Main features of the Common Agricultural Policy (CAP) and its implementation in Germany
The reform of the Common Agricultural Policy adopted in December 2013 will make Europe's agricultural sector greener and more sustainable and provide it with a reliable and stable basis for the years to come.
The funds made available via the Common Agricultural Policy support both farmers and rural areas. A total annual funding of around EUR 6.2 billion in Community resources will be available for agricultural support in Germany from 2014 to 2020.
The EU support funds are divided across two pillars:
The first pillar is composed of the direct payments to farmers which – if the respective requirements are met – are granted per hectare of farmland.
The second pillar comprises specific aid programmes for sustainable and environmentally sound farming and rural development.
First pillar: Direct payments
Governmental aid has several aims: Firstly, it is intended to reward and ensure the diverse services to society provided by the agricultural sector. Farmers bear a heavy responsibility to ensure the preservation of cultivated landscapes and supply the population with high-quality foods. They shape the social fabric in villages and create income and job opportunities in rural areas.
Secondly, the purpose of state aid is to compensate for the fact that European farmers have to meet far higher standards, especially in the fields of environmental, animal and consumer protection, than many of their colleagues in other parts of the world. These higher standards raise the cost of production in many cases and may be a competitive disadvantage in a globalised market. Support seeks to offset this disadvantage and ensures high product safety and quality.
Thirdly, the direct payments help to safeguard and stabilise farmers' incomes by cushioning the impact of price fluctuations for agricultural products which in some cases may be extreme.
The direct payments under the EU's Common Agricultural Policy constitute the main item in the support funds. On average, these payments make up around 40 per cent of the farms' income. These payments were in the past already tied to the fulfilment of certain standards ("Cross Compliance") in the fields of environmental protection, food and feed safety and animal health and protection. Following the reform of the common agricultural policy and the introduction of greening, environmental measures will henceforth play an even bigger role.
Four building blocks of the first pillar will be in place in Germany from 2015 onwards:
- Basic premium: As a result of the reallocation of EU funds in favour of new EU Member States, the funds earmarked for Germany will decline slightly from 2014 to 2019. At the same time, the premiums which still vary from region to region in Germany, ranging from EUR 154 to EUR 191 per hectare, will be unified at around EUR 175 per hectare by 2019.
- Environmental services: In addition to that, around EUR 85 per hectare will be granted for specific environmental services (greening). Greening covers the following three measures: preservation of permanent pasture areas (meadows and grazing ground), diversity in crop growing on arable land and the provision of ecological focus areas on five per cent of arable land (e.g. set-aside areas, terraces, buffer strips, hedges, boundary hedges or tree rows). Greening is designed to promote services provided by the farming sector for climate change mitigation, conservation of species, diverse cultural landscapes and sustainable production.
- Supplement to small and medium-sized farms: All farms are to receive an additional 50 EUR/ha for the first 30 hectares and an additional 30 EUR/ha for an additional 16 hectares. Small and medium-sized farms with up to 95 hectares will thus be placed in a far better position.
- Additional support for young farmers: As of 2015, young farmers under 40 years of age will, upon request, receive additional aid of approx. EUR 44 per hectare for a maximum of five years and 90 hectares of farmland.
Under the first pillar, Germany will have approximately EUR 4.85 billion at its disposal annually between 2014 and 2020.
Second pillar: Rural development support
In addition to the support to farmers through direct payments under the first pillar, the second main objective of the Common Agricultural Policy is to make the future attractive for the rural population. The main support instrument in implementing the EU priorities for the development of rural areas is the European Agricultural Rural Development Fund (EAFRD).
The priorities of rural development support are long-term strategic goals: a high level of competitiveness in the agricultural sector, the secure sustainable management of natural resources and the support of economic strength in rural regions.
The focus, on the one hand, is on the agricultural sector taking voluntary agri-environment-climate measures. For instance, Member States are required to use at least 30 per cent of the EU support funds allocated to them under the second pillar for extensification measures, organic farming or the support of areas facing natural constraints. A second important area is the strengthening of agricultural enterprises via investment in agriculture and also in tourism, countryside stewardship and farm shops. The third area supports the economic development in rural areas and local village-development projects in order to make rural areas attractive and viable and provide villages with good future prospects. The LEADER approach, as the fourth area, formulates a regional development strategy and encourages broad civil involvement, thus creating region-specific added value for the support of rural development.
Germany will, between 2014 and 2020, have around EUR 1.35 billion in EAFRD funds at its disposal which must be co-financed with further national funds provided by the Federal Government, Länder and municipalities. The Federal Government contributes approximately EUR 600 million annually in development measures via the Joint Task for the Improvement of Agricultural Structures and Coastal Protection (GAK); these measures are then to a large extent implemented in the Länder via the EAFRD support programmes.
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