The European Commission is proposing to invoke a ‘financial discipline’ mechanism in 2014, which will mean a reduction in direct payments at the end of 2013.
Financial discipline is the process by which EU Farm Ministers determine if percentage reductions are required to keep the EU Pillar 1 spending within the budget (in practice, by making reductions in direct payments). This is an EU wide process put in place to keep the EU budget on track and this will be the first time that such a mechanism has kicked in to reduce farmers’ direct support.
The long-term budget ceilings agreed by EU leaders at the Summit on Feb 8 were lower than the Commission’s original proposal and this has made financial discipline unavoidable for next year.
The details are still to be clarified, but the Commission has suggested a ‘tiered system’ is put in place where the first €5000 of farmers’ receipts would be exempt. The UK, along with Germany, France, the Czech Republic, Sweden, Denmark and Luxembourg, has argued that such a tiered system should not be used.
As more details emerge we will keep members informed.