The 2014 CAP transition year

The Council announced last Wednesday (October 23) that a political agreement had been reached with the Parliament on the transition measures for agriculture in 2014. This follows the publication of the Commission proposal in April and the adoption of the COMAGRI position in September (the relevant documents are available here in the European Parliament Legislative Observatory)

For direct payments and rural development, the new CAP rules will start to apply as from 1 January 2015. Council and Parliament agreed in June to postpone the implementation of the new rules on direct payments until 1 January 2015, but this seems to be the first time that the institutions have agreed that the start of rural development programmes should be pushed back to 1 January 2015. However, the transitional regulation provides for a number of elements of the CAP reform package to apply already as from 1 January 2014.

A draft of the agreed regulation has not yet been released, so it not possible yet to see the details. The Council press release, however, highlights some of the main issues.

Direct payments

Basis for payments. Existing rules of the Single Payment Scheme, the SAPS system and payments targeted under “Article 68″ will continue in the 2014 claim year, while new rules, such as those related to greening, will not apply until the start of 2015. Recall that the COMAGRI rapporteur, Albert Dess, had suggested that greening should be postponed until 2016, to allow time for the start of implementation of rural development programmes and the clarification of rules to avoid double funding.

Flexibility between Pillars. Member States will have the flexibility to transfer funds between the two CAP pillars already from next calendar year. The Council press release does not specify the details but one assumes it will be the same as in the new DP regulation. Such choices should be made, within certain limits, once and for the whole period of financial years 2015- 2020.

The new redistributive payment. Council has gone along with the COMAGRI request to allow member states the possibility to grant the redistributive payment to smaller farmers already in 2014.

Coupled payments.
Member states can increase the maximum rate of certain coupled support schemes to 6.5 % of the national ceilings (compared to 3,5% under the current provisions).

Adjustment to external convergence. The Commission had proposed that a member state should make a linear reduction/increase in the value of all payment entitlements and/or the amount of the national reserve in order to ensure compliance with the new ceilings agreed as part of the MFF regulation. The Council and the Parliament have introduced some flexibility with regard to the application of any linear cuts that may be necessary. Under the political agreement, member states can exempt those farmers whose direct payments remain below a certain threshold to be fixed by member states, with a maximum of €5000.

Rural development

Transitional rules are generally needed to bridge the two consecutive programming periods, as already seen at the beginning of the current programming period. However, some specific transitional arrangements are needed on this occasion, in particular to address the implications that the delay in the establishment the new direct payment regime has for certain rural development measures. This is relevant especially in respect of the baseline for agri-environment and climate measures and the application of the cross-compliance rules.

New commitments and payment of on-going commitments. Member states will be able to undertake new commitments for area and animal-related measures in 2014, even though the resources for the current period have been exhausted. The programmes covered include less favoured area payments, Natura 2000 payments, agri-environment payments, animal welfare payments, afforestation and forest environment payments. It was agreed to extend further the list of measures for which new legal commitments may be undertaken in 2014 including, for instance, support for young farmers. The COMAGRI rapporteur wanted to include also investment measures with the aim of modernising agricultural holdings but it is not clear if that was supported by the Committee (the Committee’s final report to the Parliament plenary is not yet published) nor if it has been included in the political agreement.

Co-financing rates. It seems that the new co-financing rates will apply to RD expenditure by member states in 2014.

Less favoured areas. The current definition of less favoured areas will remain in force for one further year.

Next steps

Basically, the political agreement confirms the continuation of the status quo in 2014 with respect to Pillars 1 and 2 but within the framework of the new MFF financial ceiling. All of the new elements brought forward from the new reform (more flexibility on coupled payments, on transfers between Pillars and to introduce the new redistributive payment) are optional for the member states. However, if a member state wants to use some options in later years (such as flexibility to transfer funds between Pillars) it must already decide to use this flexibility in 2014. For other options, such as the redistributive payment, this is not an issue because, under the DP regulation, a member state can decide each year if it wishes to use this option in the following year.

In the coming days, the Special Committee on Agriculture (SCA) and the Committee for Agriculture and Rural Development of the European Parliament will need to confirm the political agreement. There will then follow the vote in plenary of the European Parliament (scheduled for 20 November), followed by Council adoption of the agreement at first reading.

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