Commission mulls targeted payments to EU farmers

The EU should set maximum and minimum amounts for payments to farmers through the Common Agricultural Policy (CAP), according to a draft revision being prepared by the European Commission.

The ‘health check’ of EU farm policy favours more targeted pay-outs and suggests changes to the CAP to take account of biofuel production and climate change.

Farmers used to produce tonnes of unwanted food to earn CAP money, but a 2003 reform to the CAP weakened the link between pay-outs to farmers and what they produced. The draft mid-term health check will suggest further changes based on progress made so far, ahead of another full-scale reform in 2013.

The communication will push for further simplification of financial support systems. It suggests introducing upper and lower limits on the support handed out to farmers. This would mean a gradual reduction of larger payments, possibly a 45% cut in payments above €3,000. A minimum level of small payments, or a reduction in payments to the smallest farms, is also required to end a situation in which a "large number of farmers…receive small amounts of payments, often below the administrative cost of managing them," says the draft.

The money saved could instead be spent, at the discretion of national authorities, on rural development measures, such as the modernisation of agricultural practices or environmental protection.

The draft identifies climate change, biofuels, and water management as "three crucial new challenges" which could be eligible for increased CAP support.

A Commission official said that subsistence-level farmers would be protected under any reform to support levels, but that action was needed to weed out applications from the owners of large rural gardens.

Other measures suggested include an end to market support for all cereals. Growing global demand for cereals and an expected increase in the use of farmland to grow biofuel crops means that EU intervention is now only needed to handle agricultural crises in the cereals sector, says the draft.

An intervention system for wheat - the largest EU crop - would remain as a marker for all other cereal prices.

The health check suggests increasing the production quotas for the dairy sector. "A growing demand for high value products (especially for cheese and fresh dairy products) internally and externally," says the draft, means that farmers need to prepare for high levels of production when the dairy quota is abolished in March 2015.

Member states, including the UK, which were disappointed by the 2003 agreement, are likely to welcome the health check as a second chance to discuss more far-reaching market reform. But French President Nicolas Sarkozy has warned that he will continue to defend a more protectionist EU agriculture market.

Pekka Pesonen, secretary-general of Copa-Cogeca, the European farmers’ organisation, said that the Commission was right to single out environmental challenges for the health check, but warned against leaving farmers short of money.

"The farming sector is already making important contributions to meeting these challenges [climate change, water management and bio-energy]," said Pesonen. "However, we must keep in mind that new policy objectives will have to be accompanied by sufficient additional EU funding."

But environmental lobbyists said that the health check did not go far enough.

"We need a major rethink of what we are trying to do," said Ariel Brunner of BirdLife, a conservation group. "We expect some bold and clear ideas, but this health check risks focusing entirely on small tweaks to the current system."

The EU should set maximum and minimum amounts for payments to farmers through the Common Agricultural Policy (CAP), according to a draft revision being prepared by the European Commission.