EU Common Agricultural Policy

The European Commission announced its proposal for the new Common Agricultural Policy (CAP), which will come into force in 2013. This proposal will be discussed in all Member States and the European Parliament in the coming year. CAP reform is essential to face the challenges in the field of food security, climate change, environment and quality of life in rural areas.

Current situation

Market and price support policy (first pillar)

The CAP consists of two pillars. Pillar one comprises the classical market and price support policy. This policy involves major products such as cereals, sugar, dairy, wine, and olives. Since the Mac Sharry Reform of 1992 the first pillar policy has been subject to several changes. This was necessary for internal reasons (such as increasing surpluses of several agricultural products) and external reasons (such as complaints from major trading partners). As a result the market and price policy changed into a market and income policy, which allowed agricultural markets to act more freely and now no longer the price, but a (partially) decoupled payment is the primary means of income support for farmers.

Rural policy (second pillar)

The second pillar of the CAP includes the so-called rural policy. It involves measures of Member States that have to strengthen the competitiveness of agriculture, improve the quality of the environment and the landscape and improve the quality of life in rural areas.

Proposals by the European Commission

In the proposals of the European Commission of 12 October, the rural policy is broadly maintained. The changes proposed by the European Commission are mainly in the first pillar. At present, farmers still receive an allowance based on their production in the base period 2000-2002. Therefore the payments vary per hectare, per farm and per Member State.

The proposal of the Commission is to reduce differences in these payments. As of 1 January 2019, the per-hectare payment per Member State (or per region, as defined by each Member State) must be equal. The ultimate aim of the Commission is to give the same payment for each ha of farmland in the EU.

More demands on recipients

In addition to more equalization of payments, the Commission also wants to increase the demands on recipients. Thus, permanent grassland should be maintained, farmers must apply a 3-course rotation, and 7% of agricultural land should be used for ecological zones, where no production can take place or is allowed.