Ag Policy Blog
Chris Clayton DTN Ag Policy Editor

Wednesday 01/23/13

EU Ag Committee Approves CAP Changes

It should almost force members of Congress into wearing brown paper bags of shame to know that the European Union Parliament, which moves about as fast as frozen pond water, now is ahead of Congress in advancing a new long-term farm policy.

The EU Parliament Agriculture Committee on Wednesday voted out its "opening position for negotiations" with EU member countries on by passing its measures to reshape Europe's Common Agricultural Policy, known simply as the CAP.

The arguments and decisions by the EU committee would sound familiar to policy wonks who closely follow the farm-bill debate. Europe's payment caps are high, but may be facing cuts. There also are those on the EU committee who don't want any caps on direct payments. In eliminating waste and abuse, some entities might be culled from farm programs, but they could keep their payments if they work the books the right way. Conservation compliance, or "greening" is tighter, but there are calls for flexibility. Europe wants to boost risk-management programs for farmers, but not at the risk of direct payments. There are even options for producer groups to take supply management into their own hands.

And there are pontifications about how much reforms have gone into this new CAP. In a news release from the EU Ag Committee, the chairman declared, "This is the moment of truth. The Agriculture Committee has said today how the new CAP should look. It should be more efficient, greener and able to respond to the enormous challenges ahead of us. Such ambitious goals entail higher costs. So any further cuts to the CAP budget are simply inacceptable," said committee chair Paolo De Castro of Italy in a news release. "He also called on EU leaders to agree on their proposal for the EU's long-term budget, which is "essential to design the final shape of the future CAP", as soon as possible.

The EU Ag Committee cut off direct payments for entities such as airports and sports clubs. However, those groups can reapply for funding if they prove that farming contributes to a substantial share of their income.

Committee members also agreed to cap direct payments at 300,000 Euros, which equates to $399,210 U.S. dollars. (From here out, I'll convert from Euros to dollars) Payments are cut, however, with the largest farms receiving the equivalent of $336,675-$339,000 at risk for a possible 70% cut. Farmers receiving $266,140-$336,675 could face a 40% cut in payments. Producers receiving $199,605-$266,140 could see a 20% payment cut.

The Ag Committee noted there were amendments seeking to reject any payment caps but those votes failed to win a majority.

The parliament members also want more flexibility on new mandatory rules requiring new requiring compliance with mandatory "greening" measures. The committee wants the rules relaxed for smaller farmers, as well as exempting farmers that meet regional environmental certifications.

In another interesting development, the EU Ag Committee concluded that funds for risk management programs for farmers must come from rural development money, not from direct payments, which is the case today.

Also, farm organizations should have the ability o manage market volatility, such as "crisis-management instruments, including, as a last resort, market withdrawal."

EU Parliament Agriculture Committee news release: http://dld.bz/…

The European farm group Copa-Cogeca, which has been lobbying the agriculture committee pretty heavily, issued a news release stating the group welcomed the vote on the new CAP. Copa-Cogeca Secretary-General Pekka Pesonen said “We are pleased to see that some of our demands have been taken on board. We welcome MEPs (members) vote in favour of regulating the EU wine production potential. We also welcome the increased flexibility concerning measures to further green the CAP. In particular, the compromise amendments offer some flexibility on crop diversification and permanent pasture. But we have serious concerns that the EU will be the only state that will be cutting back on its agricultural potential at a time when there are major worries about food security. World food demand is expected to rise by 70% by 2050 and market volatility is on the increase”.

Pesonen continued “Some elements of the vote also run counter to the objectives of the CAP. In particular, we oppose any transfers of funds from the first to the second pillar of the CAP which has been proposed by MEPs. The first pillar of the CAP will be more important than ever if the EU is to ensure food security, stability and sustainability. We are also concerned that member states will be able to give very different levels of funds to different measures which could cause serious distortions of competition between member states”.

Another report coming from a British farm website added that European countries would be allowed to "re-couple" 15% of their funds to support ag production. By the same token, countries also could take up to 15% of payments and move the funds from direct subsidies to rural development programs.

Countries would also be allowed to set their own definition for active farmers eligible for payment.

The full EU Parliament will vote on the plan in March.

I can be found on Twitter @ChrisClaytonDTN

Posted at 4:26PM CST 01/23/13 by Chris Clayton
Comments (1)
Well Chris, the US Congress has to stop more often to consult their "bag men", check to see "which way the wind is blowing", talk among themselves to determine what the Partisan Position must be, check poles and look at their Bank Balances to see if "support" is arriving from which sources(VERY important for "informed" decision making!) Europeans are in the midst of Austerity Measures, so business matters more to them.
Posted by Ric Ohge at 10:02AM CST 01/25/13
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