ANALYSIS – Member states have agreed on key Commission measures which strive to maintain fair and practical farm subsidies through policy reforms this week. This is an increasing challenge as the boundaries of the common agricultural policy (CAP) extend over increasingly varied farming and political landscapes.
The Commission has argued that a versatile farming policy has been offered in no small part through the inclusion of 'modulation' and 'external convergence'.
The current reform agreement, reached on Tuesday, sets to redistribute direct payments through ‘external convergence’ which is to target nations receiving less than 75 per cent of the EU average.
Countries on this list are the Baltic states and Romania. Latvia currently only receives 40 per cent of the EU average with 75 per cent laid down as the minimum funding level.
But in order to increase payments in countries like Latvia and Estonia, money has to be taken from those receiving more.
Roger Waite, EU Commission Spokesman for agriculture and rural development said that this will most likely be from Belgium and the Netherlands as they are paid 200 per cent of the EU average.
He said that the chasm in direct payments is due to some countries being net contributors and the Baltic Republics’ restructuring period after the fall of communism.
“The amounts the Baltics have in their envelope is based on historic production at a time when they were still restructuring as countries,” said Mr Waite. “The most up to date figures were relatively low.”
He explained that Romanian agriculture is only marginally behind the 75 per cent direct payments target.
Another crucial agreement for a flexible CAP centres on the modulation issue. This was clarified when ministers decided that states can move fifteen per cent of CAP funds either way between direct payments and rural development funding, otherwise known as the two ‘pillars’.
Speaking at the National Farmers Union Conference in February, UK Defra Secretary Owen Paterson said he would opt to move money into rural development to go into technology and agri-environment schemes.
However, Poland is likely to opt to move funds the other way into the direct payments envelope.
This is not ideal from the Commission’s point of view which, according to Mr Waite, does not see the Polish option as the best use of CAP money.
“The Commission feels that putting spending into pillar two (rural development) is more efficient because it is more targeted to farmers, with clear benefits from agri-environment schemes,” said Mr Waite. “However, this is a political compromise and hard to come by now we have 28 member states.”