S3P T&BD
From the editorial board of this newsletter, we thank the delegation of Extremadura in Brussels, especially Francesc Mestre and Victor Corvera, for this detailed summary of the new CAP.
As part of the new Multiannual Financial Framework (MFF) 2028-2034, the European Commission presented the proposal for the new CAP on 16 July. Without pillars, the new CAP will be entirely included in a new single “Fund” (National and Regional Partnership Fund), which will have a minimum earmarked budget allocation of EUR 293.7 billion for income support for farmers (ringfenced), so the Commission states that there will be no cuts in the amounts received directly by farmers. Among the income support aids, the "decreasing area-based income support" stands out, with a pronounced degressivity and a cap of €100 000 per farm to ensure that this support is better targeted at young, small and family farms. For its part, the second pillar would be diluted within the other policies financed by the Fund (mainly Cohesion and migration and border policies).
The new CAP is legally established in the Fund Regulation, specifically in its Title V, as well as in a regulation accompanying it specific to the CAP). Its concreteness to reality will be designed, planned and implemented in a National and Regional Partnership Plan, the Plan (one per Member State, MS). A summary of the new CAP is given below in an extensive format:
The Multiannual Financial Framework (MFF) Regulation 2028-2034 allocates €865 million to the National and Regional Partnership Fund (“the Fund”) which includes, together with Cohesion, migration and border policies and Social Policy, the CAP, including income support for agricultural and livestock holdings, with €293.7 billion set aside for them (ringfenced). This aid covers the following types of intervention (developed below):
(a) degressive area-based income support;
(b) coupled income support;
(c) crop-specific payment for cotton;
(d) payment for natural and other area-specific constraints;
(e) support for disadvantages arising from certain mandatory requirements;
(f) agri-environment-climate actions;
(g) payment to small farmers;
(h) support for risk management tools;
(i) investment support for farmers and foresters;
(j) support for the setting-up of young farmers, new farmers, rural businesses and start-ups and the development of small farms;
(k) support for farm assistance services;
As well as interventions in certain sectors of Regulation (EU) 1308/2013 (CMO)
The production of hemp varieties with a tetrahydrocannabinol (THC) content exceeding 0,3 % shall not be eligible for aid under this Regulation.
The Fund Regulation provides that the minimum national contribution to the interventions under points (d), (e) and (f) must be at least 30%. The maximum rate of support for interventions for young farmers will have to be 85% of the eligible public expenditure.
Funding for the CAP can be increased within the Fund through synergistic programming of actions addressing more than one objective, such as agro-energy, skills and social infrastructure, water or connectivity, among others.
On the other hand, the Fund also introduces the possibility of providing financial support to one of the national plans through loans, from the subscription of public debt by the European Commission.
Agricultural funding may also benefit from projects under the European Competitiveness Fund and will remain an integral part of the European Framework Programme for Research (with Horizon Europe) in its Health, Agriculture and Bioeconomy strands.
Finally, the Commission has set a target of 35% of the entire MFF for climate and environmental spending. This target for the National and Regional Partnership Fund (which includes the CAP) is 43%.
A Unity Safety Net, financed by the EU Facility (a mechanism established under the Fund), is established to stabilise agricultural markets in times of market disturbances. It should be used to address periods and threats of market imbalance, including those caused by animal or plant health issues, affecting agricultural product prices and input costs in all or part of the internal market. The Union safety net is not intended to compensate for direct losses suffered by farmers due to natural disasters. This fund will be endowed with EUR 900 million per year or EUR 6.3 billion for the whole period. This is twice the current reserve.
Within the framework also of the EU Facility, and in the event of a crisis due to natural disasters, Member States may request to amend their Plan to provide payments to farmers affected by these disasters and to support investments for the restoration of agricultural potential. Requesting this amendment requires that the competent authority formally recognises that a natural disaster has occurred, that measures have been taken to eradicate or contain a plant disease or pest, measures to prevent or eradicate an animal disease, measures in relation to an emerging disease and that the damage has resulted in the destruction of at least 30% of the average annual production of the farmer in the previous three-year period, or in the three-year average of the last five years.
The Commission states that the money directly received by farmers will not be cut in line with its proposal. To state this, he argues the following:
The Commission also argues that for the non-ringfenced part, in addition to the planned interventions by the Member State through the Fund, there will also be the possibility of positive synergies with the Competitiveness Fund and the Horizon Fund, more easily than at present. For example, it will be easier to receive support for farms that combine agricultural and energy production (if foreseen by the Member States).
The Commission notes that the objectives of the CAP will be defined at Union level, but their implementation is entirely in the hands of the Member States through the Plans. The development of these plans aims to ensure a higher return per euro invested, making payments conditional on compliance with conditions. The Member States must submit their first draft of the plan by June 2027, the final version being delivered in February 2028. Internally, Member States should design and implement their plan in cooperation with local and regional authorities and economic, social, rural and civil society stakeholders. Once the plan has been submitted and approved, Member States may request payments up to six times a year.
The future CAP will be aligned with the implementation mechanisms for EU spending programmes under the new MFF, and its programming and implementation will be part of the Fund. With the integration of the current two-pillar structure under a single umbrella, the proposal seeks to harmonize the tools for the objectives of competitiveness, resilience, innovation and sustainability and thus obtain greater flexibility and simplification in its management. This increased flexibility will allow Member States to design, plan and implement, within their Plan, CAP support instruments in a way that best responds to the specific needs of the sector.
> Simplification: According to the Commission, the new CAP implementation model will lead to simplification:
For beneficiaries:
For the Member States:
The Commission shall adopt national CAP recommendations providing guidance to each Member State for the implementation of the specific objectives relevant to the CAP, within the framework of its Plans, well in advance of their submission. The national CAP recommendations shall be based on the specific objectives of the CAP, namely:
The Commission will base the national CAP recommendations on an analysis of the situation of the agricultural sector and rural areas, including demographic factors, structural and territorial characteristics, as well as food security in each Member State. In the national CAP recommendations, the Commission will identify in particular the main challenges to be addressed by each Member State in its Plan. The Commission may update the national CAP recommendations, as appropriate.
Responsible farm stewardship will include minimum requirements for environmental and social conditionality, as well as protection practices designed by the Member States to meet key objectives such as the protection of soils and river courses from pollution. Member States shall have the flexibility to adapt those protection practices to their specific geographical and climate context and production systems, in particular by providing for exemptions. To promote socially sustainable agriculture, some CAP payments will require compliance with the rules on working conditions.
Farm Stewardship shall include:
The first two points will jointly be called Farm Stewardship System. And payments under the following interventions (developed below) will be subject to this: degressive area-based income support; payment for natural or other specific limitations; support for disadvantages arising from certain mandatory requirements; agri-environment-climate actions; coupled income support and POSEI only as regards support for local agricultural products. On the contrary, they shall not apply to farmers receiving support for the payment for small farmers.
On protection practices:
o They shall be defined by the Member States, in accordance with Part C of Annex I to the CAP Regulation at national or regional level, in order to achieve the following objectives:
o Member States shall include in the Plan a description of the protection practices defined for each of the objectives, including their territorial scope, farmers and other beneficiaries subject to the practice and a summary of the protection practice.
o When establishing protection practices, Member States shall take utmost account of the national CAP recommendations and adapt them to the different land management systems and to the different environmental and climatic conditions of their territory.
o Farmers on organic holdings shall be deemed to comply with the protection practices with regard to objectives (b) and (c).
o Member States may provide in their Plan for specific exemptions to protection practices based on objective and non-discriminatory criteria, such as crops, soil types and farming systems or damage to permanent grassland due, inter alia, to wild animals or invasive species.
o Member States may grant temporary derogations from protection practices where weather conditions prevent farmers and other beneficiaries from applying such practices or where the application of such protection practices hampers the objectives.
o Member States may recognise that management practices under agri-environment-climate actions contribute to the objectives in a manner equivalent to the relevant protection practices and therefore that farmers or other beneficiaries who undertake to implement them comply with the relevant protection practice.
Income support for farmers should remain the central policy instrument to ensure a fair income for farmers and sustainable agriculture and food production. It should contribute to fostering a competitive and resilient agricultural sector that pursues the benefits of high-quality production and resource efficiency, while ensuring generational renewal and thus long-term food security. Given the need to target support to those most in need, Member States should pay degressive area-based income support only to those persons whose main activity is agriculture, while ensuring that small and pluri-active farmers carrying out at least a minimum level of agricultural activity are not excluded.
Although the Fund Regulation lays down some principles for the definition of ‘agricultural activity’, ‘agricultural area’, ‘eligible hectare’ and ‘young farmer’, Member States in their Plans should define them in more detail.
The CAP Regulation lays down the following measures, including income support and other measures:
Member States shall provide area-based income support for eligible hectares to farmers to meet income needs. The payment per eligible hectare shall be differentiated by groups of farmers or geographical areas, on the basis of objective and non-discriminatory criteria. The groups of farmers or the geographical areas on which the differentiation of payments is based shall be established on the basis of farmers' income from agricultural activity in a representative reference period. When differentiating payments, Member States shall target support to farmers who need it most, in particular young and new farmers, women, families or small farmers, farmers combining crop and livestock production or farmers in areas facing natural or other specific constraints. Differentiation of payments may take the form of annual flat-rate payments replacing all or part of the area-based income support per eligible hectare. The Member States shall increase the aid per eligible hectare granted to young farmers.
The total amount of payments per farmer shall be degressive: Member States shall reduce by 25 % the annual amount of area-related income support exceeding EUR 20 000, where the total amount granted to a farmer is between EUR 20 000 and EUR 50 000. 50% where it is between EUR 50 000 and EUR 75 000. And by 75%, when it exceeds 75 000 euros. The total amount of area-based income support shall not exceed a maximum of EUR 100 000 per farmer per year. In the case of a legal person or a group of legal persons, the ceiling shall apply to all holdings under the control of a legal or natural person.
Member States shall ensure that the support provided for in this Article is directed primarily at farmers who are engaged in agricultural activity on their holding and actively contribute to food security. However, small farmers whose main activity is not agriculture but who pursue at least a minimum level of agricultural activity, as established by the Member States, shall be considered as farmers. Member States shall ensure that, by 2032 at the latest, applicants reaching retirement age, as determined by national law and receiving a retirement pension, no longer receive such support.
Member States shall provide income support to small farmers replacing the support under the following interventions: degressive income support, payment of areas with natural constraints and coupled income support. Member States shall design the intervention in their Plan as optional for farmers and shall ensure that the support is not granted to farmers who do not produce any agricultural products on their holding. The annual payment for each small farmer shall not exceed EUR 3 000. Member States may differentiate this support for different groups of farmers or geographical areas.
Member States may provide support to compensate farmers for natural or other area-specific constraints. This payment may be granted for: the areas designated by Article 32 of Regulation (EU) No 1305/2013 or new areas established in view of specific constraints defined by the Member States and included in the Plan. The latter shall not exceed 2 % of the utilised agricultural area of the Member State concerned.
Member States may grant area aid in agricultural and forestry areas to alleviate disadvantages resulting from the application of Directives 92/43/EC (habitats) and 2009/147/EC (birds); and Directive 2000/60/EC (WFD). Payments under this Article may be granted to farmers, foresters and their associations. Member States may only grant payments to compensate beneficiaries for all or part of the additional costs and income foregone, including transaction costs.
Member States shall provide incentives for the following actions beneficial for climate, environment, animal health and welfare and sustainable forestry (agri-environment-climateactions):
1.- Management commitments are voluntary commitments made by farmers, and include commitments to maintain organic farming and the extensification of livestock production. These commitments may be annual or multiannual and may, in particular, have the following objectives:
2.- Transition actions: This is the voluntary transition to resilient production systems carried out by farmers at farm level or for part of a farm, including conversion to organic farming and extensification of livestock production systems. These actions shall be granted on the basis of a transition action plan drawn up by a farmer and approved by the Member State. In order to implement support for these transitional actions, the Member States shall describe in the Plan the production systems which they consider to be beneficial for the climate and the environment. The text of the proposal for the Fund Regulation states that Member States shall determine the amount of support for transition actions on the basis of the cost estimates set out in the transition plans; the support shall be limited to EUR 200 000 per farmer and programming period of the plan.
Each Member State shall support certified organic farming and extensive livestock production systems under the two forms of action.
Member States shall grant coupled income support to farmers in specific agricultural sectors and products, where applicable defined in accordance with Annex I to Regulation 1308/2013 (CMO), or to specific types of agriculture therein, who experience difficulties and are important for socio-economic or environmental reasons. This support will be reinforced by increasing the maximum expenditure from 13% to 20%, with the possibility of an additional 5% for sectors and regions that need it most, such as livestock, protein crops and sensitive border areas. Aid shall not be granted to the tobacco and wine sectors. Aid granted as an animal payment shall be limited to the beef and veal, milk and milk products, sheepmeat and goatmeat, apiculture products and silkworms sectors. For aid granted as an animal payment to livestock sectors, Member States shall take into account the environmental impact, in particular by establishing criteria for maximum livestock density in nitrate vulnerable zones.
Recognising the need for greater resilience and risk management of agricultural holdings, support should be granted to improve the ability of farmers to withstand increasing risks and crises, such as those related to climate change or market instability, in order to allow farmers to participate in risk management tools, including support for insurance premiums and contributions to mutual funds in all Member States. Member States shall support farmers to participate in risk management tools and shall ensure that support is granted only for losses exceeding a threshold of at least 20 % of the farmer’s average annual production or income in the previous three-year period, or a three-year average based on the previous five-year period, excluding the highest and lowest entry. However, Member States demonstrating in the Plan the existence of national schemes providing risk coverage to farmers shall be exempted from the obligation to include in their Plan interventions for risk management tools.
Member States shall provide support for productive and non-productive investments that make an adequate overall contribution to the resilience of agriculture, food systems, forestry and rural areas, in particular climate and water resilience. Member States shall explain in their plans how they intend to grant such aid. Such investments may concern, inter alia, infrastructure related to the development, modernisation or adaptation to climate change of agriculture and forestry, agroforestry practices, energy and water, the installation of digital technologies in agriculture, precision agriculture, diversification of income sources into other activities such as agrotourism and the bioeconomy. It should also be possible to support investments in restoring agricultural or forestry production potential following natural disasters, adverse climatic events or disasters, including fires, storms, floods, pests and diseases.
Member States shall provide support for the establishment of young farmers and rural business start-ups, including the establishment of new farmers and the business development of small farms. Member States shall lay down the conditions for this in their Plan and shall grant aid in the form of lump sums or financial instruments or a combination of both. The aid shall be limited to the maximum aid amount of EUR 300 000.
To address the specific needs of young farmers and new entrants, each Member State will be required to set out in the Plan a strategy for generational renewal based on the assessment of the specific national context, prioritising the sustainability and long-term attractiveness of the EU agricultural and agri-food sector. Member States should also develop a starter pack designed to facilitate the entry and establishment of young farmers in the sector, including a comprehensive package of interventions targeting young farmers. Member States shall also establish a single access point for young farmers which may provide information on support opportunities and procedures and facilitate entry and establishment in the agricultural sector, including the submission of applications for funding and guidance.
Recognising the need for farmers to balance professional duties with personal and family responsibilities, Member States may support farm replacement services, allowing farmers to take sick leave, maternity leave, childcare and other family members, holidays and similar life events, as well as participation in training, as specified in their plans. This support shall be limited to the setting up of farm replacement services and to the wage costs of workers replacing the farm owner for a limited period of time.
Member States shall support LEADER in preparing and implementing local development strategies as specified in their Plans and at least in rural areas with specific disadvantages. The support provided by LEADER will focus on rural development and the social, environmental, digital and economic transformation of rural areas, support for the diversification of economic activities such as agrotourism and transformation, start-ups, improving the well-being of rural citizens and strengthening social capital.
Member States shall provide support through LEADER to projects implemented by local action groups involving start-ups, added value capacity in processing, diversification of agricultural activities, including agrotourism, direct sales of agricultural products and innovation.
In line with the need to boost innovation and more sustainable practices, the European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-AGRI) should remain a key policy tool to support interactive innovation, improving knowledge sharing among actors with a view to disseminating ready-to-use solutions. Synergies between the CAP and the Union's Framework Programme for Research (FP10) should encourage agriculture to make the best use of research and innovation results, in particular those stemming from projects funded by PM10 and EIP-AGRI, leading to innovations in the agricultural and bioeconomy sector and in rural areas.
Improving interoperability between public agricultural information systems at national level can bring significant benefits. Designating a single authority to coordinate interoperability efforts and investing in single farm identifications, the EU identification portfolio and the data sharing infrastructure can reduce administrative burden, streamline reporting obligations and empower farmers within the data value chain, ultimately supporting the objectives of the CAP.
The decision on the future long-term EU budget and revenue system will be discussed by Member States in the Council. The adoption of the MFF Regulation requires unanimity, subject to the consent of the European Parliament. Some elements on the revenue side (in particular the new own resources) require unanimity in the Council and approval by the Member States in accordance with their respective constitutional requirements. On the other hand, sectoral regulations, including the Fund and the CAP, will be dealt with under the ordinary regulatory procedure. Discussions on the whole MFF package may be extended for more than a year.
More information:
· Dedicated Questions and Answers