Common Agricultural Policy_Wkipedia

The Common Agricultural Policy (CAP) is the agricultural policy of the European Union. It implements a system of agricultural subsidiesand other programmes
Since 2000, there is the Rural Development Policy, known as well as the "second pillar" of the CAP. This policy aims to stir the economic, social and environmental development in the countryside. Its budget, 11% of the total EU budget is today allocated along three main areas, known as axis.^[23] The first axis, focuses on improving the competitiveness of the farm and forestry sector through support for restructuring, development and innovation. The second one concerns the improvement of the environment and the countryside through support for land management as well as helping to fight climate change. Such projects could for example concern preserving water quality, sustainable land management, planting trees to prevent erosion and floods. The third axis concerns improving the quality of life in rural areas and encouraging diversification of economic activity. The policy also provides support to the Leader rural development methodology, under which Local Action Groups design and carry out local development strategies for their area. Member States distribute "second pillar" funds through Rural Development Programme actions.

New design of direct payments[edit]

Direct payments contribute to keeping farming in place throughout the EU territory by supporting and stabilising farmers' income, thereby ensuring the longer term economic viability of farms and making them less vulnerable to fluctuations in prices. They also provide basic public goods through their link with cross compliance.^[35]

The legal proposals aim to move away from the different systems of the Single Payments Scheme in the EU-15 (which allows for historical references, or a payment per hectare, or a "hybrid" combination of the two) and the Single Area Payments Scheme (SAPS) in most of the EU-12, a new “Basic Payment Scheme” will apply after 2013.^[36] This will be subject to "cross compliance" (respecting certain environmental, animal welfare & other rules), as at present, although there are various simplifications to the current requirement. It intends to reduce significantly the discrepancies between the levels of payments obtained between farmers, between regions and between Member States. All Member States will be obliged to move towards a uniform payment per hectare at national or regional level by the start of 2019. In line with the Commission proposals within the Multi-Annual Financial Framework, the national envelopes for direct payments will be adjusted so that those that receive less than 90% of the EU average payment per hectare will receive more. The gap between the amounts currently foreseen and 90% of the EU-27 average is reduced by one-third.^[35]

"Greening"[edit]

The legal proposals propose new concepts. Amongst them is the "greening" of direct payment. To strengthen the environmental sustainability of agriculture and enhance the efforts of farmers, the Commission is proposing to spend 30% of direct payments specifically for the improved use of natural resources. Farmers would be obliged to fulfil certain criteria such as crop diversification, maintenance of permanent pasture, the preservation of environmental reservoirs and landscapes.^[37]

Young farmers[edit]

To attract young people (under 40 years) into the farming business, the Commission is proposing that the Basic Payment to new entrant Young Farmers should be topped up by an additional 25% for the first 5 years of installation.^[38]

Small farmers[edit]

Any farmer wishing to participate in the Small Farmers Scheme will receive an annual payment fixed by the Member State of between 500 € and 1 000 €, regardless of the farm’s size. (The figure will either be linked to the average payment per beneficiary, or the national average payment per hectare for 3 ha.). Participants will face less stringent cross-compliance requirements, and be exempt from greening.^[38]

Active farmers[edit]

This new definition is aimed to exclude payments to applicants who exercise no real or tangible agricultural activity on their land. The Commission is proposing that payments would not be granted to applicants whose CAP direct payments are less than 5% of total receipts from all non-agricultural activities This doesn't apply to farmers who receive less than 5 000 Euros in direct payments.^[38]

"Capping"[edit]

The amount of support that any individual farm can receive will be limited to €300,000 per year. However, to take employment into account, the holding can deduct the costs of salaries in the previous year (including taxes & social security contributions) before these reductions are applied. The funds “saved” will be transferred to the Rural Development envelope in the given country.^[39]

Hurting smaller farms[edit]

Although most policy makers in Europe agree that they want to promote "family farms" and smaller scale production, the CAP in fact rewards larger producers. Because the CAP has traditionally rewarded farmers who produce more, larger farms have benefited much more from subsidies than smaller farms. For example, a farm with 1000 hectares, earning one hundred extra euro per hectare will make 100,000 extra euro, while a 10 hectare farm will only make an extra 1000 euro, disregarding economies of scale. As a result most CAP subsidies have made their way to large scale farmers.

Since the 2003 reforms subsidies have been linked to the size of farms, so farmers get the same for a hectare of land regardless of how much land they own. So while subsidies allow small farms to exist, large farms tend to get the larger share of the subsidies. With the 2008 Health Check of the CAP, a first step was taken towards limiting CAP payments to very large landowners.

The European Commissioner responsible for Agriculture and Rural Development Dacian Cioloş in his Public Hearing upon his nomination has showed his concern in small farms: "small holdings represent an important share, not only in the new Member States but also in South Europe". He has emphasised that a structural policy is needed "to modernise" small farms and to "develop existing opportunities in local markets", where there is "high demand for local products".^[54]

Economic sustainability[edit]

Many economists^[who?] believe that the CAP is unsustainable in the enlarged EU. The inclusion of ten additional countries on 1 May 2004 has obliged the EU to take measure to limit CAP expenditure. Poland is the largest new member and has two million smallhold farmers. It is significantly larger than any of the other new members, but taken together the new states represent a significant increase in recipients under the CAP. Even before expansion, the CAP consumed a very large proportion of the EU's budget. Considering that a small proportion of the population, and relatively small proportion of the GDP comes from farms, many considered this expense excessive.

Experts such as Prof. Alan Matthews consider that new 'greening' measures in the EU's proposed €418-billion post-2013 farm policy could lower the bloc's agricultural production potential by raising farm input costs by €5 billion, or around 2 percent.^[42]

How many people benefit?[edit]

Critics^[71] argue that too few Europeans benefit. Only 5.4% of EU's population works on farms, and the farming sector is responsible for 1.6% of the GDP of the EU (2005).^[72]The number of European farmers is decreasing every year by 2%. Additionally, most Europeans live in cities, towns, and suburbs, not rural areas. However, their opponents^[who?]argue that the subsidies are crucial to preserve the rural environment, and that some EU member states would have aided their farmers, anyway.

The 2007-2008 world food price crisis has renewed calls for farm subsidies to be removed in light of evidence that farm subsidies contribute to rocketing food prices, which has a particularly detrimental impact on developing countries.^[73]