Single Payment Scheme – There may be trouble ahead

“I tell you it will be all about the budget.”

18 months ago, this was the message I was given by more than one friend in Brussels.  That message has now translated into fact. The multi-annual financial framework has resulted in the EC Commission resolving to allocate €371.7bn to the CAP for the 2014 – 2020 Programme: €281.8bn to Pillar I and €89.9bn to Pillar II.

Additional funding from different sources will mean an overall total of €386.9bn.   In reality this is a reduction in the amount set aside for agriculture because the spending has been frozen at 2013 levels, so the 2% per annum inflation rate will no longer apply.

From 2014 the Pillar I direct payment will be divided into two payments.  30% of this direct payment will be linked to ‘greening’ the CAP with 70%  remaining subject to the same criteria as now.

Support for smaller farms against the background of reduced Budget will place capping near the top of the agenda.  There is now a much stronger political will (the EU Parliament supports this principle) to cap larger farming units although the Commission proposed to soften that approach by providing that the threshold for capping should take into account economies of scale and the ability to employ agricultural workers. The newer Member States continue to seek a greater share of the cake – “a more equitable distribution of payments” it is said.

The Commission seeks that “all farmers must engage in environmentally supportive practices which will be defined in legislation and which will be verifiable”.  On the face of it the proposal to ‘green the CAP’ is a recipe for greater complexity.  If Brussels sets the standards, the Member States will design the detail and organise the inspections – will some Member States be more enthusiastic in their inspections than others?  Yes, history tells us. Will the Members States’ detailed greening proposals create a level or an unlevel playing field?  History suggests it will be unlevel at least in some Member States.  And who will receive these greening payments?  Apparently the ‘active farmer’ – yet to be defined.  Greening – what will be the effects on production?  A live issue, particularly when the UN has just issued an estimate that the world harvest in 2011 will only just be sufficient to feed the growing world population

Where next?  The budgetary decisions are those of the Commission.  The legal texts later on this year will put flesh on the bones of what is now proposed.  There will be informal discussions between the EU Parliament, the Council of Ministers and the Commission but the real negotiating will begin when the legal texts are available.

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