Implementation of the Common Agricultural Policy (CAP) is one of the most important tasks facing the EU, the lion’s share 40 per cent (€59 billion) of whose budget goes to agricultural subsidies.
The objectives, principles and funding of the EU’s agricultural sector are recalibrated at seven year intervals with the goal of adapting them to changing social and economic circumstances. The European Commission, Council of Ministers and European Parliament reached a compromise for the 2014 to 2020 subsidy period, for the CAP as well as for the medium term financial framework. This compromise is slated for formal enactment into EU law by the European Parliament in the fall of 2013.
The CAP contains the following two environmental protection instruments:
Environmental protection measures in the first pillar of the Common Agricultural Policy (CAP)
The Common Agricultural Policy (CAP) comprises two pillars, the first for 75 per cent of the grants and the second for the remaining 25 per cent. The first column mainly involves marketing instruments and direct payments, which in Germany are awarded irrespective of per hectare yields for a given farm.
In order for farmers to receive the full amounts of such payments, they must meet what are known as cross-compliance requirements (in effect since 2005), whereby funding is contingent upon compliance with 18 European directives and regulations. Apart from these so called statutory management requirements, farmers must also maintain the “good agricultural and ecological status” of their farmland. The main cross-compliance requirements are laid down in Regulation No 73/2009/EC. The legal framework for these measures in Germany is the Direktzahlungen-Verpflichtungsgesetz and the related regulation.
The statutory management requirements involve minimum statutory standards concerning environmental protection, food safety, animal and plant health, and animal welfare. In the UBA’s view, compliance with the applicable regulations does not in and of itself justify farmers’ cost intensive subsidy entitlements.
In keeping with the principle of using public funds for the common good, the European Commission’s current reform efforts aim to optimize the integration of the agricultural sector with environmental protection and climate protection. The amended CAP will take effect on 1 January 2014, albeit not for all elements, since the necessary transposition into member-state laws will take some time.
The recently adopted recommendations for optimization of the CAP call for the greening of direct payments, i.e. statutory environmental requirements would be implemented in the first column of the CAP that would be a precondition for full direct payments. The following greening measures are envisaged:
- Greater crop diversity
Farmers would be required to cultivate at least three different types of crops on five to 75 per cent of their land (small and medium sized farms would be subject to less stringent requirements).
- Grassland conservation
Growers would be allowed to convert a maximum of five per cent of their grassland to arable land.
- Ecological priority areas
Farmers would be required to use five per cent at a minimum (possibly 7 per cent as from 2017) of their subsidized land as ecological priority areas, which according to the European Commission would need to take the form of elements such as set-asides and terraces, and landscape elements such as hedgerows, flower strips, buffer strips, and forest areas. These new greening requirements are necessary from an environmental protection and nature conservation standpoint in order to make EU agricultural policy more ecofriendly and legitimize the use of public funds for the farming sector. The UBA’s Agricultural Expert Panel (KLU) has issued two extensive position papers concerning the proposed CAP reforms. The actual form that the CAP will ultimately take is still being negotiated, and will be debated by the European Parliament and Council.
Environmental protection measures in the second pillar of the CAP
The second pillar of the CAP provides rural development funding, including the following measures: improvement of agricultural and forestry sector competitiveness; improving the quality of life in rural areas; providing financial support for crop diversification; environmental improvement; landscape beautification. Apart from being a mandatory component of rural development programs, agro-environmental measures are currently the most important (albeit voluntary) instruments for meeting environmental protection requirements in the farming sector and for achieving environmental objectives. Farmers who participate in agro-environmental measures voluntarily agree to use, for a five year period, particularly ecofriendly and resource-saving land management methods and environmentally and species-appropriate livestock farming methods. These measures, which exceed the minimum statutory requirements, make a major contribution to soil and waterbody protection, biodiversity conservation, climate protection, and landscape beautification. Farmers receive special grants by way of compensation for the income loss and additional costs entailed by meeting more stringent environmental requirements.
The legal framework for these measures is Regulation No 1698/2005/EC (ELER program).
The specific measures are implemented by the various member state grant programs, which the member states are also required to co-fund. One of the main instruments of the government’s agricultural policy and the platform for numerous agro-environmental measures is the joint federal/regional-state agricultural development and coastal protection program known as Verbesserung der Agrarstruktur und des Küstenschutzes, whose measures are tailored to regional needs via the grant guidelines of the various regional states. Agro-environmental measures in Germany are co-financed by the EU, federal government and region-state governments.
Hence it is likely that, due to economic austerity measures, many member states (particularly those in southern and eastern Europe) will have little or no funds available for agro-environmental measures. But as agro-environmental and nature conservation measures are the most important environmental protection, climate protection and nature conservation instruments under the CAP, no further cuts should be made in the second-pillar funding during the current budget negotiations.
The 2014-2020 funding period (which in reality will probably not begin until 2015; see above) will be marked by major changes in the rural development arena, particularly in that a merger of previously disparate funds (ELER, EFRE and ESF) under a partnership agreement will aim to strengthen synergy and eliminate incoherence. Unfortunately, EU funding has been cut back. To compensate for this, the member states now have the opportunity to shift up to 15 per cent of their own funding from the first to the second columns, so as to allow for greater flexibility.