The CAP towards 2020
The future policy framework and impact of
alternative scenarios
European Commission
DG Agriculture and Rural Development
Ⓒ Olof S.
Directorate for Economic Analysis, Perspectives and Evaluations
Where are we with the CAP reform process?
12 April – 11 June 2010
19-20 July 2010
18 November 2010
23 November 2010 – 25 January 2011
29 June 2011
12 October 2011
Public debate (EU citizens and organisations)
Public conference
Commission Communication ‘The CAP towards 2020’
Consultation on Impact assessment (stakeholders)
Commission proposals on the EU budget 2014-2020
Commission legal proposals on the CAP
The legal proposals are accompanied by an impact assessment that evaluates
alternative scenarios for the evolution of the policy on the basis of extensive
quantitative and qualitative analysis
Debate in the European Parliament and the Council
2011-2013
Approval of Regulations and implementing acts
2
Outline
Part I: The future policy framework
Part II: Impact assessment of alternative redistribution scenarios
- Direct Payments
- Rural Development
3
Part I: The future policy framework
4
The path of CAP expenditure 1980-2020 (in current
prices)
70
EU-10
EU-12
EU-15
EU-25
EU-27
60
40
30
20
10
Export subsidies
Other market measures
Coupled direct payments
Market-related expenditure
Direct payments
Rural development
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
0
1980
in billion € - current prices
50
Decoupled direct payments
Source: DG Agriculture and Rural Development
Notes:
2011 = Budget; 2012 = Draft Budget;
2013 = EAGF subceiling for direct payments and market-related expenditure + pillar 2 in commitments.
Rural development for 2013 includes UK voluntary modulation and Article 136 “unspent amounts”. As these cease to exist end
5
2013, the corresponding amounts are put back to direct aids as from 2014.
Challenges and CAP reform objectives
Commission Communication ‘The CAP towards 2020’
Challenges
Policy objectives
Legal proposals
Reform objectives
Europe 2020
Economic
Environmental
Territorial
Viable food
production
Sustainable
management of
natural resources
and climate action
Balanced
territorial
development
Enhanced
competitiveness
Improved
sustainability
Greater
effectiveness
Simplification
6
New design of direct payments
Degressivity and Capping
(all layers except Green Payment)
Cross compliance
• Streamlined – Climate change
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
Small Farmer Scheme
• Simplification of claims
and controls
Young Farmer Scheme
• Up to 2% of DP envelope
• < 40 years
• For 5 years
• Commencing activity
• Lump sum payment to
be determined by MS
under conditions
‘Green’ Payment
• Crop diversification
• Permanent grassland
• Ecological focus area
• Entrance in 2014
• 30% of the DP envelope
• Up to 10% of the DP
envelope
Basic Payment Scheme
• National or regional flat
rate per eligible hectare
• Regions and criteria to be
chosen by MS
• New entitlements in 2014
• Definition of agricultural activity
• Definition of active farmer
OR
7
Improved instruments to address market
developments (sCMO)
Forum for a Better Functioning Food Supply Chain
Increased financing for research and innovation
Sustainable consumption - School Fruit and Milk Scheme
• Increased funding
• New measures available for EU co-funding
Encouraging common action – better position in the
food supply chain
• Facilitated recognition of: Producer Organisations (PO),
Associations of POs, Interbranch Organisations
• More clarity as regards competition rules
• Link to Rural Development funds (start-up and co-operation
measures)
Link to the
consumer
Common
responses to
economic and
environmental
challenges
Continued market orientation
• End of certain aid schemes (Skimmed Milk Powder, hops and silkworms)
• End of production limits (sugar)
Enhanced safety-net
• Exceptional measures – more flexibility and greater coherence
• Public intervention/private storage simplified, more responsive to crises
• “Crises reserve”
Competitiveness
of individual
agricultural
producers
8
Rural development in a new framework
Europe 2020 strategy
Common Strategic Framework (CSF)
– covering the EAFRD, ERDF, ESF, Cohesion Fund and EMFF, and reflecting EU2020 through common
thematic objectives to be addressed by key actions for each of the funds
Partnership Contract
– national document outlining the intended use of the funds in the pursuit of EU2020 objectives
Rural development
policy: EAFRD
Other CSF funds
(ERDF, ESF, Cohesion Fund the EMFF)
Priorities
Innovation, Environment and Climate Change as cross-cutting themes
Fostering
knowledge
transfer and
Innovation in
agriculture,
forestry and
rural areas
Enhancing
competitiveness
of all types of
agriculture
and farm viability
Promoting
food chain
organisation
and risk
management
in agriculture
Restoring,
preserving and
enhancing
ecosystems
dependent on
agriculture and
forestry
Promoting resource
efficiency and
supporting the shift
towards a low carbon
and climate resilient
economy in
agriculture, food
and forestry sectors
Promoting social
inclusion,
poverty reduction
and economic
development
in rural areas
Rural Development Programme(s)
9
Part II: Impact assessment of alternative redistribution
scenarios
10
Direct payments
11
Role of direct payments
• Direct payments have a dual role:
– contributing to keeping farming in place throughout the EU territory by
supporting and stabilising farmers' income
– providing basic public goods through their link with cross compliance
• Direct payments form the basis for applying more targeted and
regionally specific agri-environmental and climate measures in
Pillar II
• In the future, direct payments will generally enhance the
environmental performance of EU agriculture through "greening"
measures
12
Redistribution of direct payments
•
Increasingly difficult to justify the presence of significant differences in direct
payments based on historic references
However:
•
Common "flat rate" direct payment would ignore existing economic
differences between Member States (e.g. wage levels and input costs)
•
Relation to overall economy must be considered: share of direct payments
in GDP very high in many Member States with below average direct
payments
•
Overall balance of incomes must be considered: disproportionate increase
of direct payments in some Member States could lead to sectoral income
bias towards agriculture
•
Other subsidies must be considered: Pillar II support and
structural/cohesion funds also contribute to overall support level
13
Redistribution of DP – economic criteria
EUR/ha
800
700
600
500
400
300
200
100
DP status-quo (EUR/ha)
EU-27 average (EUR/ha)
Latvia
Estonia
Lithuania
Romania
Portugal
Slovakia
EU-12
Poland
United Kingdom
Spain
Bulgaria
Sweden
Finland
Czech Republic
Hungary
Austria
EU-27
Ireland
Luxembourg
EU-15
France
Germany
Slovenia
Denmark
Cyprus
Greece
Italy
Belgium
Netherlands
Malta
0
DP MFF redistributed with economic criteria (EUR/ha)
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
(budget data from the MFF Communication - COM (2011) 500 (excluding cotton and POSEI); hectares of potentially eligible area in 2009)
14
Redistribution of DP – environmental criteria
EUR/ha
800
700
600
500
400
300
200
100
DP status-quo (EUR/ha)
EU-27 average (EUR/ha)
Latvia
Estonia
Lithuania
Romania
Portugal
Slovakia
EU-12
Poland
United Kingdom
Spain
Bulgaria
Sweden
Finland
Czech Republic
Hungary
Austria
EU-27
Ireland
Luxembourg
EU-15
France
Germany
Slovenia
Denmark
Cyprus
Greece
Italy
Belgium
Netherlands
Malta
0
DP MFF redistributed with environmental criteria (EUR/ha)
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
(budget data from the MFF Communication - COM (2011) 500 (excluding cotton and POSEI); hectares of potentially eligible area in 2009)
15
Impact of
the
different
criteria
compared
to the flat
rate
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
PPS
GDP/cap
GVA/ha
AWU/ha
LFA / UAA
Natura 2000 / UAA
Permanent grassland / UAA
++
--++
+
+
+
+
--++
-+
++
---++
+
-
++
-++
++
-++
+
+
+
--++
--++
++
----++
++
++
++
----+
+
++
++
--++
++
+
+
-----
++
-----+
--+
++
+/-+/+/+/+/++
+
++
++
-----
---++
++
++
+
++
+
++
-++
-+
+
++
-++
+
++
-
++
-++
-++
+
+
++
+/+
++
--+
+
++
++
++
++
--
+
--++
-+
-+
++
--+
++
-++
+/++
----16
Redistribution of DP – minimum 80% of EU-27 average
EUR/ha
800
700
600
500
400
300
200
100
DP status-quo (EUR/ha)
EU-27 average (EUR/ha)
80% of EU-27 average (EUR/ha)
DP - Min. 80% of EU-avg. (EUR/ha)
Latvia
Estonia
Lithuania
Romania
Portugal
Slovakia
EU-12
Poland
United Kingdom
Spain
Bulgaria
Sweden
Finland
Czech Republic
Hungary
Austria
EU-27
Ireland
Luxembourg
EU-15
France
Germany
Slovenia
Denmark
Cyprus
Greece
Italy
Belgium
Netherlands
Malta
0
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
(budget data from the MFF Communication - COM (2011) 500 (excluding cotton and POSEI); hectares of potentially eligible area in 2009)
17
Redistribution of DP – minimum 90% of EU-27 average with
objective criteria
EUR/ha
800
700
600
500
400
300
200
100
DP status-quo (EUR/ha)
EU-27 average (EUR/ha)
90% of EU-27 average (EUR/ha)
DP - Min. 90% of avg. with objective criteria (EUR/ha)
Latvia
Estonia
Lithuania
Romania
Portugal
Slovakia
EU-12
Poland
United Kingdom
Spain
Bulgaria
Sweden
Finland
Czech Republic
Hungary
Austria
EU-27
Ireland
Luxembourg
EU-15
France
Germany
Slovenia
Denmark
Cyprus
Greece
Italy
Belgium
Netherlands
Malta
0
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
(budget data from the MFF Communication - COM (2011) 500 (excluding cotton and POSEI); hectares of potentially eligible area in 2009)
18
Redistribution of DP – closing 1/3 of the gap between
current level and 90% of EU-27 average by 2020
EUR/ha
800
700
600
500
400
300
200
100
DP status-quo (EUR/ha)
EU-27 average (EUR/ha)
90% of EU-27 average (EUR/ha)
DP - Closing 1/3 of the gap to 90% of the avg. (EUR/ha)
Latvia
Estonia
Lithuania
Romania
Portugal
Slovakia
EU-12
Poland
United Kingdom
Spain
Bulgaria
Sweden
Finland
Czech Republic
Hungary
Austria
EU-27
Ireland
Luxembourg
EU-15
France
Germany
Slovenia
Denmark
Cyprus
Greece
Italy
Belgium
Netherlands
Malta
0
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
(budget data from the MFF Communication - COM (2011) 500 (excluding cotton and POSEI); hectares of potentially eligible area in 2009)
19
Rural development
20
Role of rural development
Policy objectives
•
Within the CAP framework rural development contributes to the following
policy objectives:
– Competitiveness of agriculture
– Sustainable management of natural resources and climate action
– Balanced territorial development of rural areas
•
In the service of the Europe 2020 strategy for smart, sustainable and
inclusive growth, these objectives are pursued through a set of six priorities
that also translate the thematic objectives of the CSF
21
Current distribution and rationale for redistribution
Current distribution
•
Distribution in the current period (2007-2013) reflects to a large extent the
historical shares of Member States in the Guarantee, Guidance and Leader
funds that were brought together into a single fund, the EAFRD
•
In addition, the additional amounts from modulation are distributed
according to the following formula (with each MS receiving at least 80%):
– (0.65 Area + 0.35 Labor) x GDP inverse index
Rationale for redistribution
•
Ensure a better fit between funding and policy objectives and thus a more
efficient use of budgetary resources in the pursuit of Europe 2020
•
Provide for a smooth transition from current distribution
22
Impact of alternative distribution scenarios
The impact assessment considered alternative distribution scenarios:
• Using criteria linked to the policy objectives, such as:
– Objective 1 (competitiveness of agriculture):
Area, Labor, Labor productivity inverse index
– Objective 2 (sustainable management of natural resources and climate action):
Area, N2000, NHA, Forest, Permanent pasture areas
– Objective 3 (balanced territorial development):
Rural population, GDP inverse index
And
• Factoring in the current distribution
Impact
•
•
Use of objective criteria allows for a better use of budgetary resources
Smooth redistribution allows for continuity in spending
23
Impact of criteria compared to current distribution
BE
BG
CZ
DK
DE
EE
IE
EL
ES
FR
IT
CY
LV
LT
LU
HU
MT
NL
AT
PL
PT
RO
SI
SK
FI
SE
UK
Area
Labor
Productivity
NHA
+
++
+
++
++
-++
---++
+
++
---+
+
++
--++
-++
++
----
-+
----+
+
+
-+
+
+
+
--
+
---+
+
++
+
+
+
-----+
++
Natura
2000
+
++
+
-++
+
+
--++
+
++
++
--
Forest
-++
--+
++
----+
++
++
--
Permanent
pasture
++
--++
-++
++
-+
+
--++
----++
Rural
population
+
+
++
+
-++
++
++
-+
-+
++
GDP
++
+
-++
-+
+
++
++
-++
++
--++
++
++
+
++
--
24
Example: use of objective criteria
EUR/ha
300
Formula: [1/3 [(½ Area + ½ Labor) inv index labor prod]
+ 1/3 (1/3 NHA area + 1/3 N2000 + 1/6 Forest + 1/6 PP) + 1/3 Rural pop] x GDP inv index
250
200
150
100
50
Status quo
United Kingdom
Denmark
France
Netherlands
Belgium
Spain
EU-15
Ireland
Germany
Sweden
EU-27
Lithuania
Latvia
Luxembourg
Bulgaria
Hungary
Greece
Czech Republic
Finland
EU-12
Poland
Estonia
Romania
Italy
Cyprus
Slovakia
Austria
Portugal
Slovenia
Malta
0
New distribution
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
Note: This distribution key doesn't take into account the transfers made through the market reforms in the tobacco, cotton and wine sectors
(they are added to the national envelopes after the redistribution of the amount without transfer).
25
Example: ½ objective criteria within 90-110% range
and ½ current distribution
EUR/ha
300
250
200
150
100
50
Status quo
United Kingdom
Denmark
France
Netherlands
Belgium
Spain
EU-15
Ireland
Germany
Sweden
EU-27
Lithuania
Latvia
Luxembourg
Bulgaria
Hungary
Greece
Czech Republic
Finland
EU-12
Poland
Estonia
Romania
Italy
Cyprus
Slovakia
Austria
Portugal
Slovenia
Malta
0
New distribution
Source: European Commission, DG Agriculture and Rural Development – Commission Staff Working Paper ‘Impact Assessment – CAP towards 2020’
Note: This distribution key doesn't take into account the transfers made through the market reforms in the tobacco, cotton and wine sectors
(they are added to the national envelopes after the redistribution of the amount without transfer).
26
For further information
•
The CAP after 2013
http://ec.europa.eu/agriculture/cap-post-2013/index_en.htm
•
Commission Communication ‘The CAP towards 2020’
http://ec.europa.eu/agriculture/cap-post-2013/communication/ index_en.htm
•
Impact assessment
http://ec.europa.eu/agriculture/analysis/perspec/cap-2020/index_en.htm
•
Legal proposals
http://ec.europa.eu/agriculture/cap-post-2013/legal-proposals/index_en.htm
27
Thank you
28