First Pillar of the CAP: direct payments and market measures

Transcription

1 Dialogue for Agricultural Policies in the Americas In light of the Post-2015 Development Agenda First Pillar of the CAP: direct payments and market measures Carmen Monteagudo Cuesta DG Producciones y Mercados Agrarios MAGRAMA Madrid, 6 May

2 INDEX 1. Challenges, goals and tools of the reformed CAP. Funding 2. Reform of the first pillar of the CAP a. New direct payment system b. Measures for market management 3. Conclusions 2

3 Challenges, goals and tools of the reformed CAP. Funding 3

4 Challenges ahead for European agriculture Commission Communication «The CAP in the 2020 horizon» Challenges Economic Environmental Territorial Economic challenges Food security Productivity growth slow down Price (and income) volatility Economic crisis Environmental challenges Greenhouse gases emissions Soil degradation Water quality Habitats and biodiversity Territorial challenges Vitality of rural areas Diversity of agriculture in the EU Source: European Commission 4

5 and how the CAP will address them Challenges Retos Strategic Objetivos estratégicos Objectives Reform Objetivos de objectives la reforma Economic Environmental Territorial Viability of food production Sustainable management of natural resources and climate change Balanced territorial development Increase in competitiveness Improvement in sustainability Greater effectiveness Source: European Commission 5

6 Which instruments does the CAP have to meet the reform s objectives? Increase in competitiveness Improvement of sustainability More effectiveness Orientate market tools towards its reality Improve the tools for crisis management Improve farmers position in the value chain Research, innovation and knowledge transfer and improvement of the consulting and advisory system for farmers New «green» payment in the First Pillar Orientate conditionality towards climate change Two environmental priorities for rural development Research, innovation and knowledge transfer and improvement of the consulting and advisory system for farmers Redesign direct payments Common strategic background for EU funds Redistribution of direct payments among and inside Member states Allocation of rural development funds Simplification of the policy First pillar Flexibility Second pillar Source: European Commission 6

7 How is the CAP Funded? According to the new Multiannual Financial Framework (Council Regulation (UE, EURATOM) Nº 1311/2013) in constant terms, in Heading 2 Sustainable growth: natural resources : Possibility of transfers between pillars Source: European Commission7

8 Evolution of CAP Expenditure biillion EUR (current prices) kkk hh Exports subsidies Other market support measures Market measures Coupled Direct Payments Decoulpled Direct Payments Direct Payments Rural Development Source: DG Agricultura y Desarrollo Rural. 8

9 Important financial decisions for member countries Transfers between pillars? Source: DG Agricultura y Desarrollo Rural Net result of all transfers (possible review in 2017 for the years 2018 and 2019) = total transfer from pillar I to pillar II of EUR 3 billion over 6 years 9

10 Redistribution of direct payments. External convergence A third of the difference between the current level and a 90% of EU average for 2020 (with a minimum threshold) Fuente: Comisión Europea 10

11 Direct Payments and Rural Development funds as % GDP Obs: Direct Payments and Rural Development funds allocations from in current prices; GDP 2012 (in current prices) Source: DG Agricultura y Desarrollo Rural 11

12 Reform of the first pillar of the CAP 12

13 Legal Framework DOUE publication December 20th, 2013 Base regulation (Council and Parliament): Pillar 1 (direct payments and markets): Regulation 1307/2013 which establishes norms relevant to direct payments to farmers due to aid regimes inside the CAP Regulation 1308/2013 which creates a common organization of the markets in agricultural products (COAM) - Regulation 1370/2013 which establishes certain aids and restitutions of COAM (only Council) Horizontal: Regulation 1306/2013 about financing, management and CAP monitoring Publication in 2014 of development regulations (Commission). Direct payments: Delegated Regulation 639/2014 (complete R 1307/2013) Regulation of execution 641/2014 (application R 1307/2013) Horizontal: -Delegated Regulation 640/2014 (complete R 1306/2013) -Regulation of execution 809/2014 (application R 1306/

14 New direct payment system 14

15 Conditionality Active farmer The new direct payments system Voluntary schemes Redistributive payment Payment Areas natural constraints Up to 30% LMN Up to 5% LMN Coupled support Young farmers payment Greening (Payment for agricultural practices beneficial for the climate and the environment ) Up to 8% LMN (exceptions) Up to 2% LMN 30% LMN Compulsory schemes Basic payment (according to region) rest LMN (variable) Small farmers scheme 15

16 Active farmer (I) Entry door to new direct payment system Legitimacy CAP Direct payment to farmer or legal entity with no marginal agricultural activity Concept of agricultural activity: Production, either breeding or crops Preservation of land surface for pasture or crops Minimum activity, defined by member countries, in farming areas naturally maintained for pasture or cultivation 16

17 Active farmer(ii) No payments are allowed to natural or legal person who manage: airports, railway services, water supply facilities, real estate services, permanent sport and recreational facilities (negative list may be broader; condition may be overcome) Member States will be able to decide concession of direct payments to natural or legal persons: a) Whose agricultural activity represents an insignificant part of his economic activities and/or b) Whose main activity does not consist of agricultural activity BUT it is allowed that the member countries grant direct payments to small farmers in part time (direct contribution to rural area vitality) The prohibition will not apply to farmers who received <= of direct payment the previous year There will be no direct payment concession to persons or legal persons that do not exercise a minimum of activity in farming areas naturally maintained in an agreeable state for pasture or cultivation 17

18 Basic Payment Scheme I New support system, decoupled from production, based on the allocation of rights per eligible hectare, which replaces the Single Payment Scheme. The allocation of Basic Payment Scheme (BPS): How? National/regional model Convergence of BPS towards average value. Different (full/limited convergence in 2015/progressive ) options Who? Active farmers who request it in 2015 and who were eligible for direct payments in Besides, the Member State can decide to assign BPS in other situations. BPS can also be obtained: From the National/regional reserve (prioritizing young and new farmers) Through BPS transfers How much? Nº BPS = Nº eligible hectares declared in Different possible alternatives (limitations to the general rule) Unit Value BPS in 2015: uniformed/differentiated if progressive convergence If the BPS comes from NR: national/regional average value in the year of the allocation 18

19 Basic Payment Scheme II Activation of BPS for its collection (declared eligible hectares in the direct payment application) Compulsory reduction of the payment to big farms (if more than , at least 5% of the excess) unless a redistributive payment is applied BPS transfers allowed between active farmers with/without lands in the Member State/region to which the rights were allocated (possibility to apply a withholding in favor of the National/regional Reserve) For the EU-12, the deadline for the Single Area Payment Scheme is extended until The scheme will be simpler and more uniform. 19

20 Accumulated environmental benefits Payment for agricultural practices beneficial for the climate and the environment(greening) I CAP s new GREEN model Progress towards sustainability Greening Rural development Application Mechanism Voluntary (compensation for additional costs and loss of earnings) COMPULSORY with financial support ( green decoupled payment per hectare) Conditionality Agricultural areas (eligible for direct payments) Source: European Commission Compulsory (Legal requirements: statutory management, good agricultural and environmental conditions) 20

21 Payment for agricultural practices beneficial for the climate and the environment (greening) II Annual payment per eligible hectare linked to a BPS subject to the respect, in the whole farm, of the appropriate measures: Crops diversification (soil quality) Maintenance of permanent pastures (carbon capture) Count with areas of ecologic interest (biodiversity) Equivalent practices allowed (MS choice) MS can choose to apply this scheme individually (annual calculation of the amount according to the total value of the BPR activated by the farmer) Automatic payment entitlements: Organic farm units Permanent crops Small farmer regimes 21

22 Payment for agricultural practices beneficial for the climate and the environment (greening) III Crops diversification ha of agriculture land: 2 crops (the main one, max. 75%) >30 ha of agriculture land: 3 crops (the main one, max. 75%. The two main ones max. 95%) Maintenance of permanent pastures Neither till nor change environmentally sensitive, permanent pastures Ratio between the area of permanent pastures/agriculture land declared at the national level cannot diminish by more than 5% from 2015 level Calculate at the national/regional/farm level (MS choice) Ecological focus areas >15 ha of agriculture land - 5% EFA (weighting factor) Categories chosen by MS Can be applied collectively and/or at regional level 22

23 Payment for young farmers New measure in the 1st Pillar, linked to the basic payment : top up, in order to palliate generational movement : For farmers who are less than 40 years old (less than 14%) Who are setting up for the first time or who started the agricultural activity less than 5 years before their first application Who have an activated BPS Member countries can define other admission criteria related to formative requirements and/or knowledge Annual payment (maximum 5 years) with various calculation options (25% increase from basic payment), for a maximum of payment rights activated or admissible hectares declared (member States election) Complementary to the Pillar 2 measure Additionally, BPS priority allocation of National Reserve according to regional measure 23

24 Redistributive payment Complement (top-up) to the basic payment towards better distribution of the payments Aims to benefit small and medium farms (considering economies of scale of big farms vis-a-vis work force intensity in the small farms) Annual payment representing increase up to 65% of basic payment: this additional payment is given only to the 30 first hectares or up to the mean farm area in Member States. 24

25 Payment for areas with specific natural constraints Complement (top-up) to the basic payment for farms placed in areas with specific natural constraints defined by Member States in agreement to Rural Development Regulation (R 1305/2013) Member States 'decision to limit the payment to certain areas, establishment of maximum number of hectares by farm in order to concede the payment 25

26 Voluntary complementary support Complementary support may only be granted to those sectors that are particularly important for economic, social or environmental reasons and that undergo certain difficulties, in order to ensure current level of production Annual payment according to quantitative limits defined and based on areas and constant yields or on the number of animals Eligible Sectors: cereals, oilseeds, pulse crops, legumes, linen, hemp, rice, dry fruits, potatoes for starch, milk and dairy products, seeds, ovine and caprine meat, bovine meat, olive oil, silkworms, dry animal, hop, sugar beet, sugar cane, chicory, fruits, vegetables and small cycle forest trees. Granted from 8-13% LMN (option 13+2% pulse crops, >13% previous approval by Commission) Revision if pertinent in 2016 with effects in

27 Simplified scheme for Small Farmers Voluntary scheme for MS. Farmers can decide whether they want to take part in it. Aimed to farmers who in 2015 hold BPS with an annual payment between 500 and 1250 (MS decision) Different ways to calculate the annual payment for this scheme, which will replace all other new direct payment systems Does not have to comply with greening Farmers must maintain a number of hectares accordant to the number of DPR they hold Not linked to convergence 27

28 Market management measures 28

29 Objectives Management mechanisms of agricultural markets Balanced markets Stable Prices Operating profitably How: influencing the market measures, among others, to situation through management - Reduce surplus production regulating - Balancing producer prices M. intervention - Provisions for the production support specific needs and marketing sectors to - Regular exchanges - Act in a crisis Instrument: COAM (R (UE) 1308/2013 y R (UE) 1370/2013) better tools to deal with market developments Both the evolution of prices and production costs (raw materials, products) as PPDD affect the profitability of farms. 29

30 Public intervention (IP) / private storage optional (AP) simplified Maintenance reference thresholds Conditions improved IP beef (21% trigger price increase public intervention) and dairy sector (increase month period of public intervention and 60% butter quantity subject to fixed-price 50,000 t). IP eligible sectors: wheat, durum wheat, corn, barley, sorghum, paddy rice, beef meat, skim milk powder, butter AP eligible sectors: olive oil, white sugar, flax, butter, cheese DOP / IGP, skimmed milk powder, beef, pork, sheep and goat meat. Exceptional measures of action in case of market crisis: greater flexibility and horizontal nature Disturbances of the market (export refunds) Animal diseases and loss of consumer confidence specific Issues Book Crisis (rúbrica 2 MFP : M -400 M /año- a precios 2011) New Approach of COAM. The safety net of agricultural markets Competitiveness of agricultural producers 30

31 New Approach of COAM. Maintaining market orientation Systems of limitation of production: Term milk quota regime in 2015 End quota regime in the sugar sector in 2017 Completing the system of planting rights vineyard in 2015 (new system for authorizing plantations ) Abolition of certain aid schemes (aid for use of skimmed milk and skimmed milk powder in feed and casein, coupled support to silkworms, etc.) although some specific support programs remain in certain sectors Competitiveness of agricultural producers fruit and school milk programs (increased funding and more flexible-review scheme) Fruit and vegetables operational programs (strengthening producers associations organizations, status-quo improved and new crisis measures) wine support program (enhanced status quo) apiculture programs (most eligible measures) 31

32 Link to fund rural development aid to the constitution of producer groups New Approach of COAM. Rebalancing of the value chain Promote joint action (strengthening sectoral cooperation): improving the position of farmers in the food chain Possibility of recognition of producer organizations (POs), associations (AOP) and interbranch organizations (IOs) in all sectors with a wide range of purposes and the possibility of extension of rules and financial contributions to non-members. Exemptions competition rules in case of market imbalances for the agreements and concerted practices OPs, AOPs and OIS (market withdrawals, free distribution, private storage, joint promotion, among others, maximum of 6 months) Contractual relations are regulated in all sectors (EEMM can decide whether contract or binding contract offer and at what stages; minimum elements of the contract) and contractual negotiations in specific sectors (olive oil, beef, dairy and arable crops) 32

33 In conclusion, the new CAP have been achieved 33

34 Advances in competitiveness Source: European Commission 34

35 Advances in sustainability Source: European Commission 35

36 Advances in efficiency Source: European Commission 36

37 Thank you for your attention Information on the application in Spain of the new system of direct payments: 37