COUNCIL OFBrussels, 18 October 2011
THE EUROPEAN UNION
15640/11 ADD 8
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AGRI 701 AGRIFIN 94 AGRIORG 184 CODEC 1701 AGRISTR 61
COVER NOTE
from: Secretary-General of the European Commission, signed by Mr Jordi AYET PUIGARNAU, Director
date of receipt: 17 October 2011
to: Mr Uwe CORSEPIUS, Secretary-General of the Council of the European Union
No Cion doc.: SEC(2011) 1153 final
Subject: Commission Staff Working Paper Impact Assessment Common Agricultural Policy towards 2020 Annex 3, sub-annex 3A, sub-annex 3B, sub-annex 3C, sub-annex 3D: Direct payments
EUROPEAN COMMISSION
Brussels, 12.10.2011 SEC(2011) 1153 final
COMMISSION STAFF WORKING PAPER
IMPACT ASSESSMENT
Common Agricultural Policy towards 2020
ANNEX 3,
SUB-ANNEX 3A, SUB-ANNEX 3B, SUB-ANNEX 3C, SUB-ANNEX 3D
{COM(2011) 625 final} {COM(2011) 626 final} {COM(2011) 627 final} {COM(2011) 628 final} {COM(2011) 629 final} {COM(2011) 630 final} {COM(2011) 631 final}
Annex 3, sub-annex 3A, sub-annex 3B, sub-annex 3C,
sub-annex 3D:
TABLE OF CONTENT[[note: 1.]]BACKGROUND AND STATE OF PLAY ................................................................ 8 [[note: 2.]]ACHIEVEMENTS AND CHALLENGES ................................................................. 9
2.1. Role of direct payment in supporting agricultural income ................................ 9
2.2. Distribution between Member States .............................................................. 12
2.3. Distribution between farmers within Member States ...................................... 14
2.4. Distribution between smaller and larger farms................................................ 15
2.5. Age structure in the farming sector ................................................................. 16
2.6. Non genuine farmers ....................................................................................... 16
2.7. Full decoupling in the context of regional or sectoral specificities ................. 16
2.8. Environmental performance of direct payments.............................................. 17
2.9. Simplification aspects...................................................................................... 18
2.10. Results of consultation process as regards direct payments ............................ 18 [[note: 3.]]OBJECTIVES AND POLICY OPTIONS................................................................. 19 [[note: 4.]]REDISTRIBUTION OF DIRECT PAYMENTS ...................................................... 20
4.1. Redistribution between Member States........................................................... 21
4.2. Move toward flat rate within Member States or regions ................................. 30
4.3. Impacts on farm income .................................................................................. 31
4.3.1. Impact at EU level and at MS level ................................................... 31
4.3.2. Impact per type of farming at EU level ............................................. 33
4.3.3. Impact in each Member State per farming type................................. 34
5.4. International impacts ....................................................................................... 45
5.5. Administrative impacts.................................................................................... 46 [[note: 6.]]CAPPING OF DIRECT PAYMENTS PER BENEFICIARY .................................. 46
6.1. Amounts resulting from capping ..................................................................... 49
6.1.1. Per Member State .............................................................................. 49
6.1.2. Per farming type ................................................................................ 50
6.2. Impact of capping on income .......................................................................... 51
6.2.1. Per Member States............................................................................. 51
6.2.2. Per farming type ................................................................................ 52
6.3. Environmental and climate change impacts .................................................... 53
6.4. International impact ......................................................................................... 53
6.5. Administrative impacts.................................................................................... 53 [[note: 7.]]SPECIFIC SUPPORT SCHEME FOR SMALL FARMERS ................................... 53
7.1. Economic impacts ........................................................................................... 55
7.2. Impact on farm income.................................................................................... 58
7.3. Environmental and climate change impacts .................................................... 61
7.4. Administrative impacts.................................................................................... 62 [[note: 8.]]SPECIFIC SUPPORT SCHEME FOR YOUNG FARMERS .................................. 62
8.1. Economic impacts ........................................................................................... 65
8.2. Social impacts.................................................................................................. 69
8.3. Environmental impacts .................................................................................... 70
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11.INCREASE IN DIRECT PAYMENTS' CONTRIBUTION TO
ENVIRONMENT AND CLIMATE CHANGE MITIGATION AND ADAPTATION ......................................................................................................... 74
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12.COMBINATION OF OPTIONS FOR DIRECT PAYMENTS INTO
SCENARIOS ............................................................................................................. 75
12.1. Description of the combined options into scenarios for direct payments........ 75
12.1.1. "Adjustment" scenario ....................................................................... 75
12.1.2. "Integration" scenario ........................................................................ 75
12.1.3. "Refocus" scenario............................................................................. 76
12.2. Description of impacts due to the combination of the different options ......... 76
12.2.1. Economic and social (income) impacts ............................................. 76
12.2.2. Environmental and climate change impacts ...................................... 78
12.2.3. International impacts ......................................................................... 79
12.2.4. Administrative impacts...................................................................... 80
12.3. Summary of overall impacts............................................................................ 80
SUB-ANNEX 3A Evaluation of income effect of direct support Main
results............................................................................................................... 83
SUB-ANNEX 3B - Overview of the implementation of direct payments
under the CAP in Member States in 2010 (Reg. 73/2009) (*) ........................ 88
SUB-ANNEX 3C Detailed results on income and methodology for
simulations based on FADN data .................................................................... 94
SUB-ANNEX 3D: current state of play of LFA...................................................... 112
SUB-ANNEX 3E: Suppression of coupled support for beef, sheep and goat
sectors ............................................................................................................ 114
Figure 7: Distribution of direct payments between beneficiaries in EU-15 and in EU-12:
.................................................................................................................................. 16
Figure 8: Redistribution between MS - EU flat rate......................................................... 22
Figure 9: Redistribution between MS - Pragmatic approach with minimum 80% of EU
average...................................................................................................................... 23
Figure 10: Redistribution between MS - Pragmatic approach with MFF distribution key
.................................................................................................................................. 24
Figure 11: Redistribution between MS - Pragmatic approach with minimum 80% -
maximum 120% of EU average................................................................................ 25
Figure 12: Redistribution between MS - Economic objective criteria ............................. 26
Figure 13: Redistribution between MS - Environmental objective criteria...................... 27
Figure 14: Redistribution between MS - Economic and environmental objective criteria
.................................................................................................................................. 28
Figure 15: Redistribution between MS - Pragmatic approach (minimum 90%) with
objective criteria ....................................................................................................... 29
Figure 16: Redistribution between MS - Objective criteria applied to difference between
Status quo and EU average....................................................................................... 30
Figure 17: Redistribution - Impact on farm income per EU aggregates........................... 32
Figure 18: Redistribution - Impact per LFA/non LFA zones ........................................... 40
Figure 19: Additional income support in areas with specific natural constraints - Impact
in LFA/non LFA zones............................................................................................. 43
Table 5: Redistribution - Impact on mixed farms per MS................................................ 36
Table 6: Redistribution - Impact on other grazing livestock per MS ............................... 37
Table 7: Redistribution - Impact on milk farms per MS .................................................. 38
Table 8: Redistribution - Impact on wine farms per MS .................................................. 39
Table 9: Additional income support in areas with specific natural constraints - Impact per
farm type................................................................................................................... 44
Table 10: Additional income support in areas with specific natural constraints - Impacts
on grassland based and non-grassland based farms.................................................. 44
Table 11: Amounts capped per Member State ................................................................. 50
Table 12: Amounts capped per farming type ................................................................... 51
Table 13: Capping Impacts on income per Member State ............................................ 52
Table 14: Capping Impacts of income on farm types.................................................... 53
Table 15: Small farmers - Impacts of option 1 (EUR 1 000 per beneficiary for all MS) . 56
Table 16: Small farmers - Impacts of option 2 (15% of the average amount of direct
payment per beneficiary in each MS) ....................................................................... 57
Table 17: Small farmer scheme - share of farms per MS that would be below the
thresholds.................................................................................................................. 59
Table 18: Impact of a small farmer scheme on farm income according to size units (in %
of change compared to an option 'MFF distribution key' without the small farmer
scheme)..................................................................................................................... 60
LIST OF ACRONYMS AND ABBREVIATIONS
AWU Annual working units
CAP Common Agricultural Policy
CAPRI Common Agricultural Policy Regionalised Impact model
CATS Clearance Audit Trail System
DG AGRI Directorate-General for Agriculture and Rural Development
DP Direct Payments
EAGF European Agricultural Guarantee Fund
ECA European Court of Auditors
EU European Union
EU-27 European Union after the enlargement on January, 1st 2007
EU-10 Member States that joined the European Union on May, 1st 2004
EU-2 Bulgaria and Romania
EU-12 All Member States that have joined the EU since May, 1st 2004
EU-15 Member States of the European Union before May, 1st 2004
EUR Euro
Eurostat Statistical Office of the European Communities
FADN Farm Accountancy Data Network
FNVA Farm Net Value Added
GAEC Good Agricultural and Environmental Conditions
GDP Gross Domestic Product
1. BACKGROUND AND STATE OF PLAY
Direct payments have been one of the main1 support instruments to the agricultural sector
in the EU since the early 1990s, but their nature has changed significantly over the years. With the 1992 reform, they were introduced as coupled payments, linked to production based on area or animals and compensating farmers for cuts in price support. From 2003, direct payments were gradually decoupled from farmers' production decisions. In order to decide the rate of payment each farmer was eligible for, previous support receipts (linked to either the individual farmers' or the regions' production history) were used as reference. The introduction of direct payments helped to steer the CAP towards consistent market oriented reforms for the past two decades.
The design of the payments, de-coupled from production, has encouraged farmers to become more market oriented, thereby enhancing the competitiveness of the agricultural sector. The income support function of direct payments has contributed to ensure the longer term economic viability, and a smooth structural adjustment of the farming sector. This is particularly important given the relatively low level of income in the agricultural sector
2, which on average remains below 50 % of the average salary in the total economy
in the EU-27 (see
Figure 1 below).
Figure 1: Evolution of agricultural income as a % of ave. income in the economy3
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Source: DG AGRI, Eurostat
With the structural adjustment of EU agriculture ongoing, there remains today structural diversity across Member States and regions in income developments owing to a variety of factors, some historical others linked to natural and economic conditions (such as climatic conditions and differences in the functioning of land, labour and capital markets).
In addition to its role as income support for farmers, direct payments play a crucial role in the delivery of basic public goods through sustainable land management, due to the link between direct payments and the fulfilment of cross compliance
4 requirements. This link
is crucial, as there is evidence5 of undersupply of most important public goods, for which
certain forms of land management are particularly beneficial (such as extensive livestock and mixed systems). The public goods concerned are mostly environmental and relate for example to maintaining agricultural landscapes, farm-land biodiversity, water availability, soil functionality, climate stability and air quality. Direct payments also contribute to public goods which are not related to the environment, such as rural vitality.
The support provided by direct payments, especially by enabling the continuation of farming in more economically marginal areas, is a precondition for being able to provide more specific public goods throughout the EU territory, e.g. through rural development measures. Therefore, the two elements, income support and basic public goods, are complementary objectives of the direct payments.
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2.ACHIEVEMENTS AND CHALLENGES
2.1. Role of direct payment in supporting agricultural income
Over the previous fifteen years, agricultural income in the EU-15, measured as real factor income per full-time worker (annual working unit, or AWU), have shown very modest developments
6 (see
Figure 2). On the other hand, agricultural income in the EU-12 has
increased considerably over the last decade, supported by the gradual phasing in of direct payments following EU accession. The medium-term outlook for EU agricultural income under a constant policy assumption displays a similar pattern, with EU-15 exhibiting only a moderate increase, but the EU-12 is expected to grow at a faster pace driven by the full
phasing in of direct payments, as well as a higher value of production and assumed decline in farm labour
7.
Recent developments have also shown (or served as a reminder) that agricultural income is highly volatile. During the period 1993-2010, the annual variation of farm income exceeded the preceding three year averages by more than 30 % in about 54 % of agricultural holdings
. Figure 2 also highlights that income volatility has been exacerbated by the recent commodity price boom, economic crisis and subsequent economic recovery.
Figure 2: EU developments in agricultural income (income per AWU in real terms)
EU-15 (Index 2000 = 100 ) EU-12
150 200
EU-12
140 180
130 160
120 140
110 120
100 100
90
EU-15 80
80 60
70 40
60 20
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: DG AGRI, Eurostat
Income variability is mostly due to the volatility of input and output prices as well as changes in production levels (e.g. due to yield variability). Income variability is particularly critical for small farms, since when income is generally low, small changes can have a relatively large impact. In addition, the farm sector has shown a steady deterioration in its terms of trade since 1996, driven by the diverging dynamics of input and output prices (cf.
Figure 3 below). This divergence between output and input prices constitutes the main factor behind the drop in income at sector level.
Figure 3: Recent evolution of agricultural input and output prices
(index 1996 = 100, in real prices)
110
100
90
80
70
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Output prices - EU-27Input prices - EU-27
Source: Eurostat
While the EU agricultural sector has displayed a rapid increase in farm size and a significant improvement of productivity, many farms still depend heavily on direct payments due to the low profitability of agricultural activities. Direct payments represented on average 29 % of agricultural income in the period 2007-2009 (with total subsidies coming close to 40 % of agricultural income). This needs to be seen against the background of important variations in agricultural income across Member States, regions and sectors, with sectors such as pig and poultry, milk and horticulture having on average higher income levels than grazing livestock or field crops. The share of direct payments in agricultural income in the different Member States is shown i
n Figure 4.
Figure 4: Share of direct payments (expenditure) in agricultural factor income (avg. 2007-2009)
8:
100%
As an evaluation of the income effects of direct support9 has underlined, direct payments
have proven to be an effective tool for enhancing the income of farmers and have made a positive and robust contribution to the stability of these incomes (see sub-annex 3A for a summary of the evaluation report). It has also been shown that direct payments contribute to keeping sustainable farming in place throughout the EU territory, as well as providing a basis for the provision of public goods through agriculture
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5.However, there remain a
number of concerns as regards their distribution, targeting and environmental performance. In particular, considerations have to be made with respect to a more equitable distribution between Member States and between farmers as well as a strengthened role in the provision of income support and public goods.
Distributional concerns stem from the current dissimilar distribution of support between individual farms and Member States. The latter issue is especially emphasized in the inter-institutional and public debate (as presented below) and by many of the new Member States (EU-12) that feel disadvantaged compared to EU-15 countries, because their average levels of direct payments per hectare are lower. Targeting relates to the idea of better linking payments to farmers to specific objectives related to the provision of public goods (e.g. the fulfilment of environmental objectives), or better adjusting income support to the need of different farms or areas. Furthermore, it is often felt that the increased policy emphasis on green growth, environmental and climate change issues could be better reflected in the design of direct payments.
2.2. Distribution between Member States
Figure 5 below illustrates the significant differences between Member States as regards the average direct payments per hectare and per beneficiary based on the current distribution.
Figure 5: Average direct payments per beneficiary and per hectare in each Member State
Note: simplified calculation of average direct payments based on the national envelopes of Member States after full phasing-in of direct payments in the EU-12 and the number of potentially eligible hectares communicated by MS in the Integrated Administration and Control System (IACS) for 2008 claim year.
In the previous reforms, the decoupling of direct payments linked to historical support values was considered to be the most neutral design of support in terms of impact on farms' asset values. Using historical production as a basis for defining payment levels had the advantage that it reflected, to some extent, the conditions for agricultural production in a specific region. It was therefore politically realistic at the time to allow for the link between decoupled payment levels and historical support levels, especially since not all sectors were reformed at the same time. Today, as adjustments in all sectors have taken place and as twelve more Member States have joined the European Union with a substantially different production and support history, differences in support levels based on historical references cannot be justified on a long term. Even more so because farm structures and production pattern have of course changed since the reference periods. Moreover, direct payments based on historical production patterns do not reflect the fact that important environmental public goods tend to be provided by farms with lower yields. Those farms also tend to be more economically vulnerable and so in need of greater support.
However, the current level of direct payments is not just reflecting past production of the supported sectors, but also to a significant degree differences in the economic situation of Member States (see
Figure 6 below). It is indeed important to remember that agricultural producers face very different economic and natural conditions across the EU.
Figure 6: Average direct payments per hectare after full phasing in each Member State and GDP per capita (2007-2009 average)
500
EU-15 countrie s
450EU-12 countrie sBE
NL
400IT
EL
350CYDK
SI
FRDE
)300
UREU-15
a ( E
250HUCZEU-27AT
DP/ h
PLESFISEIE
BG
SKUK
200
ROEU-12PT
150LT
EE
100LV
50
0
5101520253035
GDP/capita (1000 PPS)
Source: DG AGRI (IACS statistics) and Eurostat (GDP/capita)
Note: ha = potentially eligible area from IACS statistics as communicated by MS, LU = 280 EUR/ha and 67 500 PPS/capita; MT = 802 EUR/ha and 18 800 PPS/capita. PPS = Purchasing Power Standard
2.3. Distribution between farmers within Member States
At present there are several models of implementation of the Single Payment Scheme (SPS) in Member States:
· The SPS can be implemented on the basis of a historical model or a regional model or
a combination of both (so-called 'hybrid' model). In the historical model, farmers were given payment entitlements based on their eligible hectares and payments received in a reference period (2000-2002). The regional model is based on a uniform value of payment entitlements within a region based on average references of support at regional level, while the hybrid model is a combination that can be either static or dynamic in time.
Sub-annex 3B of this note provides an overview of the implementation of direct payments in the EU-27. The variety of models of implementation and the discretion left to the Member States was deemed necessary at the time of the 2003 reform in order to better take into account Member State specificities in view of achieving the common goal of full decoupling and better market-orientation. However, with time, those differences are becoming less and less justified. For instance, certain eligible agricultural areas have been granted entitlements in regional models whereas not in historical models (e.g. fruit and vegetables). In addition, the use of past individual references to grant direct payments to farmers in Member States with historical models and the resulting wide range of the values of entitlements is also becoming hard to justify.
In addition, the flexibility left to the Member States in the choice of their direct payment model (historic, regional, hybrid), which was crucial for achieving almost full decoupling within few years , has led to large variations in the level of aid per hectare received by the farmers, depending on the region they are located in. For instance, in the Member States applying the historical model and also, to a lower extent, in Member States applying the regional model, using individual past references of production for determining the entitlements led to a lower level of direct payments
10 in areas with natural handicaps that
are less productive while income needs and provision of public goods in these areas are important.
2.4. Distribution between smaller and larger farms
The extreme ends of the distribution curve of direct payments per beneficiary (smallest and largest beneficiaries) are also often mentioned as problematic whereas it is the mere result of the support policy (area-based payment) and the structure of the farm sector. Indeed according to CATS
11 data for financial year 2009, around 80 % of the
beneficiaries received EUR 5 000 or less representing around 20 % of the total amount of direct payments and around 0.5% of the beneficiaries received EUR 100 000 or more representing 16 % of the total amount of direct payments (see Figure 7).
The high level of aid received by some beneficiaries (despite the modulation mechanism introduced in the 2003 reform) is seen as too high to be justified as income support as it can be reasonably assumed that large farms benefit from economies of scale and therefore their income support needs may not be proportional to the farm size. At the same time, small farmers who can make a very important contribution to the vitality of many rural areas and may have higher needs for income support often face a disproportionately high administrative burden for access to support in relation to the payment amount they receive.
Figure 7: Distribution of direct payments between beneficiaries in EU-15 and in
EU-12:
100%
90%
80%
70%
t s
en
60%
m
ay
t
P50%
irec
D40%EU-15
%
30%
20%EU-12
10%
0%
0%10%20%30%40%50%60%70%80%90%100%
% Beneficiaries
Source: CATS data (2009 financial year corresponding mainly to claim year 2008), DG AGRI calculation
2.5. Age structure in the farming sector
The farming community is ageing. Farm holders under 40 years of age make up only 14%
of the population of farmers in the EU-27 and hold 20% of the potentially eligible area. The CAP has recognized this situation as a problem and addresses it in various ways, most importantly through the rural development measure "Setting-up of young farmers" and through the possibility to address young farmers indirectly under the SPS when allocating payment entitlements (provisions for farmers commencing their agricultural activity between the reference period and the first year of the SPS and later on by using the national reserve). However, as these approaches are not applied across the board in the EU-27, there is no generalised approach to improving the age structure in the farming community.
could have been at risk of disappearing in some regions in case of full decoupling, contributed also to the maintenance of agricultural activity in these areas.
2.8. Environmental performance of direct payments
As the current amount and distribution of direct payments is based on historical criteria and references of production, they tend to be concentrated in the most productive regions (mostly in the historic model but the same applies, albeit to a lower extent, in the regional model) without being adjusted to environmental and climate-related objectives beyond the link to basic standards of cross compliance.
The way entitlements have been allocated when decoupling was put in place did not envisage a specific targeting e.g. to farms that operate in more environmentally valuable areas. However, production adjustments following decoupling have generally been in the direction of less intensive production with related environmental benefits. Furthermore, one may argue that the decrease in permanent grassland area has been mitigated
12 by the
granting of coupled aids for livestock13 (beef, sheep and goat) and by the requirements of
cross compliance which concern permanent grassland (minimum management requirements for permanent pasture and maintenance of the ratio of permanent pasture see Article 6 of R. 73/2009).
The link of direct payments to cross compliance (together with farm advisory services) has increased the awareness
14 of farmers about existing environmental standards and
about good environmental and agricultural practices such as preservation of landscape features, crop rotation, etc. Although not designed directly to that purpose, cross compliance has contributed to climate change mitigation (by reducing greenhouse gas emissions and by increasing carbon sequestration in soils) at farm level in the EU.
However, the cross compliance system is still often perceived by farmers as an additional administrative burden
-
15.In addition, some of the actions or good management practices
required from farmers under cross compliance system (above the regulatory requirements) may have a certain cost which is not specifically compensated, given that it is considered to fall below the `baseline'. This does not contribute to the acceptability of the actions by farmers.
2.9. Simplification aspects
The CAP Health Check brought some simplification at Member State and farm levels in the management of the direct support scheme in particular for the SPS (transfer rules, types of entitlements, etc.) and cross compliance. See detailed information in Annex 8 of the Impact Assessment on 'Simplification of the CAP'.
Maintaining the current well established rules would be easy for the Member States applying SPS. However, the coexistence of different SPS models (historic, regional, hybrid) which makes the policy framework more complex at EU level would also persist. Member States applying SAPS will have in any case to set up a new system of entitlements when shifting to SPS (planned for 2014 at the latest), implying significant administrative burden for the national authorities as well as for farmers. Farmers would however also benefit from the flexibility offered by entitlements, i.e. the possibility to sell, lend or activate the entitlement on different hectares.
Complexity in the current policy framework stems also from the fact that supports for coupled production and supports to agri-environmental measures of Pillar II may be paid via Article 68 of Council Regulation 73/2009. This creates 'grey zones' of support and additional administrative burden in particular for Member States due to the necessity of defining consistent rules which do not lead to duplication of payment for the same operation.
In addition, there is a clear case for simplification of CAP rules for the smallest beneficiaries whose level of red tape compared to the level of their subsidies is rather disproportionate.
2.10. Results of consultation process as regards direct payments
The Public Consultation, by which the Commission Services solicited input from interested parties on the broad policy options presented in the Communication on the CAP towards 2020
16 (referred to as the 'Communication' from here onwards), revealed
that direct payments constitute an area of great concern for many stakeholders. There was little consensus on exactly what the impacts of redistributing direct payments would be, and many contributions related strongly to the geographic area/region/Member State the respondents originated from. Still, many argued for a more equitable distribution of payments, and stressed the importance of a transition which is smooth and takes into consideration short- and long term effects.
Many organisations emphasized the need for continued support to less favoured areas, and stressed its importance for agricultural production as well as for viable and economically sustainable rural areas. Some respondents pointed towards various benefits of keeping these payments in Pillar II.
Greening Pillar I was mentioned by many as an appropriate way to reach better environmental quality, increasing the delivery of public goods and creating opportunities for sustainable agriculture. Meanwhile, a substantial number of respondents (many of whom farmers) were against greening Pillar I, or concerned with the effects it would have on the competitiveness of EU farmers. Some respondents were also concerned that the proposed Pillar I measures may not be as efficient or cost-effective as targeted measures
in Pillar II.
3. OBJECTIVES AND POLICY OPTIONS
The previous chapter has highlighted that, while the role of direct payments as a basic income support and as a propagator of public goods remains important for EU agriculture, the environment and the vitality of rural areas in general, there is room to improve the equitability and targeting of this policy instrument.
In line with the objectives of the CAP of contributing to a viable, market oriented food production throughout the EU, ensuring the sustainable management of natural resources and the provision of environmental public goods, and contributing to the balanced territorial development and thriving rural areas (as elaborated in chapter 3 of the main Impact Assessment report), and based on the various elements identified during the public debate on the future of the CAP and the stakeholder consultation on the Communication as well as the additional issues described in the previous chapter, the following objectives for reforming the direct payment scheme can be established:
· A more equitable distribution of decoupled payments among Member States and
among farmers in order to enhance direct payments effectiveness in supporting farmers' income and contributing to the provision of basic public goods;
· Better taking into account the diversity of EU agriculture, notably through
addressing the needs of small scale farmers and taking into account possible economies of scale of large farms.
In order to assess how these objectives can be achieved, the following chapters look at options for the development of direct payments in all areas identified as challenges in chapter 2 and assess their impacts. In chapter 11, at the end of this annex, the options in the different areas are assembled into the three policy scenarios analysed in the Impact Assessment, "adjustment", "integration" and "re-focus".
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4.REDISTRIBUTION OF DIRECT PAYMENTS
The future distribution of direct payments should better reflect the dual role of direct payments for income support and provision of public goods by ensuring a better fit between these policy objectives and the budgetary means available. At the same time, the current distribution will need to be taken into account to avoid major disruptions. Several options for redistribution of direct payments envelopes between Member States can be
foreseen:
An "EU flat rate": direct payments are distributed on the total potentially eligible
hectares across Member States;
A pragmatic approach: limited adjustment of the existing distribution in order to
avoid major disruptions to current DP levels, while setting an EU wide minimum level of per ha payment based on a share of the EU average.
The use of objective criteria: the EU flat rate is adjusted by objective criteria
based on economic, physical and/or or environmental indicators.
A combination of a pragmatic approach and objective criteria.
These options are elaborated in details in section
4.1and their impacts at micro level are presented in the subsequent sections. It should be noted that the simulations do not address the issue of the length and modalities of a possible transition to the new distribution which will also depend on the final level of redistribution involved. The calibration of the transition period would not only be of importance for the Member States which would see their national direct payments envelope decreasing but also for the Member States which will benefit from an increase. Indeed, the sometimes important gains on direct payments per hectare in the following options could not only drive up land prices but also prove to be an impediment to structural changes as they could prevent farmers from restructuring, growing and improving the profitability of their farms.
2013) with the total potentially eligible area17 for SPS/SAPS as declared by farmers and
communicated by MS to the Commission in the frame of the IACS (claim year 2008).
All simulations on the redistribution of direct payments assume the budget set out in the proposal for the Multi-Annual Financial Framework (MFF)
18 for direct payments. Results
of the different options are presented in comparison to the existing national envelopes based on the current distribution of direct payments.
4.1. Redistribution between Member States
EU flat rate
One option arising from the public debate would be to move away from historical references towards an EU wide 'flat rate' (or 'EU average') with the same level of aid per hectare to all farmers in the EU (option called EU flat rate in the rest of the annex). For the EU-27 the average level of direct payments, i.e. the EU flat rate would be EUR 267/ha of potentially eligible area (PEA).
Figure 8 illustrates the level of direct payment in each Member State in terms of /ha in the Status Quo after the Health Check of the CAP is fully implemented, in contrast to the EU flat rate. It is apparent that existing levels of direct payments in MT, BE, NL, IT, EL, CY, DK and SI are considerably higher, while payments in LV, EE, LT, PT, RO, SK, BG and PL (i.e. mostly new Member States) are considerably lower.
Figure 8: Redistribution between MS - EU flat rate
EUR/elig. haDP: Status Quo and flat rate
800
700
600
500
400
300
200
100
0
ml ysi ay57d
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r gndr y
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EU- 1
l at r i a
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EU- 2
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Aus
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Fi nr t umuan
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t hBel g
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Denm
Sl o
GHu
Sw
Bu
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EU
Sl o
Po
RoEs
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Li t h
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d
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Status quo - 2013EU-avg. 2020
Source: DG AGRI
Accordingly, this option would produce significant losses for MT, BE, NL, IT, CY and DK, and substantial gains for LV, EE, LT, PT and RO. In absolute terms, the biggest winners would be RO, PL and ES, while the biggest losers would be IT, DE and FR. The total amount redistributed would reach EUR 4,394 million.
However, as explained in the Communication, a flat rate payment across the EU would fail to reflect differences in the economic and environmental situation in the Member States, since a given level of payment does not have the same effect on income and each hectare does not equally contribute to the provision of environmental public goods. Moreover, the change from current levels of support to the flat rate could be very disruptive in certain cases as indicated above.
hectare. The impact of this option (referred to as 'Min80%' in the rest of the annex) is displayed i
n Figure 9 below.
Figure 9: Redistribution between MS - Pragmatic approach with minimum 80% of EU average
EUR/elig. ha DP: Min 80% of EU-average
800
700
600
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300
200
100
0
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ar i aai nnd
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r u
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l aubl i c
l aen
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vaki a
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er l aFr aEU
boEU- 2
st r i a
ga
ep
Fi nul gSp
gdom
i nPol a
E
t hBel g
GCyp
Denm
Sl oer m
GmI r eAu
Hun
RSw
BSl o
Por t u
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Est o
Lat v
Li t h
Ned
K
Luxe
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Cz
Uni t e
Min. 80% of EU-average - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
In the Status Quo distribution, eight Member States are below the 80 % threshold, while eleven Member States are above the EU average. The cost of lifting the per hectare payments of these Member States to 80 % of the EU average (i.e. EUR 213/ha) would be covered on a proportional basis by the eleven Member States that are above the EU average. This would require a reduction of their envelopes, while the envelopes of those Member States who fall between 80 % and 100 % of the EU average would remain unchanged.
again RO, PL and ES, while the biggest losers would be IT, DE and FR. The total amount redistributed would come to EUR 738 million.
Figure 10: Redistribution between MS - Pragmatic approach with MFF distribution key
EUR/elig. ha DP: MFF distribution key
700
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100
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sml y7dd2
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EU- 1
vaki a
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GCypr u
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Fr aEU
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st r i a
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Fi n
DeSl oer m
GmI r eAu
Hung
Sw
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Sl o
Por t u
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L
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R
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Un
MFF scenario - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
Alternatively, it may be envisaged to provide that all Member States get at least 80% and that no Member State gets more than 120% of the flat rate (option called "Tunnel80%- 120%" in the rest of the annex), as shown in Figure 11.
Figure 11: Redistribution between MS - Pragmatic approach with minimum 80% - maximum 120% of EU average
EUR/elig. ha DP: Min 80% max. 120% of EU-average
700
600
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ml ysi ay572
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enr i a
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ven
an
EU- 1
l and
t r i a
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l aa
ed
Sp
gdom
vaki a
ani a
uani a
at v
er l a
Bel gr e
GCypr u
nm
er mFr a
bou
EU- 2
I r enga
Aus
ep
Fi n
i nPol a
EU- 1
De
Sl o
GHu
xem
RSw
Bul g
Sl o
Por t u
Rom
Est o
L
Li t h
Net h
d
K
Lu
ech
Cz
Uni t e
Min.80-max.120% of EU-average - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
Use of objective criteria
Another option would be to base the distribution on objective criteria that reflect the dual role of direct payments in providing income support and public goods and would thus ensure a more equitable and efficient use of budgetary resources.
Possible objective criteria are very diverse in nature and may provide a very different outcome in terms of redistribution of direct payments on account of the specific economic and environmental situation of each country. The difficulties with reaching agreement on such objective criteria should not be underestimated. A selection of the criteria which have been most discussed in the institutional and public debate is given
The result of a redistribution based on a combination of general and agricultural economic criteria is presented in Figure 12.
Figure 12: Redistribution between MS - Economic objective criteria
EUR/elig. ha DP: Distribution with economic criteria
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mvenan
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t r i a
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EU
vaani a
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Fr aEU- 1
bou
E
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Sl oer mI r enga
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Sl o
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RLi t hE
Net h
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t
e
DP: Distrib. with economic criteria - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
· For the environmental criteria, areas in less favoured areas (LFA), Natura 2000
zones and permanent pasture: The index compares the share of the relevant area in the Member State's total utilised agricultural area (UAA) to the EU average. Thus Member States with a higher share of these types of areas get higher direct payments/ha (see Figure 13). These criteria would reflect disadvantages in particular areas or areas that are particularly important for the provision of public goods.
Figure 13: Redistribution between MS - Environmental objective criteria
EUR/elig. ha DP: Distribution with environmental criteria
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gal
ni a
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t v
Spai n
gdo
l and
EU
vaani a
ua
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epub
Fi nst o
La
t hBeGCy
Den
Sl oer mFr aEU- 1
I r eEnga
Aus
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Swe
Bul g
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Sl o
Por t u
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Ned
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Czec
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DP: Distrib. with environmental criteria - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
Another approach would be the combination of economic and environmental objective criteria to adjust the EU flat rate, based on the following formula (using a weight of 2/3 for economic and 1/3 for environmental criteria):
Flat rate x [2/3 x [(2/3 GDP/cap + 1/3 GVA/AWU)] + 1/3 (1/3 LFA + 1/3 Permanent grassland + 1/3 Natura 2000 area)].
The results of using this formula to adjust the flat rate are shown in Figure 14.
Figure 14: Redistribution between MS - Economic and environmental objective criteria
EUR/elig. ha DP: Distribution with objective criteria
700
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2
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r uar k
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Spai n
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an
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epub
Fi nr t umuan
t o
t hBel g
GCyp
Denm
S
GmI r eAu
Hung
Sw
Bul g
i nPoEU- 1
Sl o
Po
RoEsLat v
h
RLi t h
Ned
K
Luxe
Czec
Uni t
e
Distribution: objective criteria - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
The use of objective criteria giving more weight to economic criteria would accentuate the gap between EU-15 and EU-12 and EU-15 Member States (UK, ES and FR) would most improve their situation in absolute terms. With environmental criteria ES, UK and PT would profit most. With a combination of economic and environmental criteria ES, UK and IE would be the greatest winners while in addition to IT and EL also PL would be among the biggest losers. For the smaller Member States (MT and LU) an ad hoc solution would be most likely in any case when using objective criteria, given the extremity of the impact for these Member States.
objective criteria" in the rest of the annex) as shown in Figure 15. The total amount redistributed would be EUR 2,164 million.
Figure 15: Redistribution between MS - Pragmatic approach (minimum 90%) with objective criteria
EUR/elig. ha DP: Min. 90% - compensation with objective criteria
700
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t r i al aar i and
- 1ki a
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EU
vaani a
ua
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BeGr e
Cy
Fr aEU- 1
bou
E
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Min. 90% - comp with OC (PEA 2009) - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
· to apply the objective criteria to the difference between the current distribution
and the EU average so as to ensure that all Member States that are above the flat rate will be reducing their direct payments but still remain above the flat rate and those that are below the flat rate will be increasing their direct payments but still remain below the flat rate (Figure 16). The total amount redistributed would be EUR 2,534 million.
Figure 16: Redistribution between MS - Objective criteria applied to difference between Status quo and EU average
EUR/e lig. ha DP: OC applied to difference from EU-avg.
700
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200
100
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ml ys572
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- 2nd
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i uI t aece
r uar k
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any
U- 1
l aubl i c
l aen
ar i aai n
nd
edU- 1gal
vaki a
ani a
uani a
ni ai a
Lat v
er l al o
er mFr aE
bour g
EU
I r eust r i a
gar y
Aep
Fi n
ul gSp
gdom
i nPol a
E
t hBel g
GC
Denm
SG
emHun
RSw
BSl o
Por t u
Rom
Est o
Li t h
Ned
K
Lux
ech
Cz
Uni t e
OC applied to difference from EU-avg. - 2020 budgetStatus quo - 2013EU-avg. 2020
Source: DG AGRI
4.2. Move toward flat rate within Member States or regions
The impact from the redistribution among Member States is further compounded at the level of the farmer with the impact of redistribution within Member States. In this respect, the Communication foresees a uniform rate within each Member State or region, in line with the current regional SPS model.
A region may be defined in accordance with objective and non-discriminatory criteria such as institutional or administrative structure and regional agricultural potential. Any further differentiation for instance based on production types within the region linked to current parameters could cause problems with respect to WTO compatibility.
matter, a uniform flat rate would reduce support in more productive regions and sectors in favour of more marginal regions.
In addition, the move to a regional model in all Member States is likely to increase the rate of capitalisation of support in land prices. The flexibility for activating entitlements with additional eligible land is reduced due to the existence of only a very limited amount of "naked" land (i.e. eligible land without corresponding entitlements) and the absence of differences in the entitlement level in the regional model
-
20.Thus, substantial changes in
the payments per hectare, inherent in the "EU flat rate" option and, albeit to a lesser extent, in the other options, may have an impact on farms' asset values (especially land) and affect the profitability of farms, which would in turn influence their access to credit and ability to address existing liabilities.
Whatever the options, the distribution of support between individual farms would remain uneven despite a uniform regional flat rate, as the difference in support per farm would still be determined by the farm areas (number of eligible hectares which would determine the number of entitlements).
4.3. Impacts on farm income
The impact of redistribution of direct payments on farm income has been analysed using FADN data. For the impact assessment at farms' level it has been considered that the entire country is one single region. The following options (see section above for details) have been assessed quantitatively in terms of the effects they could have on the income of farms:
-
1)
EU flat rate
-
2)
Min80%
-
3)
Min90% with objective criteria
8.6 % of farm income in EU-12 and a decrease of 2.1 % in EU-15 compared to the baseline level in 2020. The most affected countries would be DK, GR, BE, SL, DE, IT and CY (between -8 and -5 %), while farm income in EE, LT, LV will benefit the most (by 45 %, 26 % and 53 % respectively) and also PT, RO and SK to a lower extent (between 13% and 16%).
Results for the two alternative options of 'Min 80%' and 'Min90% with objective criteria' are quite similar with regard to the winners (mainly EE, LT, LV and to a lower extent PT, RO, SK) and losers whereby impacts are slightly higher in the 'Min90% with objective criteria' option. With the 'MFF distribution key' the gains for the Member States profiting most from redistribution are substantially reduced as only a part of the difference between their current level of direct payments and 90% of the EU average is covered.
Figure 17: Redistribution - Impact on farm income per EU aggregates
Im pact on farm incom e
Change in FNVA compared to the status quo in 2020
10,0%
5,0%
0,0%
EU-15
-5,0%
EU-12
EU-27
-10,0%
EU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
Table 1: Redistribution - Impact on farm income per MS
Change in FNVA per AWU in comparison with the status quo
in 2020
Base1234
90% and objective
Status quo EU flat rateMin 80%MFF
per AWUcriteria
Belgium62.429-7%-1%-1%-3%
Bulgaria9.4656%0%0%1%
Cyprus15.251-6%-1%-1%-4%
Czech Republic23.4732%0%0%0%
Denmark72.352-8%-1%-2%-5%
Germany44.864-5%-2%-1%-3%
Greece15.597-8%-1%-1%-4%
Spain28.9534%0%1%1%
Estonia22.28145%29%12%37%
France38.819-4%-2%-1%-2%
Hungary27.898-1%0%0%0%
Ireland27.383-1%0%-1%-1%
Italy35.561-5%-1%-1%-3%
Lithuania18.16226%15%7%21%
Luxembourg50.620-1%0%0%0%
Latvia12.91253%37%15%45%
Malta31.180-4%0%0%-2%
Netherlands68.346-4%0%-1%-2%
Austria32.4450%0%0%0%
Poland12.8936%0%1%3%
Portugal11.07713%4%3%8%
Romania4.75713%5%3%9%
Finland28.4834%0%0%1%
Sweden43.9666%0%0%1%
Slovakia20.06016%2%3%9%
Slovenia7.849-7%-2%-2%-4%
United Kingdom50.1966%0%0%2%
EU-2723.7510%0%0%0%
Table 2: Redistribution - Impact per type of farming at EU level
Change in FNVA per AWU in comparison with the status quo in 2020
Base1234
Status quo EU flat rateMin 80%MFF distribution Min 90% and
per AWUkeyobjective criteria
Fieldcrops25.162-2,5%-2,9%-3,0%-2,8%
Horticulture36.1970,2%0,3%0,3%0,2%
Wine33.8113,1%3,5%3,6%3,3%
Other permanent crops21.006-1,3%-0,5%-0,5%-1,0%
Milk29.899-3,1%-2,4%-2,5%-2,6%
Other grazing livestock20.6889,9%9,9%10,1%9,7%
Granivores23.347-0,8%-0,7%-0,6%-0,7%
Mixed14.9090,2%-0,9%-0,8%-0,2%
Source: DG AGRI, FADN
In the contrary, field crop farms (-2.5 % to -3 %) and milk farms (-2.4 % to -3.1 %) would see a significant decrease in their income.
The income impact on farming system based mainly on grassland would considerably benefit (+11.1 % to +11.4%) from the move to a flat rate whatever the redistribution option as shown in table 3 below.
Table 3: Redistribution - Impact on grassland based and non-grassland based farms
Change in FNVA per AWU in comparison with the status quo in 2020
1234
EU flat rateMin 80%MFF distribution Min 90% and
Table 4: Redistribution - Impact on fieldcrop farms per MS
Change in FNVA per AWU in comparison with the status quo in 2020
Base1234
Status quo EU flat rateMin 80%MFF distribution Min 90% and
per AWUkeyobjective criteria
H BelgiumFieldcrops74.095-12%-3%-3%-6%
SAPS BulgariaFieldcrops18.0088%0%1%2%
SAPS CyprusFieldcrops24.953-6%-1%-1%-3%
SAPS Czech RepublicFieldcrops29.2370%-2%-2%-2%
R DenmarkFieldcrops76.312-10%-2%-2%-6%
R GermanyFieldcrops51.648-7%-2%-1%-3%
H GreeceFieldcrops16.689-13%-5%-5%-9%
H SpainFieldcrops33.9455%0%1%1%
SAPS EstoniaFieldcrops27.71250%32%13%41%
H FranceFieldcrops45.497-15%-12%-11%-13%
SAPS HungaryFieldcrops44.2481%0%0%0%
H IrelandFieldcrops69.740-8%-8%-8%-8%
H ItalyFieldcrops33.203-12%-5%-5%-8%
SAPS LithuaniaFieldcrops25.83228%16%7%22%
R LuxembourgFieldcrops----
SAPS LatviaFieldcrops19.57655%38%15%46%
R MaltaFieldcrops26.375-1%5%4%1%
H NetherlandsFieldcrops86.618-2%4%4%2%
H AustriaFieldcrops48.428-6%-7%-7%-7%
SAPS PolandFieldcrops14.7276%-1%0%3%
H PortugalFieldcrops11.596-15%-21%-21%-18%
SAPS RomaniaFieldcrops6.41316%6%4%11%
R FinlandFieldcrops41.3217%-1%0%1%
R SwedenFieldcrops54.5879%2%3%4%
SAPS SlovakiaFieldcrops27.47113%1%1%7%
R SloveniaFieldcrops8.964-12%-7%-7%-9%
H/R United Kingdom Fieldcrops69.717-3%-8%-8%-6%
EU-27Fieldcrops25.162-3%-3%-3%-3%
Source: DG AGRI, FADN
H =historic model R = regional/hybrid model H/R = historic or regional/hybrid model depending on regions
Table 5: Redistribution - Impact on mixed farms per MS
Change in FNVA per AWU in comparison with the status quo in 2020
Base1234
Status quo EU flat rateMin 80%MFF distribution Min 90% and
per AWUkeyobjective criteria
H BelgiumMixed67.743-10%-3%-3%-6%
SAPS BulgariaMixed6.2114%-2%-1%0%
SAPS CyprusMixed----
SAPS Czech RepublicMixed22.0343%1%1%1%
R DenmarkMixed63.407-11%-2%-2%-6%
R GermanyMixed38.262-7%-2%-1%-3%
H GreeceMixed16.312-5%1%1%-1%
H SpainMixed41.1307%3%3%3%
SAPS EstoniaMixed21.91450%32%13%41%
H FranceMixed34.760-11%-8%-7%-8%
SAPS HungaryMixed22.9622%0%0%0%
H IrelandMixed34.353-12%-12%-12%-12%
H ItalyMixed33.557-7%0%0%-3%
SAPS LithuaniaMixed14.08727%16%7%21%
R LuxembourgMixed39.5512%3%3%3%
SAPS LatviaMixed10.04356%38%15%47%
R MaltaMixed15.631-11%-6%-6%-9%
H NetherlandsMixed36.239-14%-3%-4%-6%
H AustriaMixed34.827-4%-4%-4%-4%
SAPS PolandMixed8.2519%-1%1%4%
H PortugalMixed7.94533%15%13%24%
SAPS RomaniaMixed2.70812%4%2%8%
R FinlandMixed23.2657%0%0%1%
R SwedenMixed38.1708%1%1%2%
SAPS SlovakiaMixed15.80517%2%3%10%
R SloveniaMixed5.486-10%-3%-2%-5%
H/R United Kingdom Mixed44.028-2%-10%-9%-7%
EU-27Mixed14.9090%-1%-1%0%
Source: DG AGRI, FADN
H =historic model R = regional/hybrid model H/R = historic or regional/hybrid model depending on regions
Table 6: Redistribution - Impact on other grazing livestock per MS
Change in FNVA per AWU in comparison with the status quo in 2020
Base1234
Status quo EU flat rateMin 80%MFF distribution Min 90% and
per AWUkeyobjective criteria
H BelgiumOther grazing livestock51.878-12%0%-1%-5%
SAPS BulgariaOther grazing livestock4.6673%-2%-2%-1%
SAPS CyprusOther grazing livestock17.463-9%-1%-2%-6%
SAPS Czech RepublicOther grazing livestock25.9176%2%2%2%
R DenmarkOther grazing livestock----
R GermanyOther grazing livestock34.138-8%-3%-2%-4%
H GreeceOther grazing livestock17.16614%29%28%22%
H SpainOther grazing livestock38.3496%1%1%2%
SAPS EstoniaOther grazing livestock14.15685%54%22%70%
H FranceOther grazing livestock24.87518%22%24%22%
SAPS HungaryOther grazing livestock15.0833%-2%-2%-2%
H IrelandOther grazing livestock15.6746%6%6%6%
H ItalyOther grazing livestock39.671-3%6%5%2%
SAPS LithuaniaOther grazing livestock10.84938%22%10%30%
R LuxembourgOther grazing livestock47.014-4%-3%-3%-3%
SAPS LatviaOther grazing livestock14.53661%42%16%51%
R MaltaOther grazing livestock----
H NetherlandsOther grazing livestock29.716-16%-3%-4%-7%
H AustriaOther grazing livestock26.5223%2%2%2%
SAPS PolandOther grazing livestock18.3045%0%1%3%
H PortugalOther grazing livestock15.93652%31%28%41%
SAPS RomaniaOther grazing livestock4.34212%4%2%8%
R FinlandOther grazing livestock15.92210%1%2%3%
R SwedenOther grazing livestock22.59315%1%2%4%
SAPS SlovakiaOther grazing livestock19.27320%4%5%12%
R SloveniaOther grazing livestock4.557-5%6%7%2%
H/R United Kingdom Other grazing livestock27.90965%41%43%49%
EU-27Other grazing livestock20.68810%10%10%10%
Source: DG AGRI, FADN
H =historic model R = regional/hybrid model H/R = historic or regional/hybrid model depending on regions
Table 7: Redistribution - Impact on milk farms per MS
Change in FNVA per AWU in comparison with the status quo in 2020
Base1234
Status quo EU flat rateMin 80%MFF distribution Min 90% and
per AWUkeyobjective criteria
H BelgiumMilk70.337-10%-3%-3%-6%
SAPS BulgariaMilk6.9322%-1%-1%-1%
SAPS CyprusMilk----
SAPS Czech RepublicMilk21.3723%1%1%1%
R DenmarkMilk90.265-7%-1%-1%-4%
R GermanyMilk52.719-5%-2%-2%-3%
H GreeceMilk----
H SpainMilk45.890-8%-9%-9%-9%
SAPS EstoniaMilk22.27635%23%10%29%
H FranceMilk30.748-5%-2%-1%-3%
SAPS HungaryMilk24.2111%0%0%0%
H IrelandMilk52.797-3%-3%-3%-3%
H ItalyMilk54.609-10%-6%-7%-8%
SAPS LithuaniaMilk15.02523%13%6%18%
R LuxembourgMilk56.929-1%0%0%-1%
SAPS LatviaMilk10.92454%37%14%45%
R MaltaMilk49.620-19%-16%-16%-17%
H NetherlandsMilk83.731-12%-5%-6%-7%
H AustriaMilk29.6633%3%3%3%
SAPS PolandMilk16.3936%0%1%3%
H PortugalMilk16.343-28%-31%-31%-29%
SAPS RomaniaMilk4.8927%2%1%5%
R FinlandMilk20.7124%0%0%0%
R SwedenMilk35.9300%-5%-5%-4%
SAPS SlovakiaMilk17.12117%3%4%10%
R SloveniaMilk10.224-13%-9%-9%-11%
H/R United Kingdom Milk56.545-1%-5%-5%-4%
EU-27Milk29.899-3%-2%-3%-3%
Source: DG AGRI, FADN
H =historic model R = regional/hybrid model H/R = historic or regional/hybrid model depending on regions
Table 8: Redistribution - Impact on wine farms per MS
Change in FNVA per AWU in comparison with the status quo in 2020
Base1234
Status quo EU flat rateMin 80%MFF distribution Min 90% and
per AWUkeyobjective criteria
SAPS BulgariaWine4.0135%-1%0%1%
SAPS CyprusWine----
SAPS Czech RepublicWine17.6271%0%0%0%
R GermanyWine44.5460%0%0%0%
H GreeceWine16.097-2%6%5%2%
H SpainWine25.6035%2%3%3%
H FranceWine53.5673%3%4%3%
SAPS HungaryWine934-6%-11%-11%-11%
H ItalyWine34.6493%5%5%4%
R LuxembourgWine48.5722%2%2%2%
R MaltaWine----
H AustriaWine31.5082%1%1%1%
H PortugalWine8.45514%10%10%12%
SAPS RomaniaWine9.7643%1%1%2%
SAPS SlovakiaWine----
R SloveniaWine18.3214%5%5%5%
EU-27Wine33.8113%4%4%3%
Source: DG AGRI, FADN
H =historic model R = regional/hybrid model H/R = historic or regional/hybrid model depending on
regions
4.3.4. Impact per LFA/non LFA zones
The impact on income of farms located in less favoured areas (see Figure 18) is mainly driven by the move toward a flat rate (regional model)
-
21.Simulations show that farm
incomes increase in both mountainous and not mountainous LFA and decrease elsewhere. Indeed, past references of production which served as a basis to calculate the value of entitlements are quite low in less favoured areas and in particular in mountain areas where farm size is smaller. The move to a flat rate in each Member States would lead logically to a redistribution of direct payments towards those areas.
Figure 18: Redistribution - Impact per LFA/non LFA zones
Im pact on farm incom e
Change in FNVA compared to the status quo in 2020
10,0%
5,0%
0,0%
-5,0% not in less-favoured areas
in less-favoured not mountain areas
-10,0% in less-favoured mountain areas
EU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
Source: DG AGRI, FADN
4.4. Production and price impacts of move toward flat rate at regional,
Member States and EU levels
A recent study22 based on the partial equilibrium CAPRI model together with a specific
tailed farm group component called CAPRI farm type (CAPRI FT) analyzes the impact of a flat rate for direct payments at regional (NUTS 1), Member State and EU levels (with the level of redistribution and potential impacts increasing in moving to an EU flat rate).
The study shows relatively small production and price impacts. In the EU flat rate scenario, which is the most price responsive, the maximum price increase was for cereals by 1.5 % for the EU-15 and 2.9 % for the EU-10. The small magnitude of the impact is also due to the role of entitlements in limiting land use expansion while allowing for some substitution between grassland and arable land.
As regards the distribution of direct payments envelopes between Member States, only the "Min90% with objective criteria" option considers objective criteria of environmental nature in the distribution of support between Member States, which would adjust the payments better to the objective of supporting the delivery of basic public goods in those areas where continuation of farming may be at stake. However, exact effects would depend strongly on the implementation, e.g. the distribution of direct payments between regions in Member States. If no additional environmental performance criteria were linked to direct payments (or at least to a part of the direct payments), the targeting of additional amounts to environmentally sensitive regions could be suboptimal.
4.6. International impacts
The redistribution of direct payments between Member States and farmers would not affect the classification of EU support at WTO provided that any direct effect on production level is avoided.
4.7. Administrative impacts
In case the new direct payments system is limited to a uniform regional rate, whatever the options for redistribution, the policy framework would be very much simplified because of the existence of one single model: the SPS regional one.
In the first year of implementation of the new system, there would be administrative burden associated with the redistribution (possibly new distribution of entitlements and/or recalculation of their value) and possibly transition (defining steps for progressive modifications in following years for each farmer). For those Member States currently applying SAPS, the administrative burden associated with the transition to regional SPS would be significant in the first year and is related to the establishment and allocation of entitlements.
purpose of the new Pillar I scheme for areas with specific natural constraints would be to allow Member States to achieve a more equitable distribution of income throughout their agricultural area by targeting a part of income support to farmers whose farming activity and the income derived from it is permanently limited by natural constraints.
While NHA support under the Pillar II (see sub-annex 3D for the current state of play) is only granted to a small percentage of farmers in these areas, the new Pillar I scheme for NHA would be compulsory for Member States and generalised to all farmers located in those areas. In addition, as the risk of land abandonment is extremely diversified throughout the EU and may be of particular relevance in mountain areas, the possibility to mobilise support from different sources will allow Member States to better calibrate the support needed to address this challenge.
An exercise of new delimitation of certain LFA/NHA zones is ongoing. However, the assessment of the potential impacts of the scheme in this Impact Assessment exercise has been based on current LFA/NHA delimitation, not pre-judging the new delimitation mechanisms of LFA/NHA to be used in the future. A qualitative assessment of the main changes between current and future LFA/NHA is done in secti
on 5.2.
It has been shown previously (see section that the move to a regional flat rate would already benefit to farms located in LFA/NHA whatever the option of redistribution of direct payments envelopes between Member States. In order to capture the effect of additional income support in NHA through a Pillar I scheme, the assessment in the current section is based on the redistribution option "MFF distribution key".
The 2 following two options for implementing additional support in NHA have been
assessed:
-
1)EUR 100 for each hectare located in the current LFA;
5.1. Impacts on farm income
5.1.1. Impact in LFA/non LFA zones
As shown in Figure 19, farms located in LFA/NHA see their income increasing with options 1 (+1.1 % in mountains, +1.6 % in other LFA) and 2 (+1.9 % in mountains, +1% in other LFA) and also with option 4 (+0.4 % in mountains, +1.5 % in other LFA). They are better-off with the "MFF distribution key" or the "Min 90% with objective criteria" redistribution options than with the Status quo 2020. Also the increase in income for mountains is higher in option 2 (compared to option 1) as the rate per hectare in mountains is higher than for other LFA.
Figure 19: Additional income support in areas with specific natural constraints - Impact in LFA/non LFA zones
Im pact on farm incom e
Change in FNVA compared to the base in 2020
5%
3%
1%
-1%
not in less-favoured areas
-3%
in less-favoured not mountain areas
-5% in less-favoured mountain areas
Max 5% of DP; Max Max 5% of DP; 50Max 5% of DP; 50Max 5% of DP; 50
100 in LFAin mountain LFA; in mountain LFA; in mountain LFA;
25 in other LFA25 in other LFA25 in other LFA
Table 9 and Table 10). This is due to the high share of grassland based farms located in LFA/NHA and particularly in mountains.
Table 9: Additional income support in areas with specific natural constraints - Impact per farm type
FNVA per AWU - comparison with the scenario based on the MFF
distribution key in 2020
BaseOption 1Option 2Option 3Option 4
MFF distribution MFF distribution MFF distribution Min 90% and
keykeykeyStatus quo
objective criteria
Max 5% of DP; Max 5% of DP; Max 5% of DP; Max 5% of DP;
Max 100 in 50 in mountain 50 in mountain 50 in mountain
LFALFA; 25 in LFA; 25 in LFA; 25 in
Fieldcropsother LFAother LFAother LFA
Horticulture36.2930,0%0,0%-0,3%-0,1%
Wine35.023-0,1%-0,1%-3,4%-0,4%
Other permanent crops20.896-0,1%0,0%0,5%-0,5%
Milk29.1410,3%0,3%2,8%0,3%
Other grazing livestock22.7711,1%1,2%-7,4%0,9%
Granivores23.210-0,1%-0,1%0,5%-0,2%
Mixed14.7890,0%0,0%0,7%0,5%
Source: DG AGRI, FADN
Table 10: Additional income support in areas with specific natural constraints - Impacts on grassland based and non-grassland based farms
FNVA per AWU - comparison with the scenario based on the MFF
distribution key in 2020
Option 1Option 2Option 3Option 4
MFF distribution MFF distribution
keykeyStatus quoMin 90% and
objective criteria
Max 5% of DP; Max 5% of DP; Max 5% of DP;
-
Max 5% of DP; 50 in mountain 50 in mountain 50 in mountain
Figure 20: Impacts of new delimitation of LFA/NHA
Current intermediate areas with natural handicaps Current areas with specific handicaps
Overlapping
Areas newly delimited with biophysical criteria and finetuned
Mountain areas (no change)
The purely orange colour represents intermediate LFA which would leave the delimitation, purely blue areas represent areas which would be newly delimited. The results show that globally the size of the areas in LFA/NHA will not considerably change at EU level but particular situations may arise in some Member States where the changes may affect large zones. However at this stage it is not possible to assess those impacts quantitatively.
5.3. Environmental and climate change impacts
5.5. Administrative impacts
A new regulation scheme would require monitoring and controls to the new direct payment in Pillar I, in addition to the existing one in Pillar II. However the additional burden would be limited for national administrations if the implementation is based on the existing implementation and control system in place for the Pillar II NHA aid. A management through annual payments would be less administrative burdensome than through entitlements.
6. CAPPING OF DIRECT PAYMENTS PER BENEFICIARY
The issue of distribution of direct payments to the very large and the very small farms have both been mentioned in various ways in the public debate about the CAP and in the consultation process. Indeed, as direct payments are based on areas
25, larger farms get
more direct payments. One can consider that due to economies of scale, granting a level of support per hectare to large farms similar to that received by small farms is not necessarily justified. Introducing some sort of upper ceiling or limitation/reduction for direct payments received by large individual farms could thus be considered in order to improve the distribution of payments between farmers.
Introducing a fixed ceiling on payments established at EU level can affect the capacity of large farms to employ and invest. Impacts on employment levels in large farm co- operatives, often located in the EU12, could be substantial.
With capping, the capacity of generating funds for other elements of direct payments, as well as the number of farms and Member States affected, depends on where the limits are set, in what form they are fixed and what is the distribution curve of direct payments between farms in the different Member States. As a general rule, the higher the limits, the fewer farms are affected and the effects become concentrated only on the few Member States with large farm structures. To illustrate the wide range of variations between Member States, see Figure 21 on the distribution curves of some selected Member States.
Figure 21: Distribution of beneficiaries across CATS categories (in % of the respective total number of beneficiaries)
Distribution of beneficiaries (CATS 2008)
80%
70%
60%
50%
40%
30%
20%
10%
0%
0 - - -
00
50
00
00 -
00 -
00 -
00 -
00
00 -
00 -
00 -
00
5 2 0 0 0
1 2 500 0
0 0
0 0
0 0
0 0
<
1 2 5
0 <
00
50 <
00 <
<
<
<
100 0
200 0
30
50
50
00 <
<
5 2 000
00
000 <
00 <
1 20 0
0 0
50 000
000
1 200
00 0
00 0
5
1 2 3
DEEU-15EU-12FRCATS payment class (in )
Distribution of beneficiaries (CATS 2008)
100%
90%
80%
70%
60%
The funding released by capping of direct payments should remain in the respective Member State where it could be spent on measures fostering innovation such as knowledge transfer, pilot projects or business development. Thus, capping money would reinforce the comprehensive efforts in favour of promoting innovation as envisaged for the Rural Development Policy. The selection of eligible measures and the approach towards implementation should be consistent with the provision laid down for Rural Development Programmes.
In general, fixed limits for direct payments bear the danger of an artificial "splitting" of farms to circumvent limits. Various legal responses to these problems were addressed. Taking account of different farm structures and ownership arrangements (e.g. co- operatives) would require adjustment to the definition of the "legal person" claiming the payment, which would in itself open the door to circumvention. Preventing any circumvention of the ceilings by the transfer of entitlements or the splitting of holdings would be difficult to implement, require a definition of splitting and would lay the burden of proof on Member State administrations.
Another way of addressing these difficulties would be to attenuate the effect of fixed ceilings by gradually reducing the support level as overall payments to the individual farmer increase, while retaining some support even at high overall payment levels.
A further possibility to mitigate the effects of capping in general on large farms with high employment levels is to foresee an increase of the threshold (or to put it differently, a decrease of the capped amount) for salaried labour intensity (e.g. by increasing the threshold for capping by wages actually paid or by a lump sum of e.g. EUR 15 000/AWU). Such mitigation could be foreseen both for a fixed or a progressive cap, as mentioned in the Communication on the future CAP.
The concept of capping has been addressed in the impact assessment for the Health Check
-
26.Whereas the options of fixed individual limits (e.g. no direct payment above
EUR 200 000 or EUR 300 000) and progressive ceilings (e.g. payments per beneficiary above EUR 150 000 are reduced by 20 %, above EUR 200 000 by 40 %, and above EUR 250 000 by 75 %; no payment occurs above EUR 300 000 per beneficiary) remain unchanged, the assessment of capping concerning the CAP post-2013 needs to take into account the aforementioned options of redistribution of DP envelopes between Member States.
1c) Based on redistribution option "MFF distribution key", progressive capping with mitigation by EUR 15 000/AWU
-
2)Based on redistribution option "MFF distribution key", fixed ceiling of EUR 200 000 with mitigation by 100% wages
-
3)Based on redistribution option "MFF distribution key", fixed ceiling of EUR 300 000 with mitigation by 100% wages
-
4)Based on redistribution option "Status quo 2020", progressive capping with mitigation by 100% wages (comparable to 1a)
-
5)Based on redistribution option "Min 90% with objective criteria", progressive capping with mitigation by 100% wages (comparable to 1a)
The quantitative impacts assessed are twofold: the amount generated by capping and the impact on farm income.
6.1. Amounts resulting from capping
6.1.1. Per Member State
Table 11 displays the amounts resulting from capping in the different options as a percentage of full national DP envelope following redistribution at Member State and aggregate EU-27 level, and the amount resulting from capping in absolute value at the EU level.
The results indicate that capping would release for the EU-27 between EUR 278 million
for option 4 (capping with Status Quo redistribution) and EUR 835 million for option 1b (capping with MFF distribution key redistribution). This represents between 0.6% and 1.9% of the total amount of direct payments at EU level which is quite low compared to the current amount resulting from modulation (around EUR 3 billions for budget year 2013). This is due to the thresholds of capping which affect only a limited number of farms in comparison to the modulation as only farms with very high direct payment levels are concerned. As a consequence capping would really affect very few countries where large farms play a big role
50 % wages as a mitigation factor is increasing the capped amounts in all Member States compared to the two alternative mitigation factors.
Note, in this respect, that these amounts are calculated in a simulated 2020 situation while the application of capping during the transition period for convergence of direct payments may affect farms differently.
Table 11: Amounts capped per Member State
Share of amounts capped in total pillar 1 payments (total before capping) - %
MFF distribution MFF distribution MFF distribution MFF distribution MFF distribution
keykeykeykeykeyStatus quoMin 90% and
objective criteria
1a1b1c2345
Progressive Progressive Progressive fixed ceiling of fixed ceiling of
capping with mitigation by capping with mitigation by capping with mitigation by 200 thousands 300 thousands 1a with status 1a with Min 90%
with mitigation with mitigation quoand objective
100% wages50% wages15000/AWUby 100% wagesby 100% wagescriteria
Belgium0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Bulgaria9,8%13,1%1,9%11,9%5,4%8,9%10,4%
Cyprus0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Czech Republic0,4%4,2%0,5%0,5%0,1%0,5%0,4%
Denmark0,2%0,6%0,7%0,2%0,0%0,2%0,1%
Germany0,2%1,7%2,1%0,3%0,1%0,1%0,2%
Greece4,0%4,1%4,0%4,7%2,8%0,0%3,4%
Spain1,5%1,6%1,5%1,7%0,7%0,3%1,5%
Estonia0,0%0,3%0,0%0,0%0,0%0,0%0,8%
France0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Hungary2,6%5,9%2,3%2,9%1,8%2,3%2,6%
Ireland0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Italy0,1%0,3%0,2%0,1%0,0%2,3%0,1%
Lithuania0,4%0,7%0,0%0,5%0,2%0,2%0,9%
Luxembourg0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Latvia0,0%1,0%0,1%0,0%0,0%0,0%1,8%
Malta0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Netherlands0,0%0,0%0,0%0,0%0,0%0,1%0,0%
Austria0,0%0,0%0,0%0,0%0,0%0,0%0,0%
Poland0,1%0,5%0,1%0,1%0,0%0,1%0,2%
Grazing livestock specialized farms which currently receive little subsidies compared to their large area will benefit from the move toward a flat rate at regional or national level and get a higher share of direct payments while labour will stay the same. Thus it is quite logical that these farms will be affected the most by capping in all options based on 'MFF distribution key' or 'Min 90% with objective criteria' but much less in the Status Quo.
Table 12: Amounts capped per farming type
Share of amounts capped in total pillar 1 payments (total before capping) - %
MFF MFF MFF MFF MFF Min 90%
distribution distribution distribution distribution distribution Status quo and
key key key key key objective
criteria
1a 1b 1c 2 3 4 5
Progressive Progressive fixed ceiling fixed ceiling
capping capping Progressive of 200 of 300
with with capping with thousands thousands 1a with Min
mitigation mitigation mitigation by with with 1a with 90% and objective
by 100% by 50% 15000/AWmitigation mitigation status quo
wages wages U by 100% by 100% criteria
wages wages
(1) Fieldcrops 0,50% 0,98% 0,48% 0,59% 0,27% 0,43% 0,65%
(2) Horticulture 0,00% 0,01% 0,00% 0,00% 0,00% 0,03% 0,00%
(3) Wine 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
(4) Other permanent crops
0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
(5) Milk 0,00% 0,02% 0,00% 0,00% 0,00% 0,00% 0,00%
(6) Other grazing livestock
0,77% 0,80% 0,78% 0,87% 0,53% 0,13% 0,76%
(7) Granivores 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00%
(8) Mixed 0,03% 0,12% 0,06% 0,04% 0,02% 0,04% 0,04%
All types 1,31% 1,93% 1,32% 1,49% 0,82% 0,64% 1,45%
Source: DG AGRI, FADN
6.2. Impact of capping on income
(EE, LV, LT, PT, RO, SK), but this is mainly due to the absence of redistribution of direct payments in that option (Status quo) and not to capping.
Table 13: Capping Impacts on income per Member State
Income 2020
FNVA/AWU% of change of 2020 income in comparison with scenario 0
MFF MFF MFF MFF MFF MFF Min 90% and
IA scenariodistribution distribution distribution distribution distribution distribution Status quoobjective
keykeykeykeykeykeycriteria
Capping scenario - number
1a1b1c2345
Progressive Progressive Progressive fixed ceiling of fixed ceiling of
Capping scenario - description
no cappingcapping with mitigation by capping with capping with mitigation by 200 thousands 300 thousands 1a with Min
mitigation by with with 1a with status 90% and objective
100%wages50%wages15000/AWUmitigation by mitigation by quo
100%wages100%wagescriteria
Belgium 61.5830,0%0,0%0,0%0,0%0,0%1,4%-2,1%
Bulgaria 9.470-3,8%-5,1%-0,7%-4,6%-2,1%-3,5%-3,1%
Cyprus 15.0640,0%0,0%0,0%0,0%0,0%1,2%-2,8%
Czech Republic 23.372-0,2%-2,0%-0,2%-0,2%-0,1%0,2%-0,2%
Denmark 71.1770,0%-0,2%-0,2%-0,1%0,0%1,6%-3,1%
Germany 44.364-0,1%-0,5%-0,6%-0,1%0,0%1,1%-1,4%
Greece 15.413-1,1%-1,1%-1,1%-1,3%-0,8%1,2%-3,8%
Spain 29.192-0,3%-0,3%-0,3%-0,4%-0,2%-0,9%-0,1%
Estonia 24.9490,0%-0,1%0,0%0,0%0,0%-10,7%22,0%
France 38.4660,0%0,0%0,0%0,0%0,0%0,9%-1,1%
Hungary 27.795-1,0%-2,3%-0,9%-1,2%-0,7%-0,5%-1,0%
Ireland 27.2370,0%0,0%0,0%0,0%0,0%0,5%-0,1%
Italy 35.1890,0%0,0%0,0%0,0%0,0%0,7%-1,9%
Lithuania 19.345-0,1%-0,2%0,0%-0,2%-0,1%-6,2%12,7%
Luxembourg 50.6910,0%0,0%0,0%0,0%0,0%-0,1%-0,3%
Latvia 14.7860,0%-0,4%0,0%0,0%0,0%-12,7%25,3%
Malta 31.1210,0%0,0%0,0%0,0%0,0%0,2%-1,7%
Netherlands 67.8570,0%0,0%0,0%0,0%0,0%0,7%-0,8%
Austria 32.3840,0%0,0%0,0%0,0%0,0%0,2%0,0%
Poland 12.9910,0%-0,1%0,0%0,0%0,0%-0,8%2,1%
Portugal 11.3570,0%-0,1%0,0%0,0%0,0%-2,5%5,7%
Romania 4.882-0,9%-1,2%-0,3%-1,0%-0,5%-3,1%4,4%
Finland 28.4560,0%0,0%0,0%0,0%0,0%0,1%0,6%
Sweden 43.9590,0%0,0%0,0%0,0%0,0%0,0%0,9%
Slovakia 20.563-1,6%-4,9%-1,0%-2,0%-0,9%-3,7%3,6%
Slovenia 7.7270,0%0,0%0,0%0,0%0,0%1,6%-2,4%
United Kingdom 50.363-2,0%-2,1%-2,1%-2,2%-1,4%-0,4%-0,6%
EU-27 23.717-0,4%-0,5%-0,4%-0,4%-0,2%0,0%-0,4%
Table 14: Capping Impacts of income on farm types
Income 2020
FNVA/AWU% of change of 2020 income in comparison with scenario 0
MFF MFF MFF MFF MFF MFF Min 90% and
IA scenariodistribution distribution distribution distribution distribution distribution Status quoobjective
keykeykeykeykeykeycriteria
Capping scenario - number
1a1b1c2345
Progressive Progressive Progressive fixed ceiling of fixed ceiling of
Capping scenario - description
no cappingcapping with mitigation by capping with capping with mitigation by 200 thousands 300 thousands 1a with Min
mitigation by with with 1a with status 90% and objective
100%wages50%wages15000/AWUmitigation by mitigation by quo
100%wages100%wagescriteria
(1) Fieldcrops 24.404-0,5%-0,9%-0,4%-0,5%-0,2%2,7%-0,4%
(2) Horticulture 36.2930,0%0,0%0,0%0,0%0,0%-0,3%0,0%
(3) Wine 35.0230,0%0,0%0,0%0,0%0,0%-3,5%-0,3%
(4) Other permanent crops 20.8960,0%0,0%0,0%0,0%0,0%0,5%-0,5%
(5) Milk 29.1410,0%0,0%0,0%0,0%0,0%2,6%0,0%
(6) Other grazing livestock 22.771-1,8%-1,9%-1,9%-2,1%-1,3%-9,5%-2,1%
(7) Granivores 23.2100,0%0,0%0,0%0,0%0,0%0,6%-0,1%
(8) Mixed 14.789-0,1%-0,3%-0,1%-0,1%-0,1%0,7%0,5%
All types 23.717-0,4%-0,5%-0,4%-0,4%-0,2%0,0%-0,4%
Source: DG AGRI, FADN
6.3. Environmental and climate change impacts
Whatever the option, capping has no direct effect on the environment and on climate change. It is more the use of capped funds which may have an impact.
6.4. International impact
Capping would be neutral as regards WTO aspects.
6.5. Administrative impacts
Provisions on capping, especially those providing for mitigation of capping for large farmers with high employment and those related to the artificial conditions created to avoid capping (artificial "splitting") will be complex to draft and to implement/control or enforce by Member States. For the farmers, the capping system will be burdensome as more information and supporting documents will be required to "prove" the right to mitigation.
natural and planted vegetation. This variety, when accompanied by the presence of retained landscape features such as field margins, hedgerows, stonewalls, meadows, small woods and watercourses, is valuable for biodiversity through ensuring connectivity between semi-natural habitats and cultivated areas. It also contributes to the resilience of the landscape in the face of climate change.
In a context of globalisation and liberalisation, with volatile commodity prices, affecting both input costs and output revenues, small farmers have come under renewed pressure, including limited financial resources for investments and difficulties with access to credit as well as high transaction costs and poor bargaining power, resulting in limited market access.
In the face of these pressures on the one hand, and the important contribution of small farms to social and environmental objectives on the other, support structures need to be in place that allow small farms to survive and develop. Although at present, there are already some rules aimed at relieving smaller structures and Member States administrations from some administrative costs related to cross compliance (e.g. with
respect to the de minimis rule or hygiene regulation), the administrative burden on small farmers is in general disproportionately high in relation to the amount of support they receive.
A specific scheme for supporting small farmers would acknowledge the contribution such farms make to rural areas and the environment. It could allow small farms to restructure, diversify and increase their competitiveness, e.g. by exploring new local market opportunities and providing specific regional products. To achieve this, the scheme would have to be designed in a way to either promote competitiveness, development and structural change or allow small farmers to choose their development path (e.g. maintaining local small-scale production) in order to narrow the income gap with larger structures. This specific scheme would also make it possible to cut red tape by simplifying administrative procedures for farmers as well as for national administrations.
However, a support scheme for small farmers within the first pillar would only offer limited possibilities of targeting or imposing requirements in terms of e.g. development capacity, investments, or the commitment to continue farming. This is why it is important to grant it in combination with more targeted support through Rural Development policy, focusing on the competitiveness of farms.
The granting of a lump-sum payment corresponding to a pre-determined threshold.
However, this could lead to grant a high "bonus" to those with the lowest payments compared to the ones that are just below the threshold.
An increase of direct payments by progressive percentages (the lower the payment
below the threshold, the higher the percentage possibility of bands). This would assume setting up bands under the threshold to the limit of which the payment of the farmers falling in the band would be completed. This option would mitigate the concerns of the above option by completing only to the limit of the band but it would
be complicated to apply.
As regards the financing of the scheme, it should not put at risk the competitiveness of other farms by using a disproportionate share of the total direct payment envelope. Several options could be envisaged: either through a share (e.g. 5%) of the national envelope for direct payments of each Member States or through the results of capping generated in the same Member States. The latter could be an intuitively appealing solution as it would link the distribution problems at both end of the farm spectrum. However, this would result in a financial mismatch between the funds needed for the scheme and those generated owing to the unevenly distributed farm structures between Member States. There would be either too little financing available (in Member States with many small farms) or the scheme would be over-funded (in Member States with large farm structures).
Clearly, the budgetary needs for financing the small farmer scheme crucially depend on the definition of small farmers. Several options could be considered to define the small
farmers:
Option 1: A threshold fixed at EU level for all Member States (e.g. EUR 1 000 per
beneficiary)
Option 2: A threshold calculated at Member States level with an EU-wide formula
(e.g. 15 % of the average amount of direct payment per beneficiary in each Member States)
Option 1 would use 9.2 % of the EU DP envelope which would mean an additional
5.1% of DP dedicated to small farmers as compared to what they receive in the Status Quo. In CY, MT, RO, more than 40 % of the DP national envelopes would be used for more than 70% of beneficiaries. In IT, LT, EL, ES, PL, PT and SI, 8 to 23 % of national DP envelopes would be used for more than 40 % of beneficiaries. Detailed results are presented in Table 15.
Table 15: Small farmers - Impacts of option 1 (EUR 1 000 per beneficiary for all MS)
Share of beneficiaries below the 1000 euros threshold Share of budget necessary to grant 1000 euros to the beneficiaries below the 1000 euros threshold Share of additional budget needed to finance these small farmers
AT 22% 3,7% 2,0%
BE 12% 0,9% 0,5%
BG 46% 4,5% 2,1%
CY 76% 57,7% 35,9%
CZ 17% 0,4% 0,2%
DE 23% 1,5% 0,9%
DK 23% 1,5% 0,9%
EE 36% 4,6% 2,2%
EL 55% 23,9% 15,1%
ES 44% 8,1% 4,9%
FI 9% 1,1% 0,3%
FR 15% 0,7% 0,4%
HU 43% 6,2% 3,1%
IR 8% 0,8% 0,4%
IT 62% 20,2% 12,3%
LT 59% 23,5% 11,3%
LU 9% 0,5% 0,2%
LV 48% 15,5% 7,0%
MT 85% 82,3% 66,3%
NL 24% 2,0% 1,2%
Table 16: Small farmers - Impacts of option 2 (15% of the average amount of direct payment per beneficiary in each MS)
% beneficiaries below threshold Total amount needed to raise small farmers to the threshold set at 15% of nat.avg (in % of the DP envelope) Share of additional budget needed to finance these small farmers
Threshold (15% of national avg)
(in )
AT 868 20% 3,0% 1,6%
BE 2.070 22% 3,3% 1,8%
BG 1.524 66% 9,9% 6,3%
CY 198 21% 3,2% 0,8%
CZ 5.737 57% 8,6% 5,4%
DE 2.203 34% 5,1% 3,3%
DK 2.411 38% 5,8% 3,7%
EE 1.179 43% 6,4% 3,2%
EL 348 31% 4,7% 2,4%
ES 824 40% 6,1% 3,6%
FI 1.244 12% 1,8% 0,7%
FR 2.947 26% 3,9% 2,6%
HU 1.054 45% 6,8% 3,5%
IE 1.496 13% 2,0% 0,9%
IT 461 42% 6,3% 3,0%
LT 379 18% 2,8% 0,9%
LU 2.800 17% 2,5% 1,5%
LV 467 21% 3,1% 1,2%
MT 155 48% 7,2% 3,8%
NL 1.831 33% 4,9% 3,2%
PL 335 13% 1,9% 0,4%
PT 468 51% 7,7% 4,5%
RO 271 12% 1,8% 0,4%
SE 1.347 35% 5,2% 2,7%
SI 347 14% 2,1% 0,8%
SK 3.855 73% 11,0% 8,3%
Figure 22: Small farmers - Impact of option 3 (maximum EUR 1 000 per beneficiary and maximum 5% of the DP envelope in each MS)
60%
50%48%
46%
44%
40%41%
40%
36%38%38%
32%
30%27%
27%28%
25%
23%23%24%
22%23%24%
20%
17%18%
15%
12%12%
10%9%8%9%
4,5%4,6%5,0%5,0%5,0%5,0%
3,0%3,7%3,8%3,6%5,0%5,0%5,0%5,0%5,0%5,0%
0,4%0,5%0,7%0,9%0,8%0,9%1,9%1,1%1,5%1,5%2,0%
0%
10 3586
1 1 10 1 1010 47263052
356
CZ
BG 1 1
LUFR
UKIE 1
BE 10
SK FI
EE
DK 10
DE 10
NL
SE 1010 1
AT
LVES 730
SI 505
PL 47
LTHU 4
IT 4
EL 36
RO
PT 3523
CY
MT 12
Share of beneficiaries below the tresholdShare of budget needed
Source: CATS data for financial year 2009, DG AGRI calculation
Note: For those Member States in which a threshold of 1000 per beneficiary will use more than 5% of the direct payments envelope for small farmers, the threshold has been reduced accordingly and its level appears after the initials of the Member States on the axe.
From an economic point of view, the scheme would result in an improvement of the position of smaller structures and to a consolidation of micro-size farms, thus contributing to vitality of rural areas, increasing the public acceptance of direct payments and having a positive impact on the income and purchasing power of small farmers. However, due to the lack of specific data there is no scope for additional quantitative assessment.
Table 17 displays the share of farms per Member State included in the FADN that would be below the thresholds defined in the 3 options.
Table 17: Small farmer scheme - share of farms per MS that would be below the thresholds
option 1 option 2 option 3
Total number MFF distribution MFF distribution MFF distribution
key key key
of farms
15% of the
Min 1000 average DP in Min 1000 but
MS Max 5%
Belgium 30.000 6,3% 8,0% 6,3%
Bulgaria 138.000 46,2% 53,2% 40,7%
Czech Republic
15.000 3,3% 20,0% 3,3%
Denmark 33.000 0,3% 1,2% 0,3%
Germany 200.000 1,5% 4,4% 1,5%
Estonia 7.000
Ireland 97.000
Greece 546.000 20,9% 1,1% 1,4%
Spain 713.000 30,5% 25,2% 19,2%
France 343.000 4,5% 10,0% 4,5%
Italy 609.000 21,1% 5,1% 4,1%
Cyprus 20.000 59,0% 9,0%
Latvia 25.000 4,0% 2,4%
Lithuania 51.000 2,5%
Luxembourg 2.000
Hungary 94.000 12,6% 14,9%
Malta 2.000 20,0%
Netherlands 57.000 4,7% 9,8% 4,7%
Austria 81.000 2,5% 2,5%
Poland 819.000 8,0% 0,7% 1,4%
Portugal 103.000 31,8% 10,6% 6,2%
Romania 956.000 63,9% 5,8% 11,5%
Table 18: Impact of a small farmer scheme on farm income according to size units (in % of change compared to an option 'MFF distribution key' without the small farmer scheme)
MFF distribution MFF distribution MFF distribution MFF distribution
keykeykeykey
Min 100015% of the Min 1000 but
average DP in MSMax 5%
0 - <4 ESU4.7012,7%0,9%0,4%
4 - <8 ESU11.2550,5%0,2%0,1%
8 - <16 ESU16.253-0,3%0,0%0,0%
16 - <40 ESU25.800-0,2%0,0%-0,1%
40 - <100 ESU40.690-0,2%-0,1%-0,1%
>= 100 ESU54.215-0,2%-0,1%0,0%
Source: DG AGRI- FADN
On the other hand, when looking at the income effects for those farmers who are beneficiaries of the scheme, it becomes clear that, depending on the option, impacts can be very substantial reaching up to +21.8 % for the income of small farmers in BG under
option 2 (where the threshold is fixed at 15 % of national average of DP per beneficiary)
Table 19: Impact of small farmer scheme on income for benefiting farms represented in FADN (in % of change compared to an option 'MFF distribution key' without the small farmer scheme)
Change in income of farms benefiting from small farmer scheme
Option 1Option 2Option 3
Min 100015% of average DP in
MSMin 1000 but max 5%
Belgium0,4%1,0%0,4%
Bulgaria13,6%21,8%7,6%
Czech Republic2,5%17,0%2,5%
Denmark0,0%0,3%0,0%
Germany0,3%1,0%0,3%
Estonia Ireland Greece
2,6%0,3%0,3%
Spain2,4%1,6%1,4%
France0,5%1,5%0,5%
Italy1,9%0,5%0,4%
Cyprus9,2%10,2%
Latvia1,5%1,9%
Lithuania2,7%
Luxembourg Hungary
4,4%4,7%
Malta0,9%
Netherlands0,1%0,2%0,1%
Austria1,6%1,6%
Poland2,2%0,2%0,6%
Portugal6,7%2,3%1,8%
Romania12,4%1,7%2,7%
Slovenia8,9%
Slovakia Finland Sweden United Kingdom
7.4. Administrative impacts
Depending on the share of farmers concerned and on the rules that would be simplified for the small farmers, the small farmer scheme could considerably simplify the overall management of the direct payments scheme for Member States. For the farmer, the application procedure for this approach can be very simple and would mean a much less burdensome access to support.
An approach built on the assumption that the direct payments for small farmers would be generally increased does not require any additional control but cross-reporting from existing controls.
However, provisions aimed at preventing artificial "splitting" of farms could be complex
to draft.
-
8.SPECIFIC SUPPORT SCHEME FOR YOUNG FARMERS
Data on the age structure of farmers in the EU indicate the ageing of the farming community. As Table 20 shows, there are 1.8 mio young farmers (defined as farm holders "under 40 years of age") which make up 14% of the population of farmers in the EU-27 and hold 20% of the potentially eligible area (PEA)
-
28.The largest share in PEA held by
young farmers is found in PL (29%), AT and FR (both 27%), while the smallest one in RO (12%), MT and CY (both 13%). The average farm size of young farmers in most Member States is larger than the average farm size. Other indicators also suggest that their performance is better compared to farmers above 45 years of age. However, the weight of this comparison might be biased by a higher share of small and unprofitable farms.
Table 20: Importance of young farmers
YF (farmers less than 40
yrs old*)Hectares of PEA held by YF
N°%N°%
BE7.38016,7%278.60621,3%
BG37.8057,7%672.33019,3%
CZ6.74518,5%524.09814,9%
DK7.30016,7%541.02120,4%
DE80.01021,9%3.514.82620,8%
EE2.84513,0%200.71623,2%
IE20.22015,8%905.06919,5%
GR124.65014,5%1.257.56022,6%
ES110.26011,2%3.861.31918,4%
FR79.53518,6%7.183.94327,1%
IT134.4108,1%1.646.85616,1%
CY3.4658,7%18.59912,9%
LV17.46016,2%350.32322,7%
LT28.75512,5%509.30819,3%
LU36015,9%29.66323,9%
HU91.83014,8%821.25016,2%
MT1.0009,1%92712,6%
NL11.27015,5%314.54717,3%
AT38.78524,0%737.08727,0%
PL549.78023,0%4.106.95729,0%
PT15.3655,7%414.74714,2%
RO394.39010,1%1.158.93311,9%
SI7.87510,5%72.14216,3%
SK6.2959,4%285.41215,2%
FI13.75520,5%580.26425,5%
SE9.48014,0%534.68717,5%
UK24.8208,8%2.271.13714,2%
EU-271.825.84513,6%32.445.87720,1%
EU-15677.60012,4%23.888.66820,3%
EU-121.148.24514,4%8.564.45919,7%
the newcomers who apply are young farmers. However, further narrowing down of newcomers as only young farmers, e.g. on the basis of criteria used for rural development measures, risks to be challenged at the European Court of Justice because of being discriminatory.
While a majority of Member States uses the national reserve for newcomers, there are a few that do not (DK, NL, SE, MT, DE, UK), which means that their young farmers can get the access to direct support under the SPS only by transfers of entitlements (by buying, leasing or inheriting). As this can be, together with land, rather costly, young farmers may not be encouraged to start farming. This is particular the case when the support for setting-up (or for an early retirement) is not available under the rural development programme (MT, NL, SK). In terms of access to direct payments, young farmers in Member States applying SAPS benefit from a more favourable treatment as they can claim direct support any year provided that they have at their disposal eligible land.
In the light of this situation, a specific support scheme for young farmers in Pillar I could be envisioned that would encourage the setting-up of young farmers and/or support the operation of their farms in the first years. When designing such a new scheme, the objectives of the scheme should guide further decisions such as whether it is mandatory or voluntary, who are beneficiaries, the amount and the form of support, when and for how long to grant support and whether to set any budgetary limits.
A mandatory application would ensure that the often difficult situation for young new- comers would be equally taken into account in all MS. On the other hand, voluntary application could be argued as well since Member States are in the best position to decide if an additional measure is necessary in their case.
As defining beneficiaries on the basis of their age could be challenged at the European Court of Justice, an alternative could be to use the current definition of "newcomers", with the expectation that most of them would be young farmers, or to apply the definition foreseen under rural development measures
-
29.The justification could be that "the
creation and development of new economic activity by farmers commencing their agricultural activities (or young farmers) is financially challenging, in particular for young farmers, and this should be considered in the allocation and targeting of direct support". Besides legal implications, both targeted definitions also narrows down the number of potential beneficiaries, thus having more limited implications in terms of budgeting and administrative burden than if all farmers under 40 are granted support.
Option 3: Granting a top-up of a certain percentage of the basic rate for direct
payments in each Member State to a scheme for young farmers (less than 40 years of age)
Option 4: Granting a lump-sum support to starting-up farmers based on average farm
size and average direct payments per ha in the Member State.
In all options, the support would be given for a limited number of years, e.g. 3 years or 5 years, or until a farmer reaches the age of more than 40 years.
8.1. Economic impacts
The impacts of the four options are assessed in terms of the level of the payment to young farmers and the share of budget that would have to be dedicated to the scheme in a given year. The analysis is done on the basis of Eurostat data on the number of young farmers and the size of their farms. Results have then been projected in the redistribution scenario "MFF distribution key".
The results would be the following:
Option 1: The impact of a YFS with a fixed top-up amount per hectare for small
farmers has been examined for three different amounts for the top-up of 100/ha, 50/ha and 20/ha. Both a top-up of 100/ha and a top-up of 50/ha would require a considerable share of the direct payment budget for its financing (7.6 % and 3.8 % respectively at EU level) while these amounts would be reduced substantially for the top-up of 20/ha (1.5 %). LV would be the Member State with the highest share of the national direct payment envelope going into the YFS, up to 16 % with a 100/ha top- up due to the fact that its number of young farmers is relatively high and the budgetary envelope for direct payments relatively low (see Table 21).
Table 21: Impact of YFS with fixed top-up payment per hectare
Share of
budget YFS Budget for Share of Budget for Share of
Budget for YFS with YFS with budget YFS YFS with budget YFS
with 100/ha100/ha50/hawith 50/ha20/hawith 20/ha
mio %mio %mio %
BE27,95,3%13,92,6%5,61,1%
BG67,28,2%33,64,1%13,41,6%
CZ52,45,9%26,22,9%10,51,2%
DK54,15,9%27,13,0%10,81,2%
DE351,56,8%175,73,4%70,31,4%
EE20,114,8%10,07,4%4,03,0%
IE90,57,3%45,33,6%18,11,5%
GR125,86,2%62,93,1%25,21,2%
ES386,17,7%193,13,9%77,21,5%
FR718,49,4%359,24,7%143,71,9%
IT164,74,3%82,32,1%32,90,9%
CY1,93,7%0,91,8%0,40,7%
LV35,016,0%17,58,0%7,03,2%
LT50,911,1%25,55,5%10,22,2%
LU3,08,7%1,54,3%0,61,7%
HU82,16,3%41,13,2%16,41,3%
MT0,11,9%0,00,9%0,00,4%
NL31,54,1%15,72,1%6,30,8%
AT73,710,4%36,95,2%14,72,1%
PL410,713,1%205,36,5%82,12,6%
PT41,56,8%20,73,4%8,31,4%
RO115,95,9%57,93,0%23,21,2%
SI7,25,2%3,62,6%1,41,0%
SK28,57,1%14,33,5%5,71,4%
FI58,010,8%29,05,4%11,62,2%
SE53,57,5%26,73,7%10,71,5%
UK227,16,2%113,63,1%45,41,2%
EU-273.244,67,6%1.622,33,8%648,91,5%
EU-152.388,97,1%1.194,43,6%477,81,4%
EU-12856,49,0%428,24,5%171,31,8%
Table 22: Impact of YFS with fixed percentage of direct payment budget
Budget for
Budget for YFS /ha for YF YFS with /ha for YF
with 5% of MS with 5% of 2.5% of MS with 2.5% of
envelope for MS budget envelope for MS budget
YFSfor YFSYFSfor YFS
mio /hamio /ha
BE26,494,713,247,4
BG40,860,720,430,3
CZ44,785,422,442,7
DK45,784,522,842,2
DE259,273,7129,636,9
EE6,833,73,416,9
IE62,168,631,034,3
GR101,280,550,640,2
ES249,964,7124,932,4
FR382,753,3191,426,6
IT192,8117,196,458,5
CY2,5135,91,367,9
LV11,031,35,515,6
LT23,045,211,522,6
LU1,757,80,928,9
HU65,179,232,539,6
MT0,2266,40,1133,2
NL38,3121,819,260,9
AT35,448,117,724,0
PL156,938,278,419,1
PT30,373,115,236,5
RO97,584,148,742,0
SI6,996,23,548,1
SK20,270,810,135,4
FI26,946,313,423,2
SE35,967,117,933,5
UK184,181,092,040,5
Table 23: Impact of YFS with top-up of a certain percentage of the basic rate
basic rate per ha for Budget for Share of basic rate per ha for Budget for Share of
YFS with YFS in total YFS with YFS in total
basic rate 20% top-up YF with 20% 20% top-up budget with 25% top-up YF with 25% 25% top-up budget with
per hato basic ratetop-upfor YF20% top-upto basic ratetop-upfor YF25% top-up
/ha/ha/hamio %/ha/hamio %
BE230,546,1276,512,82,4%57,6288,116,13,0%
BG160,532,1192,621,62,6%40,1200,727,03,3%
CZ152,630,5183,116,01,8%38,1190,720,02,2%
DK206,041,2247,222,32,4%51,5257,527,93,0%
DE183,736,7220,4129,12,5%45,9229,6161,43,1%
EE89,617,9107,53,62,7%22,4112,04,53,3%
IE180,036,0216,032,62,6%45,0225,040,73,3%
GR298,059,6357,674,93,7%74,5372,593,74,6%
ES120,524,1144,593,01,9%30,1150,6116,32,3%
FR167,233,4200,6240,23,1%41,8208,9300,23,9%
IT181,536,3217,859,81,6%45,4226,974,71,9%
CY207,741,5249,30,81,5%51,9259,71,01,9%
LV74,214,889,05,22,4%18,592,76,53,0%
LT104,320,9125,210,62,3%26,1130,413,32,9%
LU157,231,4188,60,92,7%39,3196,51,23,4%
HU184,636,9221,530,32,3%46,2230,837,92,9%
MT287,057,4344,40,11,1%71,8358,80,11,3%
NL240,248,0288,315,12,0%60,1300,318,92,5%
AT133,426,7160,119,72,8%33,3166,724,63,5%
PL121,624,3145,999,93,2%30,4152,0124,94,0%
PT104,720,9125,78,71,4%26,2130,910,91,8%
RO85,017,0102,019,71,0%21,3106,324,61,3%
SI170,334,1204,42,51,8%42,6212,93,12,2%
SK125,225,0150,27,11,8%31,3156,58,92,2%
FI138,427,7166,116,13,0%34,6173,120,13,7%
SE137,827,6165,314,72,1%34,4172,218,42,6%
UK133,926,8160,660,81,7%33,5167,376,02,1%
EU-27149,129,8178,9967,52,3%37,3186,41.209,42,8%
EU-15160,632,1192,7767,42,3%40,2200,8959,22,9%
EU-12119,023,8142,9203,92,1%29,8148,8254,92,7%
-
*age class 'less than 40 years old' has been estimated by assuming a uniform distribution of farmers in the age class 'from 35 to 44 years old' based on Eurostat data
Source: Eurostat data, DG AGRI calculation
Option 4: The impact of a lump-sum support to young farmers was analysed for a
model that would give young farmers a payment at the level of 25 % of the average direct payment per ha in the Member State in which they are located times their farm size in hectare
with a limit of 25 ha in Member States whose average size of holding is
below 25 ha and a maximum comprised between 25 ha and the average size of holdings in the Member States where average holding size is equal to or higher than 25 ha.
Table 24: Impact of YFS with a lump-sum support
number of
hectares YFS
5% of average taken into payment total YFS in share
farmers farm size of average farm ccount for average per payments to of total DP
<40yrs**YFsize in MSYFSDP/ha PEAfarmer***YFSbudget
N°hahahaDP/ha- - %
BE36937,828,628,6403,42.8871.065.3450,20%
BG1.89017,86,217,8233,71.0391.964.1120,24%
CZ33777,789,377,7254,84.9501.669.3900,19%
DK36574,159,759,7344,25.1351.874.1110,21%
DE4.00143,945,743,9307,33.37513.503.3370,26%
EE14270,638,938,9156,61.521216.3140,16%
IE1.01144,832,332,3267,82.1612.185.0400,18%
GR6.23310,14,710,1363,99185.720.0390,28%
ES5.51335,023,825,0237,71.4858.188.8370,16%
FR3.97790,352,152,1288,93.76314.965.4040,20%
IT6.72112,37,612,3378,01.1587.782.2550,20%
CY1735,43,65,4351,747281.7770,16%
LV87320,116,520,1141,8711620.9110,28%
LT1.43817,711,517,7174,47721.110.3480,24%
LU1882,456,956,9275,73.92270.5930,21%
HU4.5928,96,88,9257,35752.641.2900,20%
MT500,90,90,9673,71567.8030,16%
NL56427,924,925,0422,12.6381.486.7540,19%
AT1.93919,019,319,0259,81.2342.393.3230,34%
PL27.4897,56,57,5221,741411.381.4030,36%
PT76827,012,625,0207,71.298997.3490,16%
RO19.7202,93,52,9200,51472.904.7270,15%
SI3949,26,59,2312,6716281.9110,20%
SK31545,328,128,1215,41.512475.7850,12%
FI68842,233,633,6236,01.9831.363.5230,25%
SE47456,442,942,9234,92.5221.195.3250,17%
UK1.24191,553,853,8230,93.1063.854.2910,10%
EU-2791.29217,8266,790.001.2960,21%
EU-1533.88035,3284,466.645.5260,20%
EU-1257.4127,5218,923.355.7700,25%
-
*age class 'less than 40 years old' has been estimated by assuming a uniform distribution of farmers in the age class 'from 35 to 44 years old' based on Eurostat data
** it was assumed (on the basis of the figures of farmers assisted in the RD programmes for YF) that the number of assisted farmers in the YFS could be around 5% of the farmers <40yrs
*** 25% of average DP/ha x average farm size of young farmers (with limit of 25 ha in MS whose average size of holding is below 25 ha and limit of average size of holdings in the MS where average holding size is more than 25 ha)
Source: Eurostat data, DG AGRI calculation
8.3. Environmental impacts
It is unlikely that there would be substantial environmental impacts from the introduction of a young farmer scheme. However, it is possible that young farmers would have a particularly good awareness of environmental problems and the skills and knowledge to use modern technology that allows environmentally and climate friendly production methods.
8.4. International impacts
There would be no particular international impacts from a young farmer scheme.
8.5. Administrative impacts
The implementation of a scheme for young farmers would cause additional administrative burden but the costs would be limited as the number of farmers that could take part in such a scheme would not be extremely high. It is important that such a scheme would be designed not to double existing support possibilities under rural development.
-
9.BETTER DEFINITION OF "ACTIVE FARMERS"
The current definition of "farmer" ("...a natural or legal person, or a group of natural or legal persons (...) who exercises an agricultural activity.") acknowledges the fact that direct support is decoupled and, thus, not linked to production activity. However, the application of this definition has resulted in criticism from the European Court of Auditors (ECA), and also from the public at large, as certain cases have been reported where direct payments seem to have been granted to persons or companies that cannot be considered as genuine farmers as they are only to a very small extent engaged in agriculture or agriculture is not their main business activity.
This problem was already addressed in the Health Check of the CAP that provided for optional additional criteria for the exclusion of persons/companies from the aid whose agricultural activity is only an insignificant part of their overall activity and/or whose main business objects do not consist of exercising an agricultural activity. However, no Member State has made use of the possibility of setting up these additional criteria.
· Third, the situations differ substantially between Member States with respect to how
many beneficiaries could be affected and with respect to what kind of information is available in national statistics to be used as criteria to determine what is an "active farmer".
As for establishing the criteria to define who is an "active farmer" there are two approaches both of which, however, may create problems:
· Due to the differences between Member States mentioned above, it could be a
promising approach to establish a list of criteria for the definition of "active farmers"
at European level from which Member States could then choose those elements that best fit their national situation and the availability of information. The problem with this approach is that it could give rise to complaints about discrimination and unequal treatment between farmers.
· Alternatively, fixed and equal criteria could be set that all Member States would have
to apply. This, however, would not leave flexibility to Member States and could create problems for those Member States that are not in a position to apply the selected elements.
Possible elements to be considered as criteria to determine who is an "active farmer"
could be, for example:
· That the turnover (or income, or receipts) derived from an agricultural activity
represents or represented at least X % of the total turnover (income, receipts) of a natural or legal person. This would mean that payments would be granted only to those natural and legal persons for whom agriculture forms a significant part of overall economic activities or whose principal business or company objects consists of exercising an agricultural activity. However, care would have to be taken not to exclude part time farmers with such a definition (most notably those engaged in diversification strategies).
· Farmers subscribing to rural development measures could be considered as active
farmers. However, this criterion is, again, not sufficient as the sole determinant of who should be seen as an active farmer.
9.1. Economic and social impacts
The economic impacts of a better definition of "active farmers" would most likely not be substantial as the problem of granting direct payments to non-genuine farmers seems to be limited to particular cases and is not a widespread phenomenon. This having been said, a definition that guarantees that only active farmers receive support means, of course, a better targeting of payments to those who actually are the intended recipients. Thus, the approach would improve the use of public funds and increase the public acceptance of direct payments.
9.2. International impacts
It would have to be ensured that the list of criteria set up to define who is an "active farmer" contains only elements that respect WTO Green Box criteria. In particular, it would have to be avoided that any of the criteria would imply an obligation to produce in order to be classified as an "active farmer" as this would be against the principle of decoupling.
9.3. Environmental impacts
Care is needed not to exclude from support - and so from GAEC - land which is important for environmental reasons and/or which may also at some stage be needed for agriculture.
9.4. Administrative impacts
Improving the targeting of payments to active farmers would require careful fine tuning of definitions, possibly in cooperation with Member States, and selecting criteria to be integrated into the IACS register. This would generate substantial administrative effort for farmers who would have to prove eligibility by providing supplementary detailed information and possibly submitting accompanying documents with their application and for national/regional authorities who would have to control the received information. This could lead to a considerable increase of administrative burden for farmers and Member States.
particular type of farming are considered particularly important for economic and/or social reasons. The potential risks and benefits in the regions should be identified on a case-by-case basis before deciding to which extent and where a possibility for coupled support should remain.
To this end, the role of coupled payments on farmer's margins was assessed on the basis of FADN data (see details in sub-annex 3E "Impact of suppression of coupled support for beef, sheep and goat sectors based on FADN data"). As some current coupled payments will become decoupled in the coming years (sugar beet and cane, fruits and vegetables) and as some others are part of specific programmes (POSEI and Small Aegean Islands) or are guaranteed by the Treaty (cotton), the assessment was limited to the beef, sheep and goat sectors
-
31.All types of coupled payments implemented during the analysed period
were taken into account: "re-coupled" payment, specific support (Article 69 of Reg. 1782/2003), national aid or Complementary National Direct Payment.
The analysis is based on the principle consideration that, if all the payments are decoupled, it is assumed that a farmer continues producing only if the output covers the operating costs. Therefore the analysis compares the margin over operating costs with and without coupled payments and looks at the particular Member States, types of production systems and types of areas (LFA, mountain LFA, non-LFA) to assess the impacts.
10.1. Farm level impacts of keeping certain types of coupled supports
The impacts of withdrawing coupled payments on farmers' margins vary substantially across the analysed Member States and the different production systems and regions.
In the beef sector, in FI and SE direct payments (both EU and national coupled &
decoupled payments especially LFA and environmental payments) are so important that the farmers may not take their production decision solely on the basis of a margin analysis per enterprise. Specialist breeders especially in mountainous LFA are the most sensitive to the decoupling of any of the per head payments especially in FR, AT and PT where from 18 to 44 % of the suckler cow population could be affected. The payments per head represent a lower share of the margin of the specialist breeders and fatteners (B&F); therefore the impact of a total decoupling would be limited for these systems except in FR and PT where respectively 15 % and 36 % of the cows could be affected, especially in other LFA areas. Suppression of the coupled direct payments for fatteners affected estimated 86 % of FI fattening farms and 89 % of the total population of animals.
ES the impact may be limited to 5 % of the ewes. Despite the limitation due to small sample sizes, it seems plausible that the impact would be also significant in HU and PT.
10.2. Environmental and climate change impacts
The question of whether margins would turn negative without coupled support in the beef, sheep and goat sectors is of substantial importance from an environmental point of view as many of the producers are located in environmentally sensitive areas where little or no other agricultural activity is possible as production conditions are particularly challenging. The move to negative margins and, as a consequence, the termination of agricultural production in these areas could result in land abandonment with negative environmental and climate change consequences.
For example, 84 % of the EU-27 beef breeders are located in less favoured areas and gross margin is significantly lower in mountainous LFA as the lower value of output is not fully compensated by lower costs of production. In general, sheep and goat production is also located mainly in LFA where often no other production is possible.
10.3. Social impacts
In rural areas where little other agricultural or general economic activity takes place, beef, sheep and goat production can contribute to providing employment and keeping up the vitality and attractiveness of rural areas. As these types of farming are often located in disadvantaged regions, the continuation of production can be judged favourably from a social point of view in these cases.
10.4. International impacts
A precondition for maintaining some payments coupled to production is that these payments stay within strict limits to be fully compatible with WTO requirements.
the enhancement of certain elements of Good Agricultural and Environmental
Conditions (GAEC) within cross compliance.
The analysis in annex 2 "Greening of the CAP" shows that there is a place for a greening component of direct payments within this two pillar structure, which would - together with enhanced cross compliance and a stronger rural development - considerably enhance the environmental performance of the CAP throughout the EU territory.
To be effective, the design of such a greening component should strike the right balance between benefits for the environment and efforts required by the farming sector, while staying simple as befits the Pillar I and keeping administrative burden as low as possible.
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12.COMBINATION OF OPTIONS FOR DIRECT PAYMENTS INTO SCENARIOS
This section discusses the overall impacts of the direct payment aspects of the three broad policy scenarios mentioned in the Communication on the CAP, i.e. the "adjustment", "integration" and "re-focus" scenario. As each scenario includes a different combination of the elements for direct payments discussed in chapters 4 to 10, the section draws strongly on the discussion earlier in this paper and only briefly recapitulates the effects that the combination of the options will produce.
12.1. Description of the combined options into scenarios for direct payments
12.1.1. "Adjustment" scenario
The "adjustment" scenario focuses on the redistribution of direct payments toward more equity between Member States and farmers. Different approaches to this redistribution are applied (such as convergence to EU flat rate, "Min 80%" or "Min 90% with objective criteria"). The redistribution would imply a move of all Member States towards a regional model for direct payments, independently of the options chosen for redistributing the envelopes (see chapter 4).
a compulsory basic income support (at least 60% of national envelope in each
Member States) distributed under the form of a regional flat rate based on entitlements (see secti on 4.2);
a compulsory area-based payment for naturally handicapped areas of maximum
5% of national direct payments envelope (see chapter
[[note: 5)]];
a compulsory green payment across the whole EU territory, composed of simple,
generalized, annual and non-contractual environmental measures going beyond baseline standards of cross compliance (the green layer would represent 30% of national envelope in each Member States); the measures would concern permanent grassland, ecological set-aside, crop diversification and a Natura 2000 specific support as well as automatic granting of the payment to organic farming (see chapter
[[note: 11 a]]
-
-nd annex 2 on "Greening of the CAP");
a voluntary coupled support component for specific sectors representing
maximum 7.5% of the national direct payments envelope (see chapter
[[note: 10)]]
· All layers but the greening are subject to progressive capping mitigated by salaried
labour employed (see chapter
[[note: 6)]]
· Better targeting of support to active farmers in order to make sure that direct payments
reach only persons genuinely engaged in agriculture including part-time farmers (see
chapter
[[note: 9)]]
· A lump sum support to small farmers (defined as small beneficiaries below a certain
threshold) replacing all the other components of direct payments in order to cut red tape, financed by a maximum 5% of direct payments national envelope (see chapter 7)
· A support scheme for young farmers (defined as farmers starting-up an agricultural
activity) based on farm size and average direct payments in a Member State, financed by a maximum of 2% of direct payments national envelope (see chapter 8)
The effects of the redistribution of direct payments would vary strongly depending on the option chosen. The option of granting flat rate direct payments across the EU would lead to massive redistributions of funds between Member States. The resulting substantial impacts on incomes are likely to make it politically unacceptable for many Member States to agree to such a redistribution.
The options of ensuring a minimum level of convergence or of combining this pragmatic approach with the use of objective criteria in redistributing between Member States would reduce the effects on incomes while still leading to a more equitable distribution of direct payments among Member States.
The move towards a regional model for direct payments that is implied in the redistribution means that direct payments would be redistributed also between farmers within Member States, at least in those Member States currently applying a historic model.
The impact on income per type of farming is mainly driven by the move toward a regional model. Whatever the option for redistribution, grazing livestock farms and to a lower extent wine farms and horticulture would benefit. Field crop farms and milk farms, on the other hand, would see a significant decrease in their income. In general, farming systems based mainly on grassland would considerably benefit from the redistribution.
Integration scenario:
The impact of the redistribution of payments would go in the same direction as described for the adjustment scenario, albeit with a somewhat lower level of convergence of payment levels between Member States due to the fact that the increase in direct payment for Member States below 90% of the EU average is more limited. The extent of changes would also be influenced by:
The fact that only a part of the national envelope would be devoted to the basic
income support so that some farmers could see their basic income support substantially reduced. The impacts of this reduction may, of course, be mitigated by a transitional period in order to allow the adjustments of farm structures;
-
constraints. However this would strongly depend on the level of implementation of the flat rate and delimitation of regions by the Member States;
The maintenance of coupled supports to livestock. The effect would depend on the
allocation of budget to this component. If a reduction of the envelope of coupled aids occurs compared to the Status Quo, the most affected farms would be grazing livestock farms in certain regions. However, this is mitigated by the rest of the scheme (redistribution of direct payments) which is in general more favourable to grazing livestock farms;
The fact that small farmers would see an increase in their direct payments, narrowing
the income gap with bigger structures. This would allow them to choose the development path they wish, whether towards structural change or maintaining local small-scale production;
The support scheme for young farmers which would increase the incomes of farmers
starting-up agricultural activity for a limited number of years and thus encourage the entry of young farmers into the sector;
The better targeting of support to active farmers, which would most likely not have
substantial overall income effects for the sector but would increase the public acceptance of direct payments;
The fact that there are farmers who can profit from many components of the system,
e.g. being located in areas with specific natural constraints thus eligible to the LFA component of the direct payments and efficiently carrying out the environmental measures of the greening component. They would see their income increase as compared to farmers who can make use only of some components of the system.
Refocus scenario:
The end of direct support would result in structural changes by accelerating the move towards larger farm sizes and to more competitive production regions. Substantial reductions in farm incomes would force many producers out of business and could even endanger generally economically viable farms in years of difficult market situations as the role of direct payments in providing income support would be lost. Structural changes are likely to result in loss of employment in the farm sector and possibly also in up- and downstream sectors.
The effect of the redistribution of direct payments between farms would in itself have an important effect on the support to more environmentally sustainable and climate friendly farming. Grazing livestock farms and farms in least favoured areas would benefit from the redistribution, which would to a certain extent be favourable for the maintenance of permanent grassland and all its environmental and climate action benefits, while more intensive crop production would be supported to a lesser degree.
Integration scenario:
Farms located in LFA/NHA would benefit both from the additional income support to areas with specific natural constraints in Pillar I and the move to a regional flat rate as well as the redistribution between Member States. This would be favourable for the continuation of farming in areas with a high risk of land abandonment, which is in turn positive for biodiversity.
The environmental effects of the "greening" component and streamlining of cross compliance, which would increase the environmental performance of the CAP as a whole in terms of soils, biodiversity, water balance, climate change mitigation and adaptation, and landscape amenities, are discussed in annex 2 on "Greening of the CAP")..
Refocus scenario:
The main environmental impacts of the end of direct support would be due to the changing territorial distribution of agricultural activity. Both the concentration of production in particularly productive areas and the abandonment of production and land in more marginal regions would have far reaching consequences for the environmental balance in these areas with, e.g. possible loss of biodiversity
-
32.The extent of many of
these impacts depends strongly also on whether and how policies of Pillar II would be adapted to mitigate the consequences.
With the end of direct payments, the enforcement and sanctioning mechanism of cross compliance would be lost to a large extent and the wide reach of the GAEC ensuring a minimum maintenance of land without economic use would be lost. However the gradual nature of phasing out of direct payments may make it possible to introduce over time other ways of contribution to a better enforcement of environmental legislation.
With respect to the targeting of direct payment, it will have to be ensured that all components of the payment are in line with WTO rules. This means in particular that the extent of coupled support would need to remain within clearly defined limits and the elements used to define who is an "active farmer" need to respect WTO Green Box criteria, in particular they cannot imply an obligation to produce.
Re-focus scenario:
The WTO compatibility of CAP payments would not be affected.
12.2.4. Administrative impacts
Adjustment scenario:
In the first year of implementation of the new system, there would be an administrative burden associated with the redistribution (distribution of new entitlements and/or recalculation of the value of entitlements) and possibly transition (defining steps for progressive modifications in subsequent years for each farmer). However, this would be a one-off administrative impact.
Integration scenario:
In addition to the need of managing the redistribution in the first year of implementation of the new scheme, a number of the components for direct payments, such as capping, the definition of "active farmers" and the "greening" could be burdensome as additional control requirements could result from them.
On the other hand, the small farmer scheme would substantially reduce the administrative demands from the application for and granting of direct payments to such beneficiaries.
Refocus scenario:
In the long run, the phasing out of direct payments would bring administrative facilitation since the scheme would not have to be administered anymore.
Adjustment Integration Refocus
Flat rate Min 80% Min 90% + obj criteria MFF distrib. key Small farmers scheme Young farmer scheme Capping Greening Additional support for NC Definition active farmers Coupled support
Effects as compared to status quo Effects of each component as compared to MFF distribution key without any Effects as comp. to status quo
components
Income effect
EU27 0 0 0 0 - - - -1 - +1 - -2
EU15 -2 -1 -2 -1 - - - -1 - - - -2
EU12 +2 +1 +2 +1 - - - -2 - - - -2
LFA -1 -1 -1 -1 - - - 0 +1 - +1 -2
Non-LFA +1 +1 +1 +1 - - - -1 -1 - - -1
Arable farms -1 -1 -1 -1 - - -1 -1 0 - - -1
Grazing lifestock farms +2 +2 +2 +2 - - -1 +1 +1 - +1 -2
Large farms - - - - - - -1 - - - - -1
Small farms - - - - +2 - - +1 - - - -2
Young farmers - - - - - +2 - - - - -
Environmental effects 0 0 0 0 0 0 0 +2 +1 0 +1 -2
International effects 0 0 0 0 0 0 0 0 0 0 -1 0
SUB-ANNEX 3A Evaluation of income effect of direct support Main results
(1) SCOPE
The evaluation examines the effects of the direct support schemes laid down in Council Regulation (EC) No 1782/2003 on the income of farmers and answers how effective and efficient these schemes have been in ensuring a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture (Art. 39 of the Treaty of Lisbon). The evaluation also examines the coherence of direct payments with measures under the Single CMO and rural development measures with respect to the income objectives.
The evaluation covers the 27 EU Member States over the period since 1 January 2005 onwards, but it uses data going back to 2001.
(2) METHODOLOGY
The analysis was carried out:
· At the macro-economic level, based on agricultural statistics from EUROSTAT at regional level
(NUTS II);
· At the micro-economic level, based on farm data from the FADN database (Source: EU-FADN-
DG AGRI L-3).
The analysis distinguished between seven agricultural sectors, the choices of implementation of the direct payment schemes in different Member States/regions, farm size, type of organisation and geographical location.
The following table provides a synthesis of the main issues covered by the evaluation and the tools used for addressing them:
Tools Update
of FADN data
Tools Update
of FADN data
(BU and RO, 2008)
Estimatio
n of the effects of CMO measures
Statist ical analys
is Ordinar
y least square models Gini coefficient
of concentrati
on
Probit regressi
on Quantile regression
s Litera ture Revie
w Panel
of exper
ts
Issues
Contribution to the economic viability of farms
Efficiency in targeting the beneficiaries
Relative income transfer efficiency
Coherence between direct support and other CAP measures
Coherence between direct support and LFA compensatory allowance
(3) MAIN CONCLUSIONS
Contribution of direct payments to achieving a fair standard of living for the agricultural community, by stabilising and enhancing the income of farmers
In terms of enhancing farmers' income, direct payments:
· Contribute to enhancing the income of farmers;
· Play a particularly important role in generating income in grazing livestock specialist farms,
field crops, mixed farms and dairy farms;
Role of direct payments for farmers' income according to farm location and the type of organisational form of holding
Direct payments:
· Reduce the existing differences between farmers' income in non LFA areas and in LFA
areas and the subgroup of mountain LFA areas;
· Have larger effects on income stability in LFA areas in comparison to non-LFA areas;
· Contribute to improving the standard of living of the agricultural communities in the LFA
areas and in the subgroup of mountain LFA areas;
· Appear to have a larger income stabilizing effect in individual farms and farms organised as
partnerships compared to farms having other types of organisational forms.
Direct payments and economic viability
· Direct payments are vital in ensuring the economic viability of farms in field crops, other grazing
livestock, mixed farming and in part the milk sector;
· Farms in which the unpaid labour component is modest (FWU/AWU <30%) are relatively
more efficient in the EU15 and less efficient in the EU12. This suggests that the strategic goals in these classes of farms are completely different: more targeted to economic results in the EU15 and more focused on social aspects in the EU12. In other words, maximisation of profit in the first case, and maximisation of employment in the second;
· The hybrid SPS model has probably contributed to a stronger growth of the return on
investments (ROI) and of the return on assets (ROA) in the EU15 after the reform in comparison with the pre-reform period.
Efficiency of direct payments
· Regarding the decoupled payments, the results of the modelling at the macro-economic and
the micro-economic level are not completely similar. While the results of the regressions at macro-economic level allow us to conclude that this type of payments contribute to decreasing income disparities, the results of the regressions run at micro-economic level are less clear-cut.
Coherence of direct payments with other CAP measures: measures under the Single CMO and rural development measures
· Direct payments are coherent with the other measures in relation to the objective of
enhancing farmers' income: the three types of support measures complement each other as they substitute each other over time in order to maintain the overall level of support roughly constant;
· Direct payments have been coherent with the measures under the Single CMO as farm
income support tools;
· Concerning the rural development measures, the results of the regression estimates are less
clear-cut;
· The three types of policy instruments are coherent with respect to contributing to more
stable incomes. Coherence between direct payments and CMO support appears to be higher than between direct payments and rural development measures in most types of farming;
· Direct payments (at EU level considering all regions and all types of farming) are coherent
with the compensatory allowance given to specific farms within a certain LFA area (i.e. the income of farmers receiving the compensatory allowance is lower or equal to the income of other farmers either not located in LFA or located in LFA but not receiving the compensatory allowance). However, the analysis by type of farming and by groups of regions according to the SPS implementation model indicates that there are also cases of overlap of direct payments with the compensatory allowance (the income of farmers receiving the compensatory allowance is higher than the income of other farmers);
payments are basically granted to farmers who need them, therefore, efficiency of direct payments' expenditure can be considered as good. However, the analysis has also revealed that margins of inefficiency exist (direct payments are granted to a certain share of farmers whose income is above the benchmark), especially in certain sectors (i.e. in the field crops sector) and in certain regions. Therefore, and taking into account also other objectives pursued with direct payments (e.g. public goods provision), it seems reasonable to recommend the identification of adequate assignment criteria and appropriate instruments able to redistribute at least part of the financial surplus generated by inefficiency to farmers who are most in need (i.e. for whom the current level of direct payments does not allow reaching the benchmark), regardless of the sector. A more efficient allocation of the expenditure would also contribute to re-aligning agricultural and other population income distribution curves.
· It was not possible to evaluate the role played by direct payments in farm household total
income, in spite of noticeable interest in this matter. The analysis of the existing literature (studies and statistics) reveals the existence of heterogeneous definitions of agricultural households and, thus, of a variety of measurement criteria and data collection instruments (where they exist). In essence, therefore, the high heterogeneity of definitions and methods makes a combined reading of the existing information impossible. Consequently, it is recommended that a common definition of farm household and farm household total income is provided and that harmonised statistics are implemented with respect to both the official national and EU statistics and the FADN.
SUB-ANNEX 3B - Overview of the implementation of direct payments under the CAP in Member States in 2010 (Reg. 73/2009) (*)
November 2010
Member Start Regions Model Min. Sectors remaining coupled Specific Support under
States SPS SPS / Require and transitional coupled payments of the Fruit & Articles 68 - 72
SAPS - ments Vegetables sector
Belgium 2005 Zone Nord: Flanders SPS 100 Suckler cow premium 100% For a better quality all sectors 68(1)(a)(ii)
+ Brussels historical Slaughter premium calves 100%
Protein crops, Flax for Fibre
2005 Zone Sud: Wallonia SPS 100 Suckler cow premium 100% Grassland premium breeding 68(1)(b)
historical Protein Crops, Flax for Fibre
Bulgaria - SAPS 0,5 ha F&V: Transitional soft fruit payments 100% In the dairy sector 68(1)(b)
100
Czech - - SAPS 1 ha Separate sugar payments 100% Aid for dairy farmers 68(1)(b)
Republic F&V:Separate payment for tomatoes intended for processing
100%
Denmark 2005 one region SPS 2 ha Special male bovine premium 75% Agri-environment Measures 68(1)(a)(v)
dynamic 300 Sp Sheep and goat premium 50% Perennial Energy Crops 68(1)(a)(i)
hybrid Starch Potato, Dried fodder, Flax for Fibre
Germany 2005 Bundesländer SPS 1 ha Protein Crops, Nuts, Grassland premium in dairy sector 68(1)(b)
(Berlin included in dynamic Starch Potato, Dried fodder, Flax for Fibre
Brandenburg, hybrid
Bremen in Lower moving to
Saxony and Hamburg a flat rate
in Schleswig-
Holstein)
Estonia SAPS 1 ha In the dairy sector 68(1)(b)
Ireland 2005 - SPS 100 Protein Crops, Dried Fodder Grassland Sheep Scheme and Grassland Dairy Efficiency
historical 68(1)(b)
Conservation in the Burren 68(1)(a)(i)
Member Start Regions Model Min. Sectors remaining coupled Specific Support under
States SPS SPS / Require and transitional coupled payments of the Fruit & Articles 68 - 72
SAPS - ments Vegetables sector
Greece 2006 - SPS 200 F&V: Until end 2010: 30% of the envelope for tomatoes Improvement of quality of olive oil, durum wheat
historical intended for processing 68(1)(a)(ii)
Cotton, Sugar, Dried fodder LFA producers in meat sectors (beef, sheep and goat)
Small Aegean Islands 100% 68(1)(b)
Restructuring programmes in LFA
Mountainous areas 68(1)(c)
Spain 2006 - SPS 100 Suckler cow premium 100% Improving quality of legumes, tobacco sheep and goat farmers and milk products
historical Slaughter premium calves 100%
Slaughter premium bovine adults 40% 68(1)(a)(ii)
Seeds, Protein Crops, Rice, Nuts, Cotton 35%, Sugar, Dried fodder, Flax for Fibre, Starch Potato 60% National programme crop rotation
68(1)(a)(v)
Outermost regions 100% Aid to sheep and goat producers and milk producers in LFA
F&V: Until end 2010: 50% of the envelope for tomatoes 68(1)(b)
intended for processing Ex article 69 measures (beef ,cotton, sugar, milk)
72(3)
France 2006 - SPS 100 Suckler cow premium 75% Additional aid for protein crops 68(1)(a)(i)
historical Seeds (some species), Protein Crops, Rice, Nuts, Aid for quality of durum wheat 68(1)(a)(ii)
Starch Potato, Dried fodder, Flax for Fibre To maintain organic farming 68(1)(a)(v)
Outermost regions 100% Diversification of crop rotation 68(1)(a)(v)
F&V: Until end 2011: 50% for tomatoes intended for Aid for calves from suckling cows and for organic labelled calves; aid for sheep and goat producers; aid for milk producers in mountain areas
processing
Until end 2010: 98% of national envelope for orchards producing prunes, peaches, and pears intended for processing
68(1)(b)
Crop harvest insurance 68(1)(d)
From 2011 until end 2012: 75% of national envelope for orchards producing prunes, peaches, and pears intended for processing
Member Start Regions Model Min. Sectors remaining coupled Specific Support under
States SPS SPS / Require and transitional coupled payments of the Fruit & Articles 68 - 72
SAPS - ments Vegetables sector
Italy 2005 - SPS 100 Seeds, Protein Crops, Rice, Nuts, Sugar, Improvement of quality (beef and veal; sheep and goat meat; olive oil; dairy products;
tobacco;
historical Dried Fodder, Flax for Fibre
F&V: Until end 2010: 50% for tomatoes intended for sugar; floricultural products)
processing 68(1)(a)(ii)
Until end 2010: 100% for pears, peaches and prunes intended for processing. Crops rotation 68(1)(a)(v)
Insurance payments for harvests, animals and plants
From 2011 until end 2012: 75% of envelope for prunes 68(1)(d)
Cyprus - - SAPS 0,3 ha F&V: Until end 2010: 100% of national envelope for citrus fruits
Until end 2012: 75% of national envelope for citrus fruits
Latvia - - SAPS 1 ha Separate sugar payments 75% In the dairy sector 68(1)(b)
F&V: Transitional soft fruit payment 100%
Lithuania - - SAPS 1 ha Separate sugar payments 100%
F&V: Transitional soft fruit payment 100%
Luxemburg 2005 one region SPS static 100 None
hybrid
Hungary - - SAPS 1 ha Separate sugar payments 100% In the dairy sector 68(1)(b)
0,3 ha for F&V: Separate F&V payments (tomatoes and other fruits) For tobacco and fresh fruit and vegetables growing areas subject to restructuring and development programmes
orchards 100%
and Transitional soft fruit payment 100% 68(1)(c)
vineyards
Malta 2007 one region SPS 0,1 ha None
regional 100 Sp
Netherlands 2006 - SPS 500 Seeds for fibre flax For transport over water 68(1)(a)(i)
historical Starch Potato, Dried Fodder, Flax for Fibre Animal welfare 68(1)(a)(iv)
Electronic I&R for sheep 68(1)(b)
Member Start Regions Model Min. Sectors remaining coupled Specific Support under
States SPS SPS / Require and transitional coupled payments of the Fruit & Articles 68 - 72
SAPS - ments Vegetables sector
Austria 2005 - SPS 100 Suckler cow premium 100% Dairy cow premium 68(1)(b)
historical Nuts, Starch Potato, Dried Fodder, Flax for Fibre
Poland - - SAPS 1 ha Separate sugar payments 100% For cultivating pulses and herbage legumes
F&V: Separate F&V payment for tomatoes100% 68(1)(a)(i)
Transitional soft fruit payment 100% For keeping cows in South-eastern Poland and sheep in Southern Poland
68(1)(b)
Portugal 2005 - SPS 0,3 ha Suckler cow premium 100% Maintaining of extensive farming systems based on native breeds (beef, sheep, goats)
historical Slaughter premium calves 100%
Slaughter premium bovine adults 40% 68(1)(a)(i)
Sheep and goat premium 50% Quality improvement of agricultural products (crops and animals)
Seeds 100% 68(1)(a)(ii)
Protein Crops, Rice, Nuts, Cotton, Sugar, Dried Fodder Agri-environmental measures for protection of olive national patrimony and support to extensive pasturing
Outermost regions 100%
F&V: Until end 2011: 50% of envelope for tomatoes 68(1)(a)(v)
intended for processing To economic vulnerable types of agriculture in milk and sheep sectors
68(1)(b)
Romania - SAPS 1 ha Separate sugar payments 100% For improving quality in the organic farming sector
F&V: Until end 2011: 50% of envelope for tomatoes intended 68(1)(a)(ii)
for processing To the milk sector in LFA 68(1)(b)
Slovenia 2007 one region SPS 0,3 ha / Special male bovine premium 65% For extensive rearing of female bovine animals and dairy payment for farmers in mountain areas and on steep hills 68(1)(b)
regional 100 Sp Protein Crops, Nuts
Preserving animal rearing on farms with permanent pastures
68(1)(c)
Slovakia - - SAPS 1 ha Separate sugar payments 50 % In the dairy sector 68(1)(b)
F&V: Separate F&V payment: 67% (Art.127of Reg. 73/2009)
Separate transitional F&V payment: 33% of envelope for tomatoes intended for processing (Art. 128 of Reg.
Member Start Regions Model Min. Sectors remaining coupled Specific Support under
States SPS SPS / Require and transitional coupled payments of the Fruit & Articles 68 - 72
SAPS - ments Vegetables sector
Finland 2006 three regions SPS 200 Sheep and goat premium 50% Supporting beef and veal production; dairy cow premium
(based on reference dynamic Seeds (timothy seed), Protein Crops, 68(1)(b)
yield) hybrid Ex-Art 69 measures (arable crops) 72(3)
moving to Starch Potato, Dried Fodder; Flax for Fibre
a flat rate
Sweden 2005 five regions SPS static 4 ha Special male bovine premium 74.55% Ex-Art 69 measures:
(based on reference hybrid 100 Sp Starch Potato, Dried Fodder Improving quality and marketing
Member Start Regions Model Min. Sectors remaining coupled Specific Support under
States SPS SPS / Require and transitional coupled payments of the Fruit & Articles 68 - 72
SAPS - ments Vegetables sector
United 2005 England normal SPS 1 ha Protein Crops, Nuts
Kingdom dynamic 200 Sp Dried Fodder, Flax for Fibre
hybrid
moving to
a flat rate
2005 England - moorland SPS 1 ha Protein Crops, Nuts
dynamic 200 Sp Dried Fodder, Flax for Fibre
hybrid
moving to
a flat rate
2005 England - SDA SPS 1 ha Protein Crops, Nuts
minus moorland dynamic 200 Sp Dried Fodder, Flax for Fibre
hybrid
moving to
a flat rate
2005 Scotland SPS 3 ha Dried Fodder, Flax for Fibre Ex-art 69 measures:
historical 100 Sp
High quality beef 72(3)
2005 Wales SPS 1 ha Dried Fodder, Flax for Fibre
historical 100 Sp
2005 Northern Ireland SPS static 100 Dried Fodder, Flax for Fibre
hybrid
Abbreviations: SPS Single Payment Scheme SAPS Single Area Payment Scheme F&V Fruit and Vegetables Sp Special entitlements
(*) For the statutory dates and amounts of decoupling please see Annex XI and XII of Regulation (EC) No 73/2009
N.B.: Hybrid model consists of elements from the regional and the historical model
SUB-ANNEX 3C Detailed results on income and methodology for simulations based on FADN data
Assumptions and methodology of partial analysis based on FADN
General
The simulation is conducted with the model AIDS7K, which has been developed in DG AGRI. The analysis is based on 2007 FADN data. The model is able to simulate the impact of the change of DP schemes on farm income and DP for the approximately 81 000 sample farms included in FADN. The impact on the sector level e.g. EU-27 is measured by aggregating the individual data using the FADN weighting scheme. The model is static. This means that the structure of farms and the allocation of land do not change in different scenarios. Outmost regions are not covered in this analysis because it is difficult to separate the POSEI payments from the rest of the EU DP received by the farmers in these regions.
For the calculation of farm income both changes in output and intermediate consumption and DP are taken into account at individual farm level. The coefficients for agricultural outputs and inputs are mainly derived from medium term projections of DG AGRI using from AGLINK COSIMO, assuming the removal of sugar beet quotas. For certain agricultural outputs not covered by AGLINK (vegetable, flowers, olive and wine), the coefficients were set based on the analysis of long historical price series.
For the purpose of the analysis it was necessary to calibrate the model in several ways in order ensure comparability of the results between the policy scenarios.
First, the weighting coefficients in the FADN were adjusted in order to adjust the eligible area in the FADN to the one reported by IACS. This was necessary because the DP levels in the scenarios were calculated based on the information on eligible area in IACS and, thus, differences in the representation of the area would have lead to distorted results. Secondly, the aggregated amount of DP in the status quo scenario was adjusted proportionally in order to be in line with the forecasted budget in the year 2020 on which the calculation of the DP level in the scenarios is based.
Redistribution options
All comparisons are done to the Status quo in 2020. Options of redistribution are described in section 4.1.
Impact per EU group and per Member States
Change in FNVA per AWU in comparison with the status
quo in 2020
1234
MFF Min 90% and
EU flat rateMin 80%distribution objective
keycriteria
EU-15-2,1%-0,7%-0,5%-1,3%
EU-128,6%2,4%1,5%5,2%
EU-27-0,1%-0,1%-0,1%-0,1%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
EU12Base1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
29.20229.2020% 29.2020% 29.2020% 29.2020%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm4.1825.34227,7% 4.5008% 4.3845% 4.88817%
Basic rate / decoupled - /farm4.1785.33828% 4.4968% 4.3805% 4.88417%
Coupled payments - /farm441% 4-5% 4-5% 4-5%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm5.0446.20523% 5.3626% 5.2464% 5.75014%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
20.73620.7360% 20.7360% 20.7360% 20.7360%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids5.5335.7564% 5.5931% 5.5711% 5.6682%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
EU15Base1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
93.89093.8900% 93.8900% 93.8900% 93.8900%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm11.50710.599-7,9% 11.200-3% 11.284-2% 10.918-5%
Basic rate / decoupled - /farm10.97910.060-8% 10.670-3% 10.754-2% 10.388-5%
Coupled payments - /farm5285392% 5310% 5310% 5300%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm13.73612.827-7% 13.429-2% 13.513-2% 13.147-4%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
63.87863.8780% 63.8780% 63.8780% 63.8780%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids22.30422.161-1% 22.2700% 22.2870% 22.2180%
External factor costs - /farm15.07114.967-1% 15.0410% 15.0540% 15.0140%
Own capital - /farm7.1897.150-1% 7.1850% 7.1890% 7.1600%
INCOME
Farm Net Value Added - /farm43.74742.839-2% 43.440-1% 43.525-1% 43.158-1%
Farm Net Value Added per AWU - /AWU34.23233.521-2% 33.992-1% 34.058-1% 33.771-1%
Remuneration for family labour - /farm21.44420.678-4% 21.170-1% 21.237-1% 20.940-2%
Remuneration for family labour - /FWU22.03221.284-3% 21.745-1% 21.810-1% 21.522-2%
Share of Pillar 1 payments in FNVA26%25%-6% 26%-2% 26%-1% 25%-4%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
EU-27Base1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
66.67866.6780% 66.6780% 66.6780% 66.6780%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm8.4268.387-0,5% 8.382-1% 8.382-1% 8.382-1%
Basic rate / decoupled - /farm8.1188.074-1% 8.073-1% 8.073-1% 8.073-1%
Impact per type of farming at EU level
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
FieldcropsBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
57.56357.5630% 57.5630% 57.5630% 57.5630%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm11.86511.089-7% 10.965-8% 10.942-8% 11.001-7%
Basic rate / decoupled - /farm11.61610.827-7% 10.706-8% 10.683-8% 10.742-8%
Coupled payments - /farm2492625% 2594% 2594% 2594%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm13.24112.465-6% 12.341-7% 12.318-7% 12.377-7%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
40.16140.1610% 40.1610% 40.1610% 40.1610%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids15.91815.780-1% 15.757-1% 15.754-1% 15.763-1%
External factor costs - /farm10.80110.701-1% 10.697-1% 10.697-1% 10.700-1%
Own capital - /farm5.1535.116-1% 5.097-1% 5.094-1% 5.100-1%
INCOME
Farm Net Value Added - /farm30.64229.866-3% 29.742-3% 29.719-3% 29.778-3%
Farm Net Value Added per AWU - /AWU25.16224.524-3% 24.422-3% 24.404-3% 24.452-3%
Remuneration for family labour - /farm14.72514.087-4% 13.985-5% 13.966-5% 14.016-5%
Remuneration for family labour - /FWU15.78914.764-6% 14.825-6% 14.828-6% 14.780-6%
Share of Pillar 1 payments in FNVA39%37%-4% 37%-5% 37%-5% 37%-5%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
HorticultureBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
WineBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
89.60289.6020% 89.6020% 89.6020% 89.6020%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm2.1813.75272% 3.99883% 4.02184% 3.87178%
Basic rate / decoupled - /farm2.1343.70474% 3.95285% 3.97586% 3.82579%
Coupled payments - /farm47482% 46-1% 46-1% 46-2%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm2.7654.33757% 4.58366% 4.60667% 4.45661%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
40.99740.9970% 40.9970% 40.9970% 40.9970%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids23.93224.2361% 24.2881% 24.2922% 24.2611%
External factor costs - /farm16.94917.0771% 17.0961% 17.0991% 17.0901%
Own capital - /farm7.2707.4472% 7.4803% 7.4813% 7.4593%
INCOME
Farm Net Value Added - /farm51.37052.9413% 53.1884% 53.2114% 53.0613%
Farm Net Value Added per AWU - /AWU33.81134.8463% 35.0084% 35.0234% 34.9243%
Remuneration for family labour - /farm27.43828.7065% 28.9005% 28.9185% 28.7995%
Remuneration for family labour - /FWU30.02331.3755% 31.6035% 31.6265% 31.4875%
Share of Pillar 1 payments in FNVA4%7%67% 8%77% 8%78% 7%72%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
Other permanent cropsBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
34.94334.9430% 34.9430% 34.9430% 34.9430%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
MilkBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
101.964101.9640% 101.9640% 101.9640% 101.9640%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm10.8249.500-12% 9.791-10% 9.752-10% 9.739-10%
Basic rate / decoupled - /farm10.7139.390-12% 9.682-10% 9.644-10% 9.630-10%
Coupled payments - /farm111110-1% 109-2% 108-2% 108-3%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm14.07012.746-9% 13.037-7% 12.998-8% 12.984-8%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
73.75873.7580% 73.7580% 73.7580% 73.7580%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids20.14819.956-1% 19.991-1% 19.984-1% 19.989-1%
External factor costs - /farm12.65412.528-1% 12.578-1% 12.578-1% 12.567-1%
Own capital - /farm7.2447.177-1% 7.162-1% 7.155-1% 7.171-1%
INCOME
Farm Net Value Added - /farm42.27640.953-3% 41.243-2% 41.205-3% 41.191-3%
Farm Net Value Added per AWU - /AWU29.89928.963-3% 29.168-2% 29.141-3% 29.131-3%
Remuneration for family labour - /farm22.12820.996-5% 21.253-4% 21.220-4% 21.202-4%
Remuneration for family labour - /FWU17.75616.761-6% 17.001-4% 16.990-4% 16.942-5%
Share of Pillar 1 payments in FNVA26%23%-9% 24%-7% 24%-8% 24%-8%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
Other grazing livestockBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
53.06753.0670% 53.0670% 53.0670% 53.0670%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
GranivoresBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
184.342184.3420% 184.3420% 184.3420% 184.3420%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm5.1554.880-5% 4.902-5% 4.949-4% 4.912-5%
Basic rate / decoupled - /farm5.0844.807-5% 4.831-5% 4.878-4% 4.842-5%
Coupled payments - /farm71732% 71-1% 71-1% 71-1%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm6.0115.736-5% 5.758-4% 5.805-3% 5.768-4%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
155.276155.2760% 155.2760% 155.2760% 155.2760%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids25.26225.2180% 25.2110% 25.2210% 25.2180%
External factor costs - /farm18.41818.3730% 18.3930% 18.3960% 18.3860%
Own capital - /farm6.5736.5740% 6.5480% 6.5530% 6.5610%
INCOME
Farm Net Value Added - /farm35.07834.803-1% 34.825-1% 34.872-1% 34.835-1%
Farm Net Value Added per AWU - /AWU23.34723.164-1% 23.179-1% 23.210-1% 23.185-1%
Remuneration for family labour - /farm9.8169.584-2% 9.613-2% 9.651-2% 9.616-2%
Remuneration for family labour - /FWU12.25112.018-2% 12.045-2% 12.085-1% 12.048-2%
Share of Pillar 1 payments in FNVA15%14%-5% 14%-4% 14%-3% 14%-4%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
MixedBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
52.65852.6580% 52.6580% 52.6580% 52.6580%
Impact per LFA/non LFA zones at EU level
Change in FNVA per AWU in comparison with the status
quo in 2020
Base1234
MFF Min 90% and
Status quo per EU flat rateMin 80%distribution objective
AWUkeycriteria
(1) not in less-favoured areas not in less-favoured areas23.053-2,8%-2,9%-3,0%-2,8%
(2) in less-favoured not mountain areas in less-favoured not mountain areas22.9724,4%2,5%2,7%3,2%
(3) in less-favoured mountain areas in less-favoured mountain areas21.7484,4%7,3%7,2%5,8%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
not in less-favoured areasBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
70.14070.1400% 70.1400% 70.1400% 70.1400%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm8.3407.437-11% 7.405-11% 7.394-11% 7.433-11%
Basic rate / decoupled - /farm8.1557.249-11% 7.218-11% 7.206-12% 7.246-11%
Coupled payments - /farm1841882% 1882% 1882% 1871%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm9.0328.129-10% 8.097-10% 8.086-10% 8.125-10%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
47.25847.2580% 47.2580% 47.2580% 47.2580%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids16.09015.928-1% 15.920-1% 15.918-1% 15.926-1%
External factor costs - /farm11.61411.497-1% 11.505-1% 11.506-1% 11.505-1%
Own capital - /farm4.4664.421-1% 4.405-1% 4.402-1% 4.411-1%
INCOME
Farm Net Value Added - /farm31.91431.011-3% 30.979-3% 30.967-3% 31.007-3%
Farm Net Value Added per AWU - /AWU23.05322.402-3% 22.379-3% 22.370-3% 22.398-3%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
in less-favoured not mountain areasBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
56.17456.1740% 56.1740% 56.1740% 56.1740%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm9.41110.60113% 10.1057% 10.1438% 10.2909%
Basic rate / decoupled - /farm8.97910.16113% 9.6738% 9.7118% 9.85710%
Coupled payments - /farm4324402% 4320% 4320% 4320%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm12.10013.29010% 12.7946% 12.8326% 12.9797%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
41.03041.0300% 41.0300% 41.0300% 41.0300%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids12.72712.9802% 12.8871% 12.8941% 12.9222%
External factor costs - /farm7.3067.4182% 7.4001% 7.4041% 7.4091%
Own capital - /farm5.4265.5693% 5.4921% 5.4961% 5.5182%
INCOME
Farm Net Value Added - /farm27.24528.4354% 27.9403% 27.9783% 28.1243%
Farm Net Value Added per AWU - /AWU22.97223.9754% 23.5583% 23.5903% 23.7133%
Remuneration for family labour - /farm14.51815.4556% 15.0534% 15.0834% 15.2025%
Remuneration for family labour - /FWU15.12616.0206% 15.6303% 15.6674% 15.7694%
Share of Pillar 1 payments in FNVA35%37%8% 36%5% 36%5% 37%6%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
in less-favoured mountain areasBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
44.87144.8710% 44.8710% 44.8710% 44.8710%
Impacts on grassland / non grassland based farming at EU level
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
Farms with less than 80% grasslandBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
66.38366.3830% 66.3830% 66.3830% 66.3830%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm8.1317.579-7% 7.584-7% 7.585-7% 7.587-7%
Basic rate / decoupled - /farm7.9237.367-7% 7.374-7% 7.375-7% 7.377-7%
Coupled payments - /farm2082122% 2101% 2101% 2101%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm9.3638.811-6% 8.816-6% 8.817-6% 8.819-6%
Amounts transfered to Pillar II or capped - /farm - - - -
COSTS Total operating costs, depreciation and taxes
44.45144.4510% 44.4510% 44.4510% 44.4510%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids15.26715.178-1% 15.177-1% 15.178-1% 15.179-1%
External factor costs - /farm10.51510.445-1% 10.457-1% 10.458-1% 10.455-1%
Own capital - /farm4.7284.7090% 4.697-1% 4.696-1% 4.700-1%
INCOME
Farm Net Value Added - /farm31.29430.742-2% 30.747-2% 30.748-2% 30.750-2%
Farm Net Value Added per AWU - /AWU23.85423.434-2% 23.438-2% 23.438-2% 23.440-2%
Remuneration for family labour - /farm16.02715.564-3% 15.570-3% 15.570-3% 15.571-3%
Remuneration for family labour - /FWU15.93415.338-4% 15.412-3% 15.424-3% 15.382-3%
Share of Pillar 1 payments in FNVA26%25%-5% 25%-5% 25%-5% 25%-5%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
Grassland based farmsBase1234
Status quoEU flat rateMin 80%MFF distribution keyMin 90% and objective
criteria
20202020/base 2020/base 2020/base 2020/base
Additional income support in areas with specific natural constraints
All comparisons are done to the redistribution option "MFF distribution key". Options for specific natural constraint payments are described in section 4.2 above.
Impact per farming type
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(1) FieldcropsBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
57.56357.5630% 57.5630% 57.5630% 57.5630%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm10.94210.785-1% 10.774-2% 11.6456% 10.837-1%
Basic rate / decoupled - /farm10.68310.197-5% 10.242-4% -100% 10.306-4%
Coupled payments - /farm259254-2% 254-2% 244-6% 254-2%
Greening - /farm - - - -
Natural handicap - /farm 333- 278- 277- 277-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm12.31812.160-1% 12.149-1% 13.0206% 12.212-1%
Amounts transfered to Pillar II or capped - /farm - - 927- -
COSTS Total operating costs, depreciation and taxes
40.16140.1610% 40.1610% 40.1610% 40.1610%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids15.75415.7230% 15.7210% 15.8751% 15.7310%
External factor costs - /farm10.69710.6760% 10.6750% 10.7741% 10.6800%
Own capital - /farm5.0945.0830% 5.0830% 5.1381% 5.0880%
INCOME
Farm Net Value Added - /farm29.71929.562-1% 29.551-1% 30.4222% 29.6140%
Farm Net Value Added per AWU - /AWU24.40424.274-1% 24.265-1% 24.9802% 24.3170%
Remuneration for family labour - /farm13.96613.839-1% 13.830-1% 14.5474% 13.883-1%
Remuneration for family labour - /FWU14.82814.703-1% 14.691-1% 15.6025% 14.647-1%
Share of Pillar 1 payments in FNVA37%36%-1% 36%-1% 38%4% 37%-1%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(2) HorticultureBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
186.202186.2020% 186.2020% 186.2020% 186.2020%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm1.4151.392-2% 1.394-1% 1.155-18% 1.362-4%
Basic rate / decoupled - /farm1.3371.281-4% 1.286-4% -100% 1.254-6%
Coupled payments - /farm7877-1% 77-1% 70-10% 77-1%
Greening - /farm - - - -
Natural handicap - /farm 34- 32- 29- 32-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm1.6541.631-1% 1.633-1% 1.394-16% 1.601-3%
Amounts transfered to Pillar II or capped - /farm - - 59- -
COSTS Total operating costs, depreciation and taxes
97.90797.9070% 97.9070% 97.9070% 97.9070%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids38.76038.7550% 38.7560% 38.7150% 38.7500%
External factor costs - /farm33.73333.7300% 33.7310% 33.6990% 33.7270%
Own capital - /farm4.9734.9710% 4.9710% 4.9620% 4.9690%
INCOME
Farm Net Value Added - /farm89.94989.9260% 89.9280% 89.6890% 89.8960%
Farm Net Value Added per AWU - /AWU36.29336.2830% 36.2840% 36.1880% 36.2710%
Remuneration for family labour - /farm51.18951.1710% 51.1720% 50.9740% 51.1460%
Remuneration for family labour - /FWU45.78245.7670% 45.7680% 45.5900% 45.7440%
Share of Pillar 1 payments in FNVA2%2%-2% 2%-1% 1%-18% 2%-4%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(3) WineBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(4) Other permanent cropsBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
34.94334.9430% 34.9430% 34.9430% 34.9430%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm2.4082.395-1% 2.3970% 2.5124% 2.290-5%
Basic rate / decoupled - /farm2.3592.242-5% 2.244-5% -100% 2.142-9%
Coupled payments - /farm4947-4% 47-4% 47-4% 47-4%
Greening - /farm - - - -
Natural handicap - /farm 106- 107- 105- 101-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm2.6852.6720% 2.6740% 2.7894% 2.567-4%
Amounts transfered to Pillar II or capped - /farm - - 78- -
COSTS Total operating costs, depreciation and taxes
14.54314.5430% 14.5430% 14.5430% 14.5430%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids8.8318.8280% 8.8290% 8.8450% 8.8070%
External factor costs - /farm5.4865.4850% 5.4850% 5.4800% 5.4820%
Own capital - /farm3.2943.2920% 3.2930% 3.3151% 3.274-1%
INCOME
Farm Net Value Added - /farm23.08523.0730% 23.0750% 23.1890% 22.967-1%
Farm Net Value Added per AWU - /AWU20.89620.8850% 20.8860% 20.9900% 20.789-1%
Remuneration for family labour - /farm14.25414.2440% 14.2460% 14.3441% 14.160-1%
Remuneration for family labour - /FWU17.18617.1750% 17.1760% 17.3011% 17.072-1%
Share of Pillar 1 payments in FNVA10%10%0% 10%0% 11%4% 10%-4%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(5) MilkBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(6) Other grazing livestockBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
53.06753.0670% 53.0670% 53.0670% 53.0670%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm14.77915.0902% 15.1312% 12.596-15% 15.0372%
Basic rate / decoupled - /farm13.46612.809-5% 12.833-5% -100% 12.751-5%
Coupled payments - /farm1.3131.247-5% 1.250-5% 1.262-4% 1.249-5%
Greening - /farm - - - -
Natural handicap - /farm 1.034- 1.048- 1.057- 1.037-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm18.95719.2682% 19.3102% 16.775-12% 19.2151%
Amounts transfered to Pillar II or capped - /farm - - 868- -
COSTS Total operating costs, depreciation and taxes
42.66942.6690% 42.6690% 42.6690% 42.6690%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids13.00513.0650% 13.0721% 12.560-3% 13.0580%
External factor costs - /farm6.7276.7641% 6.7681% 6.466-4% 6.7550%
Own capital - /farm6.4016.4250% 6.4270% 6.217-3% 6.4260%
INCOME
Farm Net Value Added - /farm29.35529.6671% 29.7081% 27.173-7% 29.6141%
Farm Net Value Added per AWU - /AWU22.77123.0121% 23.0441% 21.078-7% 22.9711%
Remuneration for family labour - /farm16.35016.6012% 16.6362% 14.612-11% 16.5551%
Remuneration for family labour - /FWU14.54714.7631% 14.7932% 12.990-11% 14.7071%
Share of Pillar 1 payments in FNVA50%51%1% 51%1% 46%-8% 51%1%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(7) GranivoresBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(8) MixedBase1234
MFF
distribution MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
52.65852.6580% 52.6580% 52.6580% 52.6580%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm7.5867.5870% 7.5770% 7.7262% 7.6901%
Basic rate / decoupled - /farm7.3426.996-5% 7.029-4% -100% 7.136-3%
Coupled payments - /farm244232-5% 233-5% 235-4% 232-5%
Greening - /farm - - - -
Natural handicap - /farm 359- 316- 313- 322-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm9.0329.0330% 9.0240% 9.1722% 9.1361%
Amounts transfered to Pillar II or capped - /farm - - 576- -
COSTS Total operating costs, depreciation and taxes
42.67442.6740% 42.6740% 42.6740% 42.6740%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids11.04511.0450% 11.0430% 11.0590% 11.0670%
External factor costs - /farm7.4477.4470% 7.4450% 7.4730% 7.4420%
Own capital - /farm3.6103.6110% 3.6110% 3.5990% 3.6381%
INCOME
Farm Net Value Added - /farm19.01719.0180% 19.0080% 19.1561% 19.1201%
Farm Net Value Added per AWU - /AWU14.78914.7900% 14.7830% 14.8981% 14.8701%
Remuneration for family labour - /farm7.9727.9730% 7.9650% 8.0972% 8.0541%
Remuneration for family labour - /FWU7.1187.1100% 7.1070% 7.2642% 7.1651%
Share of Pillar 1 payments in FNVA40%40%0% 40%0% 40%1% 40%1%
Impacts on grassland / non grassland based farming
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
Farms with less than 80% grasslandBase1234
MFF distribution
keyMFF distribution keyMFF distribution keyStatus quoMin 90% and objective
criteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
66.38366.3830% 66.3830% 66.3830% 66.3830%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm7.5857.530-1% 7.521-1% 8.0396% 7.525-1%
Basic rate / decoupled - /farm7.3757.035-5% 7.066-4% -100% 7.070-4%
Coupled payments - /farm210202-4% 203-3% 200-5% 203-4%
Greening - /farm - - - -
Natural handicap - /farm 292- 252- 251- 253-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm8.8178.762-1% 8.752-1% 9.2715% 8.757-1%
Amounts transfered to Pillar II or capped - /farm - - 592- -
COSTS Total operating costs, depreciation and taxes
44.45144.4510% 44.4510% 44.4510% 44.4510%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids15.17815.1680% 15.1660% 15.2490% 15.1670%
External factor costs - /farm10.45810.4520% 10.4500% 10.5030% 10.4470%
Own capital - /farm4.6964.6920% 4.6920% 4.7221% 4.6960%
INCOME
Farm Net Value Added - /farm30.74830.6930% 30.6840% 31.2021% 30.6880%
Farm Net Value Added per AWU - /AWU23.43823.3960% 23.3890% 23.7851% 23.3930%
Remuneration for family labour - /farm15.57015.5250% 15.5180% 15.9532% 15.5210%
Remuneration for family labour - /FWU15.42415.3790% 15.3730% 15.8593% 15.333-1%
Share of Pillar 1 payments in FNVA25%25%-1% 25%-1% 26%4% 25%-1%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
Grassland based farmsBase1234
MFF distribution
MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
Impacts in LFA/non LFA zones
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(1) not in less-favoured areasBase1234
MFF distribution
MFF distribution keyMFF distribution keyStatus quoMin 90% and objective
keycriteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
70.14070.1400% 70.1400% 70.1400% 70.1400%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm7.3947.066-4% 7.104-4% 8.0048% 7.147-3%
Basic rate / decoupled - /farm7.2066.884-4% 6.922-4% -100% 6.965-3%
Coupled payments - /farm188181-3% 182-3% 179-5% 181-3%
Greening - /farm - - - -
Natural handicap - /farm - - - -
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm8.0867.758-4% 7.796-4% 8.6968% 7.839-3%
Amounts transfered to Pillar II or capped - /farm - - 651- -
COSTS Total operating costs, depreciation and taxes
47.25847.2580% 47.2580% 47.2580% 47.2580%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids15.91815.8550% 15.8620% 16.0251% 15.8710%
External factor costs - /farm11.50611.4680% 11.4730% 11.5751% 11.4730%
Own capital - /farm4.4024.377-1% 4.379-1% 4.4391% 4.3880%
INCOME
Farm Net Value Added - /farm30.96730.640-1% 30.678-1% 31.5782% 30.721-1%
Farm Net Value Added per AWU - /AWU22.37022.133-1% 22.161-1% 22.8112% 22.192-1%
Remuneration for family labour - /farm15.04914.785-2% 14.816-2% 15.5523% 14.850-1%
Remuneration for family labour - /FWU14.44414.214-2% 14.235-1% 15.0094% 14.215-2%
Share of Pillar 1 payments in FNVA24%23%-3% 23%-3% 25%6% 23%-3%
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(2) in less-favoured not mountain areasBase1234
MFF distribution Min 90% and objective
keyMFF distribution keyMFF distribution keyStatus quo
INCOME PROJECTIONS
Source: L3 calculations based on FADN and the AIDS7K model
(3) in less-favoured mountain areasBase1234
MFF distribution
keyMFF distribution keyMFF distribution keyStatus quoMin 90% and objective
criteria
Max 5% of DP; Max Max 5% of DP; 50 Max 5% of DP; 50 Max 5% of DP; 50
100 in LFAin mountain LFA; 25 in mountain LFA; 25 in mountain LFA; 25
in other LFAin other LFAin other LFA
20202020/base 2020/base 2020/base 2020/base
MARKET Output - /farm
44.87144.8710% 44.8710% 44.8710% 44.8710%
DIRECT PAYMENTS (DP) AND SUBSIDIES
Total Pillar 1 payments - /farm8.0118.3134% 8.5216% 6.772-15% 8.1322%
Basic rate / decoupled - /farm7.4737.100-5% 7.103-5% -100% 6.754-10%
Coupled payments - /farm538511-5% 511-5% 516-4% 512-5%
Greening - /farm - - - -
Natural handicap - /farm 703- 907- 926- 867-
Small beneficiaries - /farm - - - -
Total Pillar 1 and 2 payments - /farm11.16311.4663% 11.6735% 9.924-11% 11.2841%
Amounts transfered to Pillar II or capped - /farm - - 309- -
COSTS Total operating costs, depreciation and taxes
28.42628.4260% 28.4260% 28.4260% 28.4260%
Estimated costs for greening - /farm - - - -
Total external factors, own capital and investment aids10.47610.5341% 10.5731% 10.248-2% 10.5010%
External factor costs - /farm5.1675.1981% 5.2211% 5.026-3% 5.1941%
Own capital - /farm5.3955.4221% 5.4391% 5.309-2% 5.3930%
INCOME
Farm Net Value Added - /farm27.60827.9111% 28.1182% 26.369-4% 27.7290%
Farm Net Value Added per AWU - /AWU23.32223.5781% 23.7532% 22.276-4% 23.4250%
Remuneration for family labour - /farm17.13217.3771% 17.5452% 16.121-6% 17.2291%
Remuneration for family labour - /FWU17.07617.2961% 17.4662% 16.049-6% 17.1270%
Share of Pillar 1 payments in FNVA29%30%3% 30%4% 26%-11% 29%1%
SUB-ANNEX 3D: current state of play of LFA
(5) LFA zoning
There are three types of less favoured areas: mountain areas, intermediate areas and areas affected by specific handicaps.
Currently, mountain areas cover nearly 16% of the agricultural area of the EU and are designated according to a limited number of physical indicators (a short growing season and steep slope, and in addition areas beyond the 62
nd parallel).
Approximately 31% of the agricultural land of the EU is classified as intermediate LFA (as of 2005, they are referred to as 'areas with natural handicaps ' NHA), on the basis of a wide range of soil and climate criteria defined by Member States. Their diversity throughout the EU was spotlighted by the European Court of Auditors as a possible source of unequal treatment.
In the light of this ECA report, and on a mandate from the Council, the Commission is currently carrying out an exercise together with Member States in which a delimitation of intermediate areas with natural handicaps based on common set of biophysical indicators is tested..
Areas affected by specific handicaps, as a third category, are areas where farming should be continued in order to conserve or improve the environment, maintain the countryside, preserve the tourist potential of the areas, or protect the coastline. These areas cover 9.1% of the EU agricultural area.
(6) LFA payment in Pillar 2
About 56% of UAA in the EU27 (i.e. about 100 million ha) has been identified as naturally handicapped. Not all of the area is subject to specific support for LFA in pillar 2, and only about 13% of all farms located in LFA currently receive the LFA payments in pillar 2. The total indicative EAFRD budget for these measures amounts to EUR 12.6bn.
(7) Share of NHA in total UAA and percentage of farms receiving NHP from the total number of farms (2005)
100,0
90,0
80,0
% UAA inNHA
70,0
60,0% of farmers receivingNHP
50,0
40,0
30,0
20,0
10,0
0,0
AT BE BG CZ CY DE DK EE EL ES FI FR HU IEITLT LU LV MT NL PL PT RO SI SK SE UK
SUB-ANNEX 3E: Suppression of coupled support for beef, sheep and goat sectors
See separate document
| publication date | 18-10-2011 |
|---|---|
| reference | 15640/11 ADD 8 |
