Commission Communication on Future CAP Leaked

A draft copy of the Commission’s much anticipated Communication on the future CAP, to be launched formally on 17 November, has been leaked ahead of its release into inter-service consultation. The 13 page paper entitled ‘The CAP towards 2020: Meeting the food, natural resource and territorial challenges of the future’, states that the future CAP “should contain a greener and a more equitably distributed first Pillar and a second Pillar focusing more on competitiveness and innovation, climate change and the environment”.

A discussion on policy instruments suggests that the two pillar structure of the CAP should be retained, with a short review of what they might contain. It concludes by posing three broad policy options, for further consideration which should inform the debate prior to the release of draft legal proposals in 2011. The document makes no mention of the overall CAP budget, although some commentators are speculating that drafting was conducted on the presumption that current funding would be maintained broadly as is.

Direct Payments

The paper accepts the need for the redistribution, redesign and better targeting of support. Gains and losses for individual countries could be limited by setting a floor level for average farm payments in each Member State. The draft paper proposes the introduction of common objective criteria for all direct payments across the EU, rather than the implementation of flat rate payments which would ignore the “very different economic and natural conditions across the EU”. Payments would be awarded on a decoupled per-hectare basis, to “active” farmers only with the lowest level comprising a basic income support payment subject to cross compliance. This would be capped at an unspecified level per farm but with a provision to modify the ceiling for large farms with many employees.

Pillar One to be Greened with Top-Up Payments

A mandatory greening of Pillar One to be applied by all Member States is another key idea floated in the paper. This would comprise top up payments applicable across the whole farmed area in the EU. They would “take the form of simple, generalised, non-contractual and annual agri-environmental actions, e.g. permanent pasture, green cover, crop rotation and ecological set-aside”. Certain elements of GAEC could be “enhanced” as well.

In a third tier, would be a version of Less Favoured Area (LFA) payments, currently under Pillar two, from where they would be removed. Calculated on a per hectare basis for areas with “specific natural constraints”, the new payments would also be subject to voluntary national top-ups. A fourth tier in Pillar One would be much like the current Article 68 measure for particular regions or types of farming on, where justified on social or economic (but not environmental) grounds.

Rural Development Repackaged

The paper aspires to rethink the way in which measures under Pillar Two are combined and packaged together in order to achieve more joined up thinking. Some redistribution of funds between Member States “could be envisaged”. There could be quantified targets for outcomes set at both EU and programme level. Presumably, agri-environment schemes which fit within the new practices proposed in Pillar one would not be duplicated under Rural Development.

The text does suggest however that a new “risk management tool kit” be built into Pillar two to address production and income risks, e.g. from market volatility. Support for insurance instruments and mutual funds are examples of the kinds of tool for inclusion in the kit. In addition to this, a new WTO green box compatible income stablisation tool could be introduced argues the paper. This clearly opens the door to a much wider set of spending opportunities within Pillar Two beyond the present menu.

Three Options Up for Consideration

Three broad policy directions for the future CAP are outlined in the draft Communication.

  1. An “enhanced” status quo – with limited improvements such as more equity in the distribution of direct payments, and a strengthening of market measures.
  2. “More balanced, targeted and sustainable support” – a major overhaul of, policy with more targeted measures and the type of changes to the two pillars outlined above, along with changes to market measures.
  3. Abolished market and income support – where direct payments and most market measures are phased out and replaced with payments limited to environmental and climate change objectives.

Next Steps

The Commission is expected to formally release the final version of the Communication on the 17 November. Before then however the paper must pass through the inter-service consultation process which allows the various Commission DGs to comment. Legislative proposals are due to be tabled in spring.

The leaked document can be read in full on Jack Thurston's blog here.

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PUBLICATION DATE

12 Oct 2010

AUTHOR

IEEP

FURTHER INFORMATION

The Institute for European Environmental Policy coordinates CAP2020. It is an independent not for profit institute which undertakes research in a number of policy areas including agriculture and rural development.