Commissioner for Agriculture and Rural Development, Dacian Cioloş, launched a public debate on the future of the CAP after 2013. Contributions to the debate were accepted until June 2010 and the European Commission organized a conference on the public debate in July 2010. The Commission’s executive summary of the conclusions drawn from the debate note:
‘... a number of themes emerged which have considerable support from the wide range of contributors. These themes represent the middle ground among respondents. Some would want to go further; others less far. From the submissions, we have identified 12 directions to be followed. The EU should:
- - Ensure that the CAP guarantees food security for the EU, using a number of tools to achieve this aim;
- - Continue to push the competitive and potentially competitive sectors of European agriculture towards operating in a market context, giving more importance to innovation and dissemination of research;
- - Transform market intervention into a modern risk- and crisis-management tool;
- - Recognize that the market cannot (or will not) pay for the provision of public goods and benefits. This is where public action has to offset market failure;
- - Bear in mind that the correct payment to farmers for the delivery of public goods and services will be a key element in a reformed CAP;
- - Protect the environment and biodiversity, conserve the countryside, sustain the rural economy and preserve/create rural jobs, mitigate climate change;
- - Rethink the structure of the two support pillars and clarify the relationship between them; make adequate resources available for successful rural development;
- - Implement a fairer CAP – fairer to small farmers, to less-favored regions, to new member states;
- - Introduce transparency along the food chain, with a greater say for producers;
- - Create fair competition conditions between domestic and imported products;
- - Avoid damaging the economies or food production capacities of developing countries; help in the fight against world hunger’.
The Commission aims to
develop a Communication on the CAP reform
concept by the end of 2010.
The Communication will be used to stimulate
formal public consultation for around six
months. In July 2011, the Commission is
scheduled to put forward formal legislative
proposals for post-2013 CAP as part of a more
comprehensive package on post-2013 financial
2014 to 2020.
there should be no reversal of past reforms;
Abolition of set-aside: the requirement for arable farmers to
leave 10 percent of their land fallow is to be abolished with effect
from MY 2008/09. It is interesting to note that it is the set-aside
mechanism that has been abolished as opposed to the rate of
set-aside being set at 0 percent. This implies that set-aside is no
longer to be considered as a supply-side management tool. In
practice, the area of land liberated from the set-aside obligations
is likely to amount to between 1.2 and 1.6 million ha (given a
theoretical available area of some 4 million ha, a maximum of 40
percent of which could return to crops the remainder being marginal
Intervention mechanisms: intervention is to be set at 0 for durum wheat (with effect from MY 2009/10), rice (with effect from MY 2009/10), barley and sorghum (with effect from MY 2010/11). For soft wheat, intervention purchases will be possible during the intervention period from November 1 to May 31 at a price of €101.31 per MT up to 3 million MT. Beyond that, intervention buying-in will be made via bids under a tender system (with effect from MY 2010/11). Monthly increments will also cease from July 2010. Although not part of the Health Check exercise, it should be recalled that intervention for corn (maize) is to be phased out from MY 2009/10 onwards (via the setting of a 0 threshold), having been subject to a ceiling of 1.5 million MT in MY 2007/08 and a subsequent ceiling of 700,000 MT in MY 2008/09 (as previously reported in GAIN E47046). As such, although thresholds are to be set at 0 for durum wheat, rice, barley and sorghum, the intervention mechanism for these products will be maintained as a market management instrument as is the case for corn.
Decoupling of support: aid for arable crops, durum wheat and
hops will be decoupled on January 1, 2010. Decoupling of aid for the
processing of dried fodder will take place on April 1, 2012. The
Commission will draw up a report by December 31, 2012 on the
progress of the Health Check particularly with regards to progress
Soft Landing of Dairy Quota: Ministers agreed to the
Commission’s original proposal of five consecutive 1 percent quota
increases from 2009 to 2013, before the expiration of the dairy
quota regime in 2015. Italy will be allowed to front-load its five
annual increases as one single 5 percent increase in 2009/10.
However, for the quota years 2009/10 and 2010/11, the super-levy
rate will be increased to 150 percent of the standard rate for any
producers who produce over 6 percent more than their quota (as a
deterrent against Italy abusing of its front-loading privilege and
still widely producing over its milk quota).
and Private Storage Aid: Ministers further rejected reforms to
the intervention system for butter and skimmed milk powder.
Buying-in of butter and skimmed milk powder (SMP) will continue at
fixed intervention prices during the intervention period from March
1 to August 31 up to a maximum quantity of 30,000 MT of butter and
109,000 MT of SMP. The tool of Private Storage Aids (PSA) for
butter is also maintained. The tools of disposal aid for using SMP
in feed and in casein/caseinate production are maintained but the
system is changed such that the Commission will now decide on
opening these instruments on the basis of market prices. The PSA
for cheese, as well as the aid schemes for the use of butter in
pastries and ice cream and for direct consumption are to be
Fat Coefficient: Adjustments to the butterfat coefficients
through Management Committee decisions have also been accepted.
Aid for Least Favored Areas: While no new money is being provided for a Milk Fund, as requested by Germany, the agreement nevertheless provides that a reserve of 0.5 percent of the national envelope is maintained to help dairy farmers in Least Favored Areas (LFAs) under the Rural Development program, instead of through the new Article 68. This money would be sourced from the unused amounts from the national envelopes.
Before the Health Check, all farmers receiving more than €5,000 in direct aid have their payments reduced by 5 percent, and the money is transferred into the Rural Development budget. This rate will be increased to 10 percent by 2012. An additional reduction of 4 percent will be made on payments above €300,000 per year. The funding obtained this way may be used by Member States to reinforce programs concerning climate change, renewable energy, water management, biodiversity, innovation linked to these points and for accompanying measures in the dairy sector. This transferred money will be co-financed by the EU at a rate of 75 percent and 90 percent in convergence regions where average GDP is lower.
One of the aims of the Health Check was to simplify the cross compliance rules (whereby farmers are obliged to respect environmental standards, animal welfare and food quality standards, non-respect of the rules resulting in cuts in their support) without diminishing their scope. Considerable criticism of the way cross compliance has been applied is soon to be published in a Report from the Court of Auditors. The institute for European Environmental Policy has pointed out that the cross compliance requirements are actually no stricter than already existing requirements by the EU and Member State laws.
Despite the criticism there was no serious discussion over the cross compliance issue, although the Council and the Commission declared that “the work will continue with the objective of obtaining further simplification for farmers as well as national administrations regarding the application of requirements on cross compliance“.
The list of legislative texts setting conditions for payment of the full amount of Community aids was adapted during the meeting.
One aspect of the cross compliance system is Good Agricultural and Environmental Condition (GAEC). It was decided that GAEC standards including:
retention of terraces,
standards for crop rotation,
appropriate machinery use,
minimum livestock stocking rates or/and appropriate regimes,
establishments and/or retention of habitats,
prohibition of the grubbing up of olive trees,
maintenance of olive groves and vines in good vegetative condition,
shall be optional except where a Member State had defined for such a standard a minimum for GAEC before January 1, 2009, or where rules addressing the standard are applied in the Member State in accordance with national provisions.A full summary of the measures is also available on the European Commission DG Agriculture website.
In September 2003, the Agriculture Council formally adopted the legal texts of the June 2003 CAP Reform agreement. The regulations on CAP reform were published in Official Journal L 27 of October 21, 2003. Reforms were introduced starting in 2004, though Member States had the option to delay implementing some of the decoupling measures until 2008.
The essence of the reform was a shift from subsidies based on production to subsidies that are decoupled from production. Fully decoupled payments were aimed to shift a large part of EU farm payments from the WTO Blue box (trade distorting, allowed within limits) to the Green box (non-trade distorting).
elements of the reform can be divided into four categories:
Council Regulation 1234/2007
establishes a single common market organization (CMO) for all agricultural
products and is viewed as an essential element of the Commission’s
strategy to simplify the CAP. This regulation enters into force on July
1, 2008, and replaces 21 existing CMOs. It combines and harmonizes as far
as possible the different Council acts in areas of market policy covering
rules on intervention, private storage, marketing and quality standards,
import and export rules, safeguard measures, competition, state aid and
the reporting of data. Council Regulation 1234/2007 has been amended
Council Regulation 361/2008 to incorporate the policy changes agreed in the context of the CMO
reforms for fruit and vegetables.
Changes in European Land Use as a result of CAP and EU enlargements Report Categories (GAIN report E49027): The way land is used in the European Union has changed over time. This has mainly occurred as a result of reforms to the CAP, as well as from markets adjusting to EU enlargements. Environmental concerns and their consequential agricultural policy choices have further impacted land use. This influence will only increase when future policies to deal with climate change will be decided.
EU-27 | European
Commission publishes legislative proposals on Health Check of CAP (GAIN
On Tuesday, 20 May, the
European Commission published its legislative proposals for the CAP
Reform. The proposals will be sent to the Council and the European
Parliament with the intention that agreement is reached in November
during the French Presidency of the EU. The policy would then apply
Council of the European Union approves proposal creating a single
Common Market Organization (GAIN report E47048):
EU Council of agricultural ministers has backed the Commission's
proposal to replace the existing 21 Common Market Organizations (CMOs)
with a single CMO for all agricultural products. This is viewed as
being an essential element of the Commission's strategy to simplify
the CAP. Under the plan, the entire CAP will eventually be covered
by four main Council acts, namely those on the single CMO, the
direct aid regime, rural development and the financing of the CAP.