The CAP 2014-2020 legislative package was announced on 17 December 2013. The Commission adopted the delegated acts on 11 March 2014. The Council and European Parliament have a two month period from that date (until 11 May) in which they can reject them, but if there are no objections they will be adopted. The implementing regulations are expected to be adopted soon after. However, with implementation of the new direct payment arrangements coming into force on 1 January 2015, Member States have already started to consider their decisions on the many options for implementing the new Pillar 1 architecture.

This article provides a broad overview of the state of play in Member States, outlining decisions made about the transfer of funds between Pillars and their thinking to date on the implementation of direct payments, both in terms of the distribution of the basic payment and decisions on the various additional elements, both those that are compulsory (greening and the payment for young farmers) and voluntary (coupled support, areas of natural constraint and the small farmers scheme).

Transfers between Pillars

Member States can transfer up to 15 per cent of their annual national ceiling for Pillar 1 to Pillar 2, or up to 15 per cent of Pillar 2 to Pillar 1 (25 per cent for certain Member States - Bulgaria, Finland, Greece, Latvia, Lithuania, Poland, Portugal, Romania, Slovakia, Spain and the UK).

Member States had to notify the Commission of their intention to transfer funds from Pillar 1 to Pillar 2 by 31 December 2013 if they wished to transfer funds in 2014. The following countries have done so: France (3%); Germany (4.5%); Latvia (6.15%); Netherlands (€20 m pa); England (12%); Scotland (9.5%); Wales (15%). Member States which want to transfer funds from Pillar 1 to Pillar 2 only from 1 January 2015 have until 1 August 2014 to inform the Commission of their decision.

In terms of transferring funding from Pillar 2 to Pillar 1, Croatia (15%), Poland (25%), and Slovakia (21%) will transfer funds from Pillar 2 to Pillar 1 from 2015. Countries wishing to transfer funding in this direction from 2016 onwards have until 1 August to decide.

Basic payment

There are two main decisions relating to the basic payment which will inform the structure and amount of the payment. First, Member States can decide whether or not to apply the basic payment scheme at a regional level and at what speed they will converge towards a uniform unit value for all entitlements. Current thinking in various Member States on applying the basic payment regionally is as follows:

• Denmark intends to apply regionalisation to favour the cattle and dairy sectors.
• Finland will apply two regions.
• Spain will divide payments according to rainfed crops, irrigated crops, livestock (pastures) and permanent crops.
• In the UK: England will maintain current regionalisation with a small redistribution of support towards moorland areas; Scotland will split payments by two or three regions (distinguishing between arable, grassland and rough grazing areas); and Wales will split payments by three regions (moorland; severely disadvantaged areas; lowland and disadvantaged areas).

Information on convergence to date, suggests that Ireland and Italy will move part of the way towards a national/regional average amount between 2015 and 2019. In the Netherlands there will be a linear transition in five equal steps and France will implement progressive convergence at 70% of the annual national annual ceiling. Germany already has single payment rates in the Laender and plans to equalise these in three stages between 2017 and 2019. In the UK, Northern Ireland will introduce area payments over a ten year period, moving only half way towards a flat rate regime by 2019, and Wales plans to reach full convergence by 2019 in five equal steps.

Second, Member States can decide whether or not to introduce a redistributive payment, and whether or not to introduce a top-up payment for the ‘first hectares’. In situations where they use more than 5% of the national ceiling to fund these payments, they do not have to apply the otherwise obligatory 5% cut to direct payments above €150,000. So far, France, Germany and Romania have stated their intention to use this measure. France will provide an additional payment on the first 52 ha, with the value increasing over time, using 5% of the national ceiling in 2015, to 10% in 2016 with the aim of eventually reaching 20% by 2018. Germany will use 7% of the national ceiling to support a top-up payment of €50/ha for the ‘first thirty hectares’ and an additional €30 for the next 16 hectares. Equally, Romania has stated its intention to introduce a payment for the first 5-30 ha.

Member States have until 1 August 2014 to notify the Commission of the conditions for their basic payments.

Compulsory additional elements of the new direct payments:

Greening: Very few firm decisions have been taken so far by Member States on how they will implement greening payment, with final decisions awaiting the delegated acts. Nonetheless, some indications are starting to emerge. Despite the flexibilities that were introduced into the regulation to allow Member States to apply practices that are ‘equivalent’ to the three standard ones and certification schemes that could be used as a route for implementing the greening measures, many Member States appear to be steering clear of these options. Greece, Hungary, Ireland, Latvia, Poland, and the UK (England, Northern Ireland and Wales) intend to implement the three standard practices. A handful of Member States are still considering how equivalent practices might be used alongside agri-environment payments with discussions on-going (Estonia, Finland, Germany, Italy, and Slovenia). The Netherlands has confirmed that a certification scheme for protein crops will be recognised as an equivalent practice. France is still considering the possibility of introducing a certification scheme based on winter cover practices for maize.

Beyond the decision on the general approach to take, Member States also have to decide:

• Whether maintenance of permanent pasture should be determined at local, regional or national level;
• The designation of grasslands in environmentally sensitive areas outside Natura 2000;
• The features which will be included as EFA;
• Whether regional implementation of EFAs should be allowed; and,
• Whether collective implementation of EFAs should be allowed.

Very few of these details have been decided upon yet, with ongoing discussions predominantly focussed on which features will be included as EFA and under what conditions. On maintenance of permanent pasture, France has decided to apply this at a national level, but that it will be monitored at a regional level. Finland intend to make full use of the greening exemption for farms north of the 62nd parallel and will apply the derogation for highly forested areas.

Payment for young farmers: Member States can choose to develop the Commission eligibility criteria further. They may also choose what share of the annual national ceiling will be used up to 2%. Ireland and Northern Ireland have indicated that it will develop further eligibility criteria for this payment. Poland, Slovenia and Spain are still considering what to do. Seven countries intend to allocate the full 2% of their annual national ceiling (Austria, Bulgaria, Finland, Ireland, Italy, Spain, and the UK - Wales). Germany will allocate 1% and Latvia is discussing options below 1% (ranging from 0.4 to 0.7%).

Voluntary additional elements of the new direct payments:

Coupled support: The options for introducing voluntary coupled support are, as anticipated, proving very popular, particularly to support the livestock sector and protein crops. To date, only a small number of Member States have declared that they will not use this support (Germany, the Netherlands and the UK – England and Wales). Several Member States have decided to use coupled support for their livestock sectors: Greece, Finland (targeting bulls and suckler cows), France (targeting the beef and dairy sectors), Italy (targeting dairy and meat sectors), Poland (targeting beef and sheep sectors), Spain (targeting beef, suckler cows, sheep and goat, dairy sectors), and Scotland (targeting the beef sector). Bulgaria will use this measure to provide support for horticulture, vegetables, and livestock (13% of the national annual ceiling) and Greece for cotton. France, Ireland, Latvia, Poland, Romania and Spain intend to introduce coupled support for the production of leguminous plants. Member States have until 1 August 2014 to notify the Commission of their final decisions on the use of this measure.

Payments for Areas of Natural Constraint: Very little information is available about whether Member States intend to introduce a top up payment to farmers in Areas of Natural Constraint. Three countries have stated their intention to grant this payment (Finland, France, Germany, and the UK - Northern Ireland). Germany intends to allocate 2.5% of the annual national ceiling to this payment for farming on grassland in disadvantaged areas. France will allocate up to 15%, targeting farmers in mountain areas. Latvia, the Netherlands, Romania, Slovenia, Spain and Wales have said that they will not grant this payment.

Small farmer scheme: Eight Member States so far have decided to introduce a small farmer scheme (Austria, Germany, Italy, Latvia, Poland, Slovenia, Spain and the UK – Northern Ireland). To date England, Finland, the Netherlands and Wales have made it clear that they will not use this option.

Next steps

In preparation for the new CAP legislative requirements entering into force on 1 January 2015, Member States have until 1 August to notify the Commission of their implementing decisions. Since neither the Council nor the European Parliament has rejected the Commission delegated acts, they will come into force during May, with an amendment to the direct payments delegated act to revise the weighting factor for nitrogen fixing crops within EFAs due in the autumn. Over the coming months, therefore, Member States will start to firm up their plans for Pillar 1, and comparisons between a more countries will become possible. Over the coming months Member States will also be submitting their draft Rural Development Programmes to the Commission for approval. Decisions on the implementation of cross-compliance and revisions to standards of Good Agricultural and Environmental Condition will also become clearer. Only when information on all these components are available, will it be possible to start to assess what sort of an impact the implementation of the CAP is likely to have and whether any additional environmental benefit will be delivered through the restructuring and the greening of Pillar 1.

Additional information

Further information for a selection of Member States is available here: Austria; Bulgaria; Finland; Germany; Ireland; Latvia; Poland; Slovenia; Spain; and the UK (England, Northern Ireland, Scotland and Wales).

We are grateful to the UK Land Use Policy Group for providing IEEP with the funding to carry out a review of Member States’ thinking to date on the implementation of Pillar 1 on which this article is based. Thanks are also due to the many Member State experts who provided us with information.