CAP Reform:early observations from the negotiations

Martin NesbitDirector, EU and International Agriculture

Edinburgh stakeholder meeting25 January 2012

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Commission’s proposed new architecture of direct payments

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Basic Payment Scheme

• New entitlements in 2014• Definition of agricultural activity• Definition of active farmer

• National or regional flat rate per eligible hectare

• Regions and criteria to be chosen by MS

‘Green’ Payment• Crop diversification• Permanent grassland• Ecological focus area

• 30% of the DP envelope

Young Farmer Scheme• Up to 2% of DP envelope• < 40 years

• For 5 years• Commencing activity

Small Farmer Scheme

• Simplification of claims and controls

• Lump sum payment to be determined by MS under conditions

• Entrance in 2014

• Up to 10% of the DP envelope

Coupled support

• Wide range of sectors• Up to 5% or 10% of DP

envelope, to be decided by MS

Natural constraint support

• For areas with natural constraints

• Up to 5% of the DP envelope

Initial UK response to proposals

Significant disappointment...

• “Greening” component does not deliver significant environmental benefits

• But it does cause significant burdens on business and government

• Limited focus on competitiveness; risks of reversal in the trend of reform

• “Small farm good, big farm bad” approach e.g. capping, compulsory small farmer scheme:

risk significant complexity, and send counter-productive signals

... but capable of improvement.

Some of the rhetoric is along the right lines:

• Challenges of global food security

• Need for improved environmental performance and sustainability

• Commitment to simplification

We need to work on the legislation to help it match the rhetoric.

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What will emerge from the negotiations?

• Jim Paice : “saying we [farm ministers] don't like these proposals doesn't demonstrate there

is any particular communion of thought about what we want instead.”

• But:

• Significant level of interest in Council in Member State flexibility

• All ministers clear that proposals fail to deliver on simplification

• Difficult to see how “greening” can be removed once it’s on the table.

• What member states can and can’t live with on greening, and on redistribution of funding

will depend on overall Budget decisions

• European Parliament role will be key; but unpredictable.

• View on capping and active farmers may not be conditioned by deliverability

• Likely to be split down the middle on “greening”

• Initial signs of interest in whether 30% is the right level of greening payment

• Will want to know what happens on overall budget levels before deciding.

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European Parliament

• Rapporteurs identified:

• Dantin (France, PPE) – Single CMO regulation

• Capoulas Santos (Portugal, S&D) – direct payments and rural development

• La Via (Italy, PPE) – Finance and controls.

• Draft reports likely to be published before the summer, allowing amendments to be tabled up to

September.

• Committee debate and vote before the end of the year. 2 options for Plenary adoption:

• (i) wait until European Council resolves the Budget

• (ii) adopt a report now, but make it clear that Parliament bases it on CAP budget proposed

by Commission.

• Opportunity for UK stakeholders: ensure UK and other MEPs understand the importance of

key issues, and any areas where the legislation needs to better accommodate local realities.

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Council

• Works in parallel to the EP, but waits for EP opinion before adopting its Common Position.

• Danish Presidency (Jan-June 2012):

• Detailed consideration in official level working groups

• Aim to agree compromise text on technical issues

• Identify key political issues and ideas for compromise

• End product: report identifying the big political questions and describing the position of Member

States and possible indicating avenues for further negotiation.

• Cypriot Presidency (July – December 2012):

• Plans not yet clear – but don’t underestimate their capacity

• Likely to be more willing than most to be guided by the Commission

• May take forward some key issues pending budget agreement – e.g. Greening

• Irish presidency (Jan – June 2013):

• Where the Council deal is likely to be done

• Will they be able to reach agreement with the EP?

Negotiation Timetable and Process

CAP Reform Negotiations Timeline European Council Day 1 Ag Council Day 1 Key national election Possible CAP deal

2015 2016Hungary Latvia Netherlands

Jun Jul Aug Sept Oct Nov Dec Lux Slovakia

EU

EP

UK

Q3 Q4Q1 Q2

MF

FC

AP

Q1 Q2 Q3 Q4

Co

mm

issi

on

Co

un

cil

Greece Italy2014

Poland2011

Denmark Cyprus2012

Ireland

Def

raP

arlia

men

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Lithuania2013

Q1 Q2 Q3 Q4

SCA Negotiations

Transitional Measures

Continuation

Technical Read through. Initial compromises.ID Key issues

Establish key policy positions beforeinterservice consultation

Proposals -inter-

service consultation ~ 1-14 Sept

New

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P t

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eff

ect

New

Fin

anci

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ersp

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Prep for consultation

Dess report finalised (End June)

EU Scrutiny Committee

(13 June)

MFF Negotiations....LeaksProposalsreleased29 June

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27 18 11 19 20 14

MFF

Agre

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CAP Impact Assessment

Finalised

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EAC to clear revised CAP position ahead of proposals

Defra consulation on legislative proposals

Scrutiny of CAP Regulatory Proposals(And any transitional measures package)

EFRA enquiry -Implementation?

Council Position?

Second Reading?

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First Reading(no formal time limit)

Implementing rulesImplementing rules

agreed in delegated/ implementing acts

Prepare draft RDPERPA systems alignment etc

Strategic Framework readacross

4 CAP Regulation Proposals Released

12 Oct

CAP Agreement?

Fr De

De

React to proposals-consider key positions

1st position -key lobby lines

4x Regulation Working Groups

- initial read through

Council Position?

Conc

illiati

on?

Consider compromises/key political issues -Establish and clear fallback positions

Establish end-game priorities

Transitional Measures Package?

EAC clearance of CAP deal

Devolved Administration and UK stakeholder engagement

Defra consulation on implementing legislation

Pl

EAC meetings during negotiations to review and clear Budget positions

Proposals- College ~ 19 Sept - 12 Oct

Martin Nesbitmartin.nesbit@defra.gsi.gov.uk

http://www.defra.gov.uk/food-farm/farm-manage/cap-reform/

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