The European Commission is set to propose a cap of €60,000 (£52,500) on direct aid payments under the new version of the CAP from 2021.
A leaked draft paper from Brussels shows the commission is planning to set its aid cap at the lowest end of the €60,000-€100,000 spectrum mooted in its initial communication on the CAP last autumn.
But in a clear sign that the EU is planning to rebalance support away from larger recipients, additional top-up payments for smaller farms are to become a compulsory feature of the scheme, rather than optional, as at present.
Payments to young farmers (those under 40) will be retained, as will the option for member states to make coupled aid payments linked to production in a wide range of sectors.
BPS to become BIS?
The Basic Payment Scheme itself will be renamed the “Basic Income Support” scheme – the first time the EU has explicitly identified area payments as being for the purpose of income support.
The current, largely discredited, greening provisions will disappear. Instead, each member state will be required to draw up detailed, national CAP support plans that will set out a mix of income support, crisis management and agri-environmental support schemes.
These support plans, cutting across both of the traditional pillars of the CAP, will be approved and overseen by a powerful new CAP managing authority, which will be charged with ensuring the plans are consistent with agreed policy strategies and do not create distortions in the internal market for agriculture products.
The new rules will not apply in the UK, as the policy is scheduled to take effect from the start of 2021. The UK will remain de facto part of the CAP only until the end of the Brexit implementation period, which ends in December 2020.
Relief for UK producers
But the relatively low capping threshold favoured by the commission will help to relieve UK farmers’ fears of being put at a competitive disadvantage by Britain’s own post-Brexit move away from large-scale aid payments.
Defra’s consultation paper, published in February this year, had suggested a progressive scale of reductions for payments above £25,000, culminating in a 75% reduction for amounts more than £200,000.
The leaked CAP reform paper is clearly a very early draft, containing a large number of blanks and unspecified detail, and there may well be significant amendments to the proposal before it is finally published by the commission on 29 May.
After that, it will be subject to at least 18 months of reviews and horse-trading between the Council of Ministers and the European Parliament before the final version becomes law.
Significantly, the draft paper contains no budget figures. The new CAP will be negotiated in parallel with EU discussions on the long-term budget for the EU after 2020, for which initial proposals are due to be tabled next Wednesday (2 May).
The expectation is that the next CAP budget will need to be scaled back considerably in response to the loss of UK net contributions after Brexit, and a political need to divert funding to other priorities such as migration and security.
The stringent moves to cap payments to larger producers may be intended as a way of limiting overall CAP payments.