New capsusle of the CAP 54 questions and answers about the recent agreement on the CAP 2023-2027
We try to explain the recent agreement between the European Parliament and the Council on the future CAP 2023-2027
- Why an agreement is needed now? An agreement now is more than welcome. We are even late if we want the new PAC to apply as soon as January 1, 2023. Farmers and rural actors have the right to have a stable legal framework for several years. Not only it will not last 7 years due to the delay in its approval, but we can expect a new proposal for the post-2027 period in 2 or 3 years, that is, opening a new period of uncertainty.
- Which are the reasons for this delay? The Commission delayed until May 2018 the presentation of its financial framework proposal for the 2021-2027 period. Therefore, it could not present its CAP proposals until June 1 of the same year. In addition, we have had an election to the European Parliament in June 2019.
- Will the new CAP enter into effect on January 1, 2023? The answer is “yes, but only partially”. Once the political agreement has been reached, it must be transposed in legal texts. There are still many technical fringes to close and let's not forget that the devil is in the details.
It will then be necessary for the Commission to approve the corresponding delegated and implementing acts. It is true that, in this CAP, these secondary legal texts are less relevant than in the past, both quantitatively and qualitatively. But they still are needed.
At the same time, the Member States must first approve and then present to the Commission their national Strategic Plans, before December 31 2021. These, in turn, must receive the approval of the Commission.
Once approved, the Member State (must approve the corresponding national regulations ministerial orders and launch, where appropriate, the relevant calls.
Therefore, it can be expected that continuity should be achieved without serious disturbances when it comes to direct aid, but there would undoubtedly be delays in much of what concerns rural development.
A "fairer" CAP?
- Is the new CAP “fairer" than the old one? The content of "fairness" is subjective. It is true that until now, 80% of the CAP support (more or less) is received by 20% of the farmers, but this happens because they were the ones that contributed 80 % of agricultural production at the end of the nineties and are today those that cultivate (more or less) 80% of the surface.
The agreement includes several mechanisms for the redistribution of direct aid, some of them already existing previously.
The limit per farm
- Will there be a limitation of support per farm? Member States may limit the amount of basic income support for sustainability that a farm can receive, to € 100.000. They may reduce the amount of this aid that exceeds € 60,000 up to 85%. In this calculation, the situation of agricultural holdings with several owners, such as cooperatives or GAEC in France, would be taken into account.
- Will labour costs be taken into account when calculating this limit? Yes, the ceiling will be increased with labour costs, both for employed workers and for family labour or service companies, including social costs and the corresponding taxes.
- Why are these labour costs taken into account? It is a try to make compatible greater equity in the distribution of PAC support without penalizing agricultural entrepreneurs who create jobs in rural areas and promote more labour-intensive crops.
- Isn't this very complicated? The agreement provides for the possibility of using flat rates to estimate these costs in order to limit the red tape.
- Will there be special aid for small and medium farmers? Yes, and it's called "redistributive payment". As such a payment, it already exists in the current CAP and some Member States such as France and Germany are already applying it. What is new is that all Member States will now have to implement it, unless they can demonstrate that they have achieved the desired redistribution objective by other means. It consists of a supplementary payment for the first hectares financed with (at least) 10% of the national envelope provided for direct aid, with ample room of manoeuvre for the Member States.
- Is there a new conditionality, this time social, for the basic income support for sustainability? Indeed, the agreement corrects one of the most visible injustices of the current CAP conditionality. Environment and animal welfare were covered by this legislation but not the social workers ‘rights.
- Is this the first time this conditionality issue has been discussed? No, the Commission's initial proposal when the direct payments were decoupled, in 2003 and 2004, incorporated this conditionality but it has been one of the first items that the Ministers, in their immense (but incomprehensible) wisdom, removed.
- Why did the Commission, after this first failure, not present it again? It is not usually his custom to throw the battle so quickly. Indeed, this is surprising, at least at first glance. It is explained by the “years of ice” that the General Directorate for Agriculture suffered when Jean-Luc Demarty was General Director and the persecution, if not harassment, to many of those who thought “out of the box”.
- Why has this new conditionality been included this time? It was one of the key demands of the European Parliament. On the one hand, the highly varied composition of the current European Parliament makes it necessary to seek much more complex balances. You must negotiate a lot and well to reach sufficient majorities.
On the other, the pandemic we have suffered has revealed the essential character of farm workers and the unacceptable conditions in which sometimes they had to work.
Finally, the issue of "social dumping" within the Union is very popular at least in some Member States such as France.
- From when will this new conditionality apply? It may apply from 2023 and should apply from 2025.
- What regulation is covered by this conditionality? The European Parliament had put on the table a long list of not less than 10 Directives to be covered. In this first stage, social conditionality is limited to the following 3 directives:
- Directive 2019/1152, on transparent and predictable working conditions in the EU (specifically articles 3-6, 8, 10 and 13) ;
- Directive 89/301 / EEC, on measures to improve the safety and health of people at work (specifically articles 5-12) ;
- Directive 2009/104 / EC, relative to the minimum safety and health requirements for the use by workers of work equipment (specifically art. 3-9) ;
- Is there something else planned in this regard? Yes, the farm advisory service (article 13 of the Regulation) must include among its elements information and advice on employment conditions and employers' obligations, as well as aspects related to health, safety and social protection in the agricultural field.
- What changes the conditionality of aid for the farmer? In principle nothing, because it is assumed that they already complies with current legislation.
- What happens to a farmer if he does not comply and there is no conditionality? If he is discovered, depending on the breach, he will be sanctioned by the Administration and/or the national Justice Courts.
- What happens to a Member State if there is no conditionality? In principle, nothing as it is supposed to have transcribed correctly the European Directives into national law and to have implemented the corresponding control mechanisms.
- What happens to a Member State if there is no conditionality and it does not fulfil its obligations? The Commission opens an infringement procedure that can end after many years, if so determined by the European Court of Justice, in an economic penalty.
- What happens to a Member State if there is conditionality and it does not fulfil its obligations? Within the framework of the audit of agricultural expenditure, it may be penalized proportionally to the non-compliance observed. In particular, it is rarely a question of an inadequate transcription of the Directive in national law, but rather a lack of controls or ineffective controls.
- What happens to a farmer if he does not comply and there is conditionality? As the Member States has to implement properly the controls, the probability of ben penalized increase significantly. In addition to the sanctions foreseen in the national laws, he can suffer a reduction of his CAP payments.
- Is there a rendez-vous clause? Indeed, based on the experience accumulated until 2027, the Commission will present a report to the Council and the European Parliament on the impact that this new conditionality has had with, if necessary, new proposals to strengthen the social dimension of the new CAP and incorporate more directives into the legal framework.
A greener CAP?
- Has the environmental conditionality of the basic aid for sustainability been strengthened? The answer is yes, but less than what would be desirable, than what the Commission proposed and what the environmental organizations asked for. As a general rule, the previous “greening” requirements have been incorporated into the conditionality rules, albeit with nuances. We have move from an obligation of "crop diversification" included in the previous "greening» to an obligation of “crop rotation”, although with escape routes such as catching crops or a “reinforced diversification” with legume crops.
On the other hand, it has also be decided that, as a general rule, 4 % of the arable land has to be devoted to biodiversity and that all wetlands have to be protected. The hedges and the trees cannot be cut during the birds’ breeding season.
- What are the "Eco-schemes"? The new CAP reserves 25% of the national envelope for direct aid to finance farmers’ actions environmental supportive. They are a kind of agri-environmental measures, like those included so far in the second pillar of the CAP, but without national co-financing. Member States must necessarily propose them to farmers, but the participation of the latter is voluntary.
- How are Eco-schemas defined? Each Member State will have to define the Eco-schemes that it considers pertinent in its national Strategic Plan.
- Which budget is reserved for the Eco-schemes? The agreement reserves 25% of the national envelope devoted to the direct payment for them.
- Will there be a transitional period? Yes, and no, it depends for what. Farmers must be eligible for Eco-schemes from the first year. The budget mobilized for this purpose in the years 2023 and 2024 shall not fall below 20% of the envelope, but in the average of the 5 years, the final percentage must be 25%.
- The "greening " mobilized 30% of the budget for direct aid and the Eco-schemes "only" 25%. Is this CAP less ambitious from an environmental point of view than the current one? My answer is clearly no. Numerous studies and reports have shown that the "greening" environmental contribution has been limited.
If the Strategic Plans are serious and if the European Commission fulfils its role as defender of the European Treaties and maintains an adequate level of requirements, the Eco- schemes will result in a useful instrument to promote the sustainable transformation of our agriculture .
- Will this CAP allows the member States to achieve the objectives set by the Commission strategies “From farm to table” and “Biodiversity”? I do not believe that today anyone can give a categorical answer to this question, although my intuition is that the new CAP, by itself, will not allow these strategies to be fulfilled.
- Are the objectives of the European Strategies really well defined? The targets presented in both strategies have not been endorsed by any impact analysis. They are more the result of the exercise of “optimism of the will” more than “the pessimism of the reason”. In my opinion, they mark the correct path towards where we must go, towards where we must mobilize all available efforts, but we face a double danger. On one hand, some consider that these objectives cannot be discussed. On another hand, others take advantage of the Commission's voluntarism to question even the need to advance as quickly as possible in the agro-ecological transition.
- Did the debate on the strategies arrive at the right moment? The CAP is a liner whose course change is possible but it takes time. The Commission made its proposals for Strategies long after the CAP negotiations had started. It is as if we ask an archer located 50 meters away to reach the target while at the same time the target is been moved.
- What can you ask to the CAP in terms of sustainability? We can, and we should, ask the CAP to deliver in terms of sustainability. It has to be an important lever to achieve a sustainable food system and rural territory. But the goal of sustainable development, including sustainable food, cannot be achieved solely through the CAP, however important the possible and necessary contribution of such a policy is. I am thinking, among others, on the state aid scheme, the Next Gen funds and (among others) fiscal, territorial and regional, social, educational policies ...
- What guarantees do we have that Eco-schemes will really have an impact on the agro-ecological transition? Guarantees, what is said guarantees, we have few. The Eco-schemes are only defined in their main lines on a European scale. The detail (and the devil is in the details) will have to wait for the approval of the national Strategic Plans. The experience of past reforms does not lead to optimism regarding the environmental ambition of (at least) some of these national decisions. But you never know.
Then there is always the approval of the Plans by the Commission, which has declared that it will be vigilant that the Strategic Plans do represent a difference. It remains to be seen to what extent the Commission will be able to live up to its stated ambitions.
- ¿Are the Environmental rules to be respected decided definitely? The answer to this important question is no, they are not definitively fixed. In Brussels, they have invented the term “Dynamic alignment”. In the coming months and years, the European Union, and its Member States will continue to adopt environmental commitments, both internally and internationally. Logically, all European funds will have to contribute to the achievement of those objectives.
- Could the Commission reject a national Strategic Plan because it is not aligned with the Green Plan? Commissioner Janusz Wojciechowski has described this possibility as "unimaginable" 
- Will the Commission verify the compliance and impact of the Strategic Plans? Yes, two reviews are planned in 2025 and 2027, accompanied if necessary by specific action plans for the Member States that are behind.
- ¿ Will these review be useful? It is always better to have an examination by the Commission than not to have one, but its effectiveness can be doubted, unless the breaches are manifest, indisputable and flagrant, which is unlikely.
Between the delay in the start of the programs (especially for rural development); the time it takes for them to have an impact, the complexity of the evaluation process, the reading of the indicators and the understanding of the reasons behind their evolution, we are in a complete grey areas.
- What happened to the "performance reserve"? The Commission proposal included a "performance reserve" for those Member States which o fulfil properly their Strategic Plan. It would have been 10% of the national envelope for rural development corresponding to last year of the budget programming period, that is to say 2027. With this schedule of reviews, all Member States were guaranteed to be able to enjoy this reserve. In other words, the mechanism was useless.
In a previous article we had concluded that a reserve of effectiveness (more forceful) could only be operative if, instead of a duration of 7 years like the current one, we had a CAP (and financial perspectives) period, as it has repeatedly requested by the European Parliament, of 10 (5 + 5) years.
In the final agreement the articles that made reference to this “performance reserve” have been deleted.
- What does the agreement say regarding imported products? The Council and the European Parliament have agreed on a statement that import products have to meet the same health and environmental standards than the European products.
- How this statement is made concrete? The Commission must present, no later than June 2022, a report on the legal feasibility of applying these standards to imported products, in accordance with the World Trade Organization rules.
- What does this mean by “legal viability? As a general rule, Europe cannot impose its own rules on third countries but it can request that imported products do not have product residues (pesticides, herbicides, antibiotics ...) prohibited in Europe, if there is scientific evidence of the impact of their consumption, especially in health.
In the event that this evidence does not exist (the hormone beef e case for has been the subject of international panels, the Union can impose restrictions but has also to compensate the concerned third countries.
If this evidence exists, the Maximum Residue Limits (MRLs) can be set at detection levels. But the use of the product in question must be completely prohibited in the European Union that is to say that there is no possible “exceptional uses”, today often authorized by the Member States. An alternative is to build a complex system to check the ‘exceptional use authorisations” delivered by the third country.
The preferential agreements represent another window of opportunity. The European Union can try to include clauses prohibiting the presence of residues, or even their use, if the product is going to be exported to Europe.
The beneficiary of the aid
- How is defined the new “active farmer”? The strategic plans of the Member States must include a definition of active farmer, to whom the CAP aid will be directed. They will have to develop a minimum agricultural activity. Member States may approve a negative list of entities automatically excluded. It seems that the words “genuine farmers” have disappeared from the agreement and that we have now an “active farmer 2.0”.
- What about multi-active or part-time farmers? The diversity of situations in Europe has led the Commission to transfer the definition of the CAP beneficiaries to the Member States. At European level, multi-active or part-time farmers are not excluded.
- And what about young farmers? The new mandatory minimum level of support for young farmers is set at 3% of national envelop. In other words, it can be achieve with both first and second pillars support. In the latter case, it would include the installation grants and even the investments (only 50%). The payment per hectare will be granted during the five years after the request.
- Something else in the national strategic plans? Yes, these plans should include " generational change strategies " that go beyond the CAP support and are consistent with other policy of national relieve, such as access to land ...
The new farmers
- And what about the not-so-young farmers? The European Union has had a young farmer policy of support since 1973, based on the belief that future farmers would be the children of current farmers. It is as if one wanted to renew the Public Administration supporting that the future civil servants have to be the children of the current civil servants. This policy has not deliver.
However, step b step, a space is opening up for the “new” farmers, a much broader, modern and promising concept. The new CAP incorporates in its objectives those “new” farmers who will be eligible to benefit from the second pillar support. But nothing is foreseen for the first pillar.
- And what about the integration of gender policy in the CAP? For the first time the new PAC includes among its objectives "gender equality and participation of women in agriculture". There is no specific measure foreseen but the Member States will have to incorporate it into the different mechanisms and aid defined in the Strategic Plans.
- What does the agreement say about internal convergence? The minimum value of each entitlement should reach 85% of the average value no later than 2026. In principle, no farmer can see reduce their aid by more than 30% but, in case of conflict, the 85% rule prevails over the 30% rule.
- Is there major changes in these payments? The answer is no, the agreement represents great stability in this regard. Member States are allowed to allocate to them a maximum of 13% of the direct aid envelop, and add another 2% for protein crops.
- Although little has been said about it, what are the changes that are being introduced in the European regulation of agricultural markets? The CAP is deepening the dynamics initiated with the current CAP, and the Omnibus regulation, maintaining its market orientation in a way compatible with the management (and self-management) of the agricultural markets in time of crisis. As stated by Pedro Gallardo, vice-president of COPA-COGECA, “you cannot make green policies with red numbers”.
- Which are the changes approved on market management? On one hand, it introduces a reserve budget to finance market measures in times of crisis, with endowments yearly at least 450 million euros. If that item was not enough to face a crisis situation, as a last resort the financial discipline mechanism could be activated (as today), applying a cut to the direct aid perceived by farmers above 2,000 euros. However, it has not been possible to make this reserve multiannual, that is to say that the amounts not used in one year could reinforce the budgetary allocation for subsequent years.
Market observatories (already existing today for milk, meat, arable crops, sugar, fruit and vegetables and wine) will be extended to all products
- And, on self-management of these markets? The most important innovation is Member States will be able to finance operational funds of producer organizations in all sectors, as it is happening today in the fruits and vegetables sectors.
On the other hand, based on the experience of the dairy crisis, the possibility of promoting voluntary production reduction measures will be speeded up, before the crisis sets in on the market.
In addition, the possibility to self-regulate the supply of products with designations of origin existing today for wines, hams and cheeses, will be expanded.
And what do you do for my constituency?
- Which additional surprises can be found in the agreement? We have tried to address the main new CAP issues. But in an negotiation as complex as this one, there are multiple aspects addressed to achieve an agreement, trying to answer the question asked by many of those who have to give the final approval: “And what about my constituency?”.
Just to give a few examples, it is worth mentioning the introduction of the table olive sector in the list of products eligible to private storage; the extension from 2030 to 2045 of the planting rights in the wine sector, as well as the introduction of nutritional labelling in wines.
 See The "years of ice" (2000-2010) of the CAP and in DG AGRI ; http://tomasgarciaazcarate.com/post/the-years-of-icee2809d-(2000-2010)-of-the -cap-and-in-dg-agri-133190
 The "years of ice” (2000-2010) of the CAP and in DG AGRI; http://tomasgarciaazcarate.com/post/the-years-of-icee2809d-(2000-2010)-of-the-cap-and-in-dg-agri-133190