Tag: capping

Posted on

What impact will degressivity and capping have?

In my previous post, I calculated the size of the amounts that could be allocated to the degressive area-based income support payment using the minimum and maximum amounts of aid per hectare proposed in the NRPF Regulation of 130 EUR and 240 EUR, respectively. This payment is intended to provide area-based income support for eligible hectares to farmers to address income needs. The purpose of the exercise was to examine the potential allocations to other CAP instruments, for example, agri-environment-climate actions, depending on how much Member States allocated to the degressive area-based payment.

The limitation of that calculation is that it assumed that all hectares would receive these amounts, and thus it took no account of the potential impact of degressivity and capping. In this post, I try to provide a crude estimate of the likely impact of degressivity and capping for several Member States. It turns out that the degressivity and capping rules, though they seem sharp, will have a limited impact in practice in many countries.… Read the rest

Posted on

Capping direct payments – a modest proposal

DG AGRI has published its latest breakdown of the distribution of direct payments in financial year (FY) 2017, which refers to payments made to farmers in the claim year (CY) 2016. The report itself has less text than usual, but lots of graphs showing the distributions of payments and recipients for the EU28 and by country. The detailed tables showing the numbers behind these graphs are given in the statistical annex.

A couple of points are worth remarking. The tables distinguish between the distribution of decoupled payments, other direct payments and total direct payments. The decoupled payments include the basic payment, greening payment, redistributive payment, young farmers’ payment, and the payment to areas facing natural constraints in Pillar 1. The other direct payments are mainly the small farmer scheme and coupled payments under the Voluntary Coupled Support Scheme, the cotton payment and POSEI payments.

Decoupled direct payments amounted to €35.37 billion and were paid to 4.25 million beneficiaries in 2017.… Read the rest

Posted on

The redistributive payment is more effective at redistribution

Capping of direct payments is not the only instrument proposed by the Commission to allocate more support to small and medium-sized farms. In addition to a mandatory ‘basic income support for sustainability’, the Commission CAP proposal would also require Member States to introduce a ‘complementary redistributive income support for sustainability’. This redistributive payment is currently voluntary under the 2014-2020 CAP.

Under the current CAP, the redistributive payment is applied by 9 Member States: BE-Wallonia, BG, DE, FR, HR, LT, PL, RO and UK-Wales. The financial allocation to the scheme takes up from 0.5% to 15% of the Member States national ceiling for direct payments. The payment aims at achieving a more effective income support for smaller farmers by granting an extra payment per hectare for the first hectares below a certain threshold.

All farmers eligible for BPS/SAPS receive the redistributive payment. However, they only receive this payment up to a certain number of hectares per holding.… Read the rest

Posted on

More on capping direct payments

I want to revert to the topic of the capping of direct payments under the CAP, which I last discussed here and here. It is not the most important issue in the Commission’s legislative proposals for the CAP after 2020. But the issue of the fairness of direct payments was raised as an issue in the CAP Communication, and the proposed capping has been defended as a significant step in the better targeting of these payments. There is thus some interest in asking how effective it is likely to be.

The current situation

The current situation reflecting the distribution of payments in claim year 2015 is shown in the following graph. The graph shows the cumulative number of beneficiaries and their cumulative share of total direct payments in that year. What emerges clearly is the large number of very small beneficiaries. On average, at EU level, half of the direct payments beneficiaries receive less than €1,250 per year (around €100/month), corresponding to 4.5% of the total direct payments envelope.… Read the rest

Posted on

Why capping will be a mirage

Commissioner Hogan confirmed in his press conference folllowing the publication of the Commission’s proposal on the next Multi-annual Financial Framework that the Commission intends to introduce a cap of €60,000 on the maximum amount of direct payments any holding can receive in the next CAP legislative period. Commission President Juncker is reported as telling the Belgian Parliament earlier this week that “the European Commission will propose a €60,000 limit on individual direct payments to support small farm holdings instead of ‘agricultural factories’”. These statements are misleading and disingenuous, because they ignore what is likely to be the fine-print in the Commission proposal.

The problem is that this proposal is unlikely to achieve its intended objective. The leaked draft of the Commission’s legislative proposals requires Member States to first deduct (the language used is “shall deduct”) the value of salaries paid from the direct payments received before the cap is applied.… Read the rest

Posted on

How Member States are implementing the new CAP

All the focus last week was on the publication of the Commission Communication on the Future of Food and Farming. This document has been greeted with both curiosity (concerning the potential of the proposed new mode of delivery and governance to deliver both simplification of the CAP as well as improved targeting and results on the ground) and criticism (from farm groups worried that it eliminates the ‘common’ in the Common Agricultural Policy and environmental groups worried that it could facilitate the continued transfer of a large chunk of the EU budget to farmers with no questions asked). It will take some time to tease out its full implications, and this is something I will return to on this blog in the future.
Last month DG AGRI also published without fanfare on its website a very useful summary report on the implementation of the 2013 CAP reform in the 2015 claim year, the first year of implementation of the new CAP.… Read the rest

Posted on

Does capping direct payments make sense?

CAP Pillar 1 direct payments were originally introduced to compensate farmers for the reduction in intervention support prices following the MacSharry reforms in 1994. This was an important and necessary step to help farmers adjust to a new economic situation. However, assistance for adjustment should only be temporary. As the years have passed, the argument that direct payments are intended as compensation payments has become less and less credible. As result, a number of alternative rationales for the continuation of Pillar 1 direct payments have been proposed.

These payments are variously justified as addressing low farm incomes, as a necessary support for EU food security, as providing a safety net for farmers against unexpected market shocks, as compensating for higher regulatory standards and as ensuring more sustainable management of natural resources. These are all important policy objectives, but there is little evidence that decoupled area-based payments are an effective, efficient or equitable way of achieving these objectives (these arguments are spelled out more fully in my recent paper for the RISE Foundation).… Read the rest

Posted on

Eurobarometer on CAP reform

A new Eurobarometer public opinion poll shows widespread support among European citizens for the Commission’s main CAP reform proposals. The poll, conducted by TNS Opinion and Social, interviewed 26,713 adults, enough for a representative sample in each member state.

The first question, concerning setting a cap on the amount of aid to the largest farms found that 47% of respondents favour a limit while 28% opposed a limit. 15 per cent didn’t know. Support for capping was strongest in Cyprus (+54%), Denmark (+36%), Finland (+33%) and Sweden (29%). Malta was the only country where more people thought a limit was a bad thing (-20%). In the agriculture council the strongest opponents of capping have traditionally been the UK, Germany, Czech Republic and Slovakia. However, in each of these countries, a clear plurality of citizens favoured capping subsidies to larger farms.

A second question asked about strengthening the link between direct payments and the protection of the environment.… Read the rest