The new Common Agricultural Policy (CAP): why the reform? The CAP as a symbol of European integration. The most important novelties: Direct Aid and Rural Development. The assigned resources.

1. The new Common
Agricultural Policy (CAP)
Passwords: Sustainability and
Innovation
March 2014

2. The new Common Agricultural Policy (CAP)
On November 20, 2013 the European Parliament approved
the Regulations of the new Common Agricultural Policy
(CAP) in force for the seven-year period 2014-2020.
For the first time the CAP was approved under the co-
decision procedure by the European Parliament and the
Council of the European Union. It is the positive outcome of
two long years of negotiations, launched in October 2011,
when the European Commission proposed the new
Regulations.

3. Why the reform?
! To update the CAP to an enlarged EU of 28 Member
States and tackle the new challenges in agriculture:
protection of the environment, food safety, innovation
and competitiveness in world markets.
! To bring the CAP into line with the Multiannual
Financial Framework 2014-2020 and new budget
requirements.

4. The CAP as a symbol of European integration
! Already present in the Treaties establishing the European
Economic Community (EEC) in 1957.
! The first communitarised sector in which EU
institutions have exclusive competence.
! Contains Regulations directly applicable in all EU
Members States.
Its scope goes beyond agriculture since the CAP
involves several related sectors: healthy and quality
food, care for the landscape and protection of the
environment, safeguard of communities, etc.

5. 1957
! To increase agricultural
productivity and profitability
to ensure a fair standard of
living for farmers.
! To stabilise markets and
assure the availability of
supplies.
! To ensure that supplies
reach consumers at
reasonable prices.
The objectives
Today
! Food safety, to satisfy the
needs of the world’s
population which will reach
9 billion in 2050.
! Agricultural
sustainability and ability
to tackle the challenges of
climate change.
! Protection of rural areas
and maintenance of
agricultural economies.

6. 1962 Establishment of
the CAP
The objective: to protect the
market. Common Market
Organisations (CMOs) were created
to ensure fixed prices all over Europe
and protect those prices from global
competition by establishing customs
duties and export support.
The flaws: the protectionist
approach and isolation of the
European market from global
competition slowed down the
modernisation of agricultural
holdings, ultimately damaging
consumers.
CAP: overview
The ’80s Initial adjustments
Rather than an organic reform,
it involved a series of
provisions to solve the most
obvious critical issues, first and
foremost surplus produce.

7. The approach changed: from product support to producer
support.
Main points
! Reduction in guaranteed fixed prices and compensation to
farmers through per hectare payment (not linked to the
quantity produced, but to the produce).
! Support for farmers who respect the environment > the
importance of sustainable agricultural production begins to be
affirmed.
Unsolved issues
! The financial unsustainability of the CAP.
! Imbalance between market support and environmental
measures.
1992: the Mac Sharry Reform

8. ! Decoupling of aid: CAP payments are linked to the
number of cultivated hectares rather than to the quantity
produced.
! Support is no longer linked to production, farmers can
decide if and what to produce, adjusting supply to demand.
The CAP > from product support
to income support for producers.
! Members States have ample discretionary powers to
adapt the CAP to the conditions in their respective countries.
! The Rural Development Policy, introduced a few years
earlier in Agenda 2000, becomes an important part of the
CAP. The objectives: food quality, protection of the
environment, animal welfare and support for young
farmers.
2003: the Fischler Reform, a turning point

9. Internal factors
! Uncoupled direct aid (pillar I) solved some distortions
of the agricultural markets, but also created extreme
distribution inequalities.
! The Rural Development Policy (pillar II), especially its
application, needed to be improved.
2010-2011: why another reform?

10. 2010-2011: why another reform?
External factors
! The reform of the Multiannual Financial Framework
of the EU: the CAP represents approximately 40% of
EU resources > the revision of the EU budget has to
review the way in which agriculture is financed.
! An EU with 28 Member States: agricultural models
and their level of development differ enormously in an
enlarged Europe. Adjustments had to be introduced so
that the CAP could be modulated to adapt to national
specificities.
! Climate change.
! The advent of food security.

11. CAP 2014 - 2020: a long legislative process
October 12,
2011
The European Commission presented the CAP Reform
Package based on the 2010 Communication “The CAP
towards 2020” and the results of a public consultation on
this issue. The proposal is linked to the reform of the EU
Multiannual Financial Framework 2014-2020. For the first
time the approval process is launched between the
European Parliament, the Council and the European
Commission (the so-called Trilogue). EU Member States
express divergent positions on several issues;
negotiations are further complicated by the fact they
have to take place concurrently and in a coherent manner
with negotiations regarding the EU Budget.
Trilogue negotiations regarding the CAP Reform
ended on June 26. Small adjustments were made in
September, and on November 20 the seven
Regulations of the new CAP were approved by the
EU Parliament at its first reading.
2013

12. The most important
novelties

13. Direct Aid (pillar I)
! Support paid only to active farmers, anyone who
practices an agricultural activity. The EU specifies what
they are not and excludes, for example, sports clubs,
golf courses, real estate services, airports and railway
stations. EU States have the option to apply a stricter
definition of possible beneficiaries of this financial
support.
! Elimination of uncoupled aid: replaced by a system of
direct payments with a minimum threshold of aid to
farmers so that resources can be distributed more
uniformly across the agricultural land of each Member
State/Region.
! Agriculture has to produce public heritage, especially
environmental heritage; as a result, beneficiaries have to
adopt environmentally and climatically friendly farming
practices.

14. Direct Aid (pillar I)
! Convergence: within 2019 Members States will distribute
flat rate aid at national or regional level across all
farmlands. To avoid penalising specialised productions
which require greater resources and investments, a
flexibility mechanism has been introduced for Member
States. The latter can gradually reach a flat rate by
envisaging, within 2019, a minimum mandatory
payment per hectare equal to 60% of the national or
regional average, but with the possibility to limit losses
for each holding to 30% of the initial value.

15. Direct Aid (pillar I)
Greening
This is the second most
important element of the
national ceilings of the CAP
worth 30% of the total
national resources available.
The three measures for
which green aid is provided:
! crop diversification;
! maintaining permanent
grassland;
! maintaining ecological
focus areas.
Young farmers
This is an annual top-up
payment for a maximum of
five years, compulsory for
Member States, and it is
awarded to new entrant
young farmers under 40. EU
States may also introduce
further eligibility criteria.

16. Direct Aid (pillar I)
Other optional payments
National Governments can use part of their national ceiling to
finance other activities.
! Small farmers: lump sum payment, between 500 and
1250 euros, replacing direct payments (basic aid and other
related aid), to simplify access to aid by small farm
holdings (minimum one hectare).
! Areas with natural constraints: an annual payment for
farm holdings located, either in full or in part, in areas with
natural environmental constraints. The State may grant up
to 5% of the national envelope, and can choose to support
only certain Regions and/or with specific characteristics.
! Voluntary coupled payment: a supplementary support
for certain kinds of cultivations which States consider
strategic for economic, social and/or environmental
reasons, or because they are facing unusual difficulties (i.e.
grains, flax, hemp, rice, dairy products, olive oil, etc.).

17. Rural Development (pillar II)
Rural development is financed by the European Agricultural
Fund for Rural Development (EAFRD), at least 20% of which
is co-funded by Member States.
The CAP Reform 2014-2020 has also introduced the principle
of flexibility between pillars, allowing Member States to
transfer up to 15% of the annual resources earmarked for direct
aid to Rural Development.

18. Rural Development (pillar II)
Six priorities
1. Fostering knowledge
transfer and innovation.
2. Enhancing the
competitiveness of all types
of agriculture and farm viability.
3. Promoting food chain
organisation and risk
management in agriculture.
4. Enhancing the ecosystems
dependant on agriculture and
forestry.
5. Promoting resource
efficiency and supporting the
shift towards a low-carbon
economy.
6. Promoting social inclusion.
Three objectives
1. Improving the competitiveness
of agriculture.
2. Sustainable management of
natural resources and climate
action.
3. Balanced territorial
development of rural areas.

19. Based on the approach adopted by the previous plan
(2007-2013), Member States and Regions develop their own
strategies and Rural Development Programmes (RDPs) and
tailor them to the specific characteristics of their own territory.
Two novelties
! The Rural Development Policy must contribute to
achieving not only the objectives of pillar I, but more to
the other EU structural funds, especially the European
Regional Development Fund (ERDF) and the European
Social Fund (ESF), which are managed as part of the
Common Strategic Framework (CSF).
! Thematic sub-programmes can be presented in
support, for example, of the short supply chain, mountain
areas, etc.
Rural Development Plan (pillar II)

20. TheCAP2014-2020inItaly:
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