Cursul 13

“Common Agricultural Policy reform

The European Commission's proposals for the future of the CAP aim to make the EU's agricultural policy
more responsive to current and future challenges, while continuing to support the active needs of European
farmers.

By setting out a more intuitive and innovative policy, the Commission aims to foster a sustainable and
competitive agricultural sector that will thrive beyond 2020.

On 1 June 2018, the European Commission presented legislative proposals on the common agricultural
policy (CAP) for the period 2021-27. The proposals aim to ensure that the CAP can continue to provide
strong support for European farming, enabling prosperous rural areas and the production of high-quality
food. The proposals will also allow the CAP to make a significant contribution to the European Green Deal,
especially with regard to the farm to fork strategy and biodiversity strategy.

In particular, the Commission's proposals focus on: 

 securing a fair deal and a stable economic future for farmers;

 setting higher ambitions for environmental and climate action;
 safeguarding agriculture’s position at the heart of Europe’s society.

In order to achieve these broad goals, the Commission has set out specific objectives:

Ensure a fair income for farmers, Increase competitiveness, Rebalance the power in the food chain, Climate
change action, Environmental care, Preserve landscapes and biodiversity, Support generational renewal,
Foster vibrant rural areas, Protect food and health quality, Ensure a fair income for farmers, Increase
competitiveness, Rebalance the power in the food chain, Climate change action, Environmental care,
Preserve landscapes and biodiversity, Support generational renewal, Foster vibrant rural areas, Protect food
and health quality.

To ensure stability and predictability, income support will remain an essential part of the CAP. As a part of
this, basic payments will continue to be based on the farm’s size in hectares. However, the future CAP must
prioritise small and medium-sized farms and encourage young farmers to join the profession.

This is why the Commission proposes:

 a higher level of support per hectare for small and medium-sized farms;
 to reduce the share of direct payments received above €60,000 per farm and to limit payments at
€100,000 per farm, with a view to ensure a fairer distribution of payments;
 a minimum of 2% of direct support payments allocated to each EU country set aside for young
farmers, complemented by financial support under rural development and measures facilitating
access to land and land transfers;
 EU countries having to ensure that only genuine farmers receive support.

Farmers play a key role in tackling climate change, protecting the environment and preserving landscapes
and biodiversity. The European Commission aims to facilitate the role of farmers by ensuring that the CAP
will:

 contribute to climate change mitigation and adaptation, as well as sustainable energy;

 foster sustainable development and efficient management of natural resources such as water, soil
and air;
 contribute to the protection of biodiversity, enhance ecosystem services and preserve habitats and
landscapes.
A new green architecture

In its proposals, the Commission sets out a new green architecture for the CAP, featuring strengthened
mandatory requirements and increased funding opportunities for green farming. Amongst the measures
foreseen in the proposals are:

 the preservation of soils through requirements to protect carbon-rich wetlands and practice crop
rotation;
 an obligatory nutrient management tool, designed to help farmers improve water quality and reduce
ammonia and nitrous oxide levels on their farms;
 a new stream of funding from the CAP's direct payments budget for "eco-schemes", which will
support and incentivise farmers to undertake agricultural practices beneficial for the climate,
biodiversity, and the environment.

Through such measures, the CAP will place agriculture at the heart of the European Green Deal, as well as
the EU’s ambitious biodiversity and farm to fork strategies.

Farmers are at the heart of Europe’s rural communities, providing vital public goods. The future CAP
proposes to develop, support and invest in our rural communities, by:

 helping new generations of farmers to join the profession, through encouraging knowledge transfer
from one generation to the next and improving access to land for young farmers;
 promoting employment, growth, social inclusion and local development in rural areas, including
bio-economy and sustainable forestry;
 improving the response of EU agriculture to societal demands on food and health, including safe,
nutritious and sustainable food, food waste, as well as animal welfare;
 providing continued support for rural communities through the smart villages initiative and
community-led local developments under the LEADER programme.

The European Commission proposes to simplify and modernise how the CAP works, shifting the emphasis
from rules and compliance towards results and performance.

An updated EU-wide framework

The framework of the policy will be based upon nine specific objectives, focusing on the social, economic,
and environmental goals of the CAP.

In order to achieve these objectives, the Commission will provide a toolbox of broad policy measures, which
EU countries can shape around their own needs and capabilities.

The Commission will also provide a common set of result indicators as part of a new performance,
monitoring and evaluation framework, which will be used to assess the progress of EU countries in reaching
the CAP objectives.

CAP strategic plans

Each EU country will draw up their own CAP strategic plan, setting out how they will direct CAP funding
towards specific targets and how these targets will contribute to the overall EU objectives.

When drawing up their plans, each country will liaise with the Commission, hold consultations with experts
and stakeholders, and undertake an extensive SWOT (strengths, weaknesses, opportunities, and threats)
analysis of their specific needs.

All strategic plans will be submitted to the European Commission for evaluation and approval before they
are implemented. Additionally, EU countries will submit an annual performance report to show progress
towards the targets that have been set.
Benefits of the new way of working

The new approach combines detailed planning and clear objectives with workable measures and
comprehensive monitoring to ensure that results can be achieved.
Greater flexibility
In the future CAP, EU countries will have greater freedom to shape rules and funding allocations around the
needs of their farmers and rural communities, as long as they are in line with EU standards and objectives.
Streamlined administration
Countries shall submit only one strategic plan, covering income support, sectorial strategies, and rural
development, allowing for a smoother execution and less of an administrative burden.
Stronger environmental protection
When presenting their strategic plans, countries will be obliged to demonstrate a higher environmental
ambition than at present. The new way of working will allow countries to turn EU-wide standards and
objectives into actions that are relevant to the reality on the ground.

Boosting inovation

Knowledge and innovation are essential for a smart, resilient and sustainable agricultural sector. The CAP of
the future will both encourage increased investment in research and innovation and enable farmers and rural
communities to benefit from it.

Therefore, it is essential to build stronger agricultural knowledge and innovation systems (AKIS) to boost
initiation and development of innovation projects, to disseminate their results and to use them as widely as
possible. Including national AKIS strategies in CAP strategic plans will incentivise the structuring and
organisation of the national innovation ecosystem. Ensuring that well-functioning AKIS exist throughout the
EU avoids duplication of efforts, saves costs, increases the impact of EU and national/regional funding and
speeds up innovation.

Successful AKIS strategies include four main group of actions:

1. enhancing knowledge flows and strengthening links between research and practice;
2. strengthening all farm advisory services and fostering their interconnection within the AKIS;
3. enhancing cross-thematic and cross-border interactive innovation;
4. supporting the digital transition in agriculture.

The European Commission has proposed to set aside €10 billion from the Horizon Europe programme for
research and innovation in food, agriculture, rural development and the bioeconomy. The agricultural
European innovation partnership (EIP-AGRI) will continue to pool funding sources from Horizon Europe
and rural development to foster competitive and sustainable farming and forestry.

A strong budget

In July 2020, the European Council made conclusions on the Commission’s proposals for a long-term
budget of the EU for 2021-27, which will now be put forward to the European Parliament. Based on these
conclusions, the future CAP will be supported by robust funding.

€387 billion in CAP funding

Based on the July 2020 European Council conclusions, the CAP’s European agricultural guarantee
fund (EAGF) will be set at €291.1 billion (in current prices), while its European agricultural fund for rural
development (EAFRD), including the Next Generation EU funding, will amount to €95.5 billion.

Up to €8 billion from Next Generation EU

Next Generation EU will reinforce the budget of the EAFRD by €8 billion to help rural areas make the
structural changes necessary to achieve the goals of the European Green Deal and digital transition.

Up to 25% transfer between income support and rural development

 In order to allow EU countries to better adapt the policy to their farming sectors’ priorities, they will
have the option to transfer up to 25% of their CAP allocations between income support and rural
development. EU countries can apply additional flexibilities for certain specific purposes, such as supporting
environment and climate objectives, supporting young farmers and in the case of countries with below-
average direct payments.

Based on the feedback of 7,600 farmers and 2,200 agri-food companies across the EU, 24 country-specific
fi-compass reports present the main challenges faced by these two groups when it comes to access to
finance. The reports also estimate the financing gap for agriculture in the EU between €19.8 and
€46.6 billion, while for the agri-food sector the estimated gap is more than €12.8 billion. These financial
needs are likely to be exacerbated by the current crisis.

The reports reveal that in most European countries, financing of agriculture is subject to higher interest rates
and unfavourable conditions, when compared to other sectors of the economy. In addition, no matter the
performance of the sector, the reports found that there was insufficient flexibility in lending and repayment
conditions – something that is particularly needed in agriculture.

fi-compass (a joint initiative between the European Commission’s ESIF services and the European

Investment Bank) analysed in detail the financial environment in which farmers and processors in each
country operate. This includes banking systems, major financial players for the two sectors, and what is
offered as loans, guarantees and various financial schemes with national and/or EU financing. The reports
also provide country-specific conclusions on how to improve existing financial instruments and set up new
ones. They also identify weaknesses related to low levels of farmers’ financial literacy and lack of banks’
knowledge on agriculture.

While large farms seem to have a rather easy access to finance, young farmers and new entrants are amongst
the most affected groups, and often lack adequate financing possibilities. Small farms face significant
difficulties in terms of accessing development investments, due to a lack of assets to use as guarantees
(collateral) and of necessary skills on how to prepare business plans.

Regarding the agri-food sector, the analysis shows a better financial environment, where a greater diversity
of financing sources exists, compared to agriculture. The reports found that more financial instruments exist
in this sector, although possibilities to improve their offer and coverage still remain. In addition, within this
sector, start-ups and innovative companies were identified as having the most difficulties in finding the
necessary capital to launch or expand their operations.

For the next common agricultural policy (CAP) 2021-27, financial instruments using resources from
the European agricultural fund for rural development (EAFRD) could be used to finance stand-alone
working capital, investments, capital rebates and provide for combinations with grants and interest rate
subsidies.”

https://ec.europa.eu/info/news/needs-farmers-and-agri-food-companies-are-significant-2020-jun-11_en