This week saw final political agreement on the draft CAP regulations, which should pave the way for the release of implementing regulations and which should allow Scottish government to push forward with the detail of implementation in Scotland.
While the political agreement pushed through by the Irish at the end of June was hailed as a success, there were some outstanding issues that needed to be resolved. These issues came about because the Heads of State meeting to discuss the Multi-Annual Financial Framework (European budget) set out positions on elements of the CAP package that was going through the co-decision procedure. This complicated the negotiations and left some complicated loose ends that needed to be tidied up before the whole regulations could be finalised. This week’s deal brings the negotiations to a close and should allow the Commission to bring forward detailed implementing regulations, which should in turn allow Members States to develop detailed implementing proposals.
The reality is that this deal does not significantly alter the choices available to Scottish Ministers; the main significance is that it allows the process to move forward.
The main aspects of the deal included agreement on:
"Capping" and "Degressivity”: Agreement has been reached on compulsory "degressivity", and voluntary "capping". In practice this means that the amount of Direct Payment support that an individual farm holding receives [not including the Greening payment] will be reduced by at least 5% for the amounts above €150 000. In order to take account of employment, salary costs may be deducted before the calculation is made. This reduction does not need to apply to Member States which apply the "redistributive payment" under which at least 5% of their national envelope is held back for redistribution on the first hectares of all farms. The funds "saved" under this mechanism stay in the Member State/region concerned, and are transferred to the respective Rural Development envelope, and can be used without any co-funding requirements.
External Convergence: The national envelopes for direct payments for each Member State will be progressively adjusted such that those Member States where the average payment (in € per hectare) is currently below 90% of the EU average will see a gradual increase in their envelope (by 1/3 of the difference between their current rate and 90% of the EU average). Moreover, there is the guarantee that every Member State will reach a minimum level by 2019. The amounts available for other Member States who receive above average amounts will be adjusted accordingly.
Transferring funds between Pillars: Member States will have the possibility of transferring up to 15% of their national envelope for Direct Payments (1st Pillar) to their Rural Development envelope. These amounts will not need to be co-funded. Member States will also have the option of transferring up to 15% of their national envelope for Rural Development to their Direct Payments envelope, or up to 25% for those Member States that get less than 90% of the EU average for direct payments.
Co-funding rates: The maximum EU co-funding rates will be up to 85% in less developed regions, the outermost regions and the smaller Aegean islands, 75% in transition regions, 63% in other transition regions and 53% in other regions for most payments, but can be higher for the measures supporting knowledge transfer, cooperation, the establishment of producer groups and organisations and young farmer installation grants, as well as for LEADER projects and for spending related to the environment and climate change under various measures.