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What is the Common Agricultural Policy, and how is it being changed to tackle climate change?

The farming subsidy is undergoing a major reform ahead of the 2023-2027 period.

LAST MONTH, MINISTER for Agriculture Charlie McConalogue announced details of new Common Agricultural Policy (CAP) funding allocations for agricultural schemes for the upcoming 2023-2027 period. 

Speaking at a press conference alongside the Taoiseach, he announced an allocation of €2.3 billion in national funding to be made available over the 2023-2027 period. Over €1.56 billion of this will come directly from the European Union (EU) CAP budget.

This brings the total funding for the plan for the 2023-2027 period to €9.8 billion.

McConalogue also said the agricultural sector will have “really ambitious targets” to reduce greenhouse gas emissions.

“The announcement today is a real commitment to our farm families. It will support our farmers in doing what they do best – produce top class, world famous food while helping them make a real impact in meeting our climate ambitions,” he said. 

The announcement comes three years after the European Commission launched its proposals on the reform of the CAP.

The Department of Agriculture released a draft plan in September following ongoing public consultations with stakeholders to allow them to outline their views.

In June, EU member states and the European Parliament agreed on a major reform of farming subsidies after NGOs criticised it for not being “green” enough.

This reform will include a number of new measures to try and make farming a more sustainable industry on the whole.

The reaction has been mixed: one farmer told The Journal that the changes are needed, but that it involves too many small-scale reforms and needs to be more coherent and ambitious. 

But what exactly is the CAP, and what will the latest green changes mean for farmers in Ireland?

What is the CAP?

Farmers across the EU have benefitted from the CAP since its creation in 1962. It is the longest-serving EU policy, making up more than a third of its overall budget, and is implemented in all 28 member states.

According to the European Commission, its aim is to “help provide a decent standard of living for European farmers and agricultural workers” and a “stable, varied and safe food supply for the citizens of all member states”.

The CAP is made up of two funds, which are often referred to as the “two pillars” of the CAP.

The first pillar, the European agricultural guarantee fund (EAGF), has an allocation of €291.1 billion. Up to €270 billion of this is provided for income support schemes, with the remainder dedicated to supporting agricultural markets.

The CAP’s second pillar is the European agricultural fund for rural development (EAFRD). It has a total allocation of €95.5 billion, which includes €8.1 billion from the EU recovery package to help farmers address the challenges posed by the pandemic.

There are three types of support included in the CAP: income support for farmers, or “direct payments”, market measures and rural development.

The direct payments make up the majority of the CAP. Over 70% of the current EU farm budget is dedicated to direct payments for European farmers, who are paid per hectare of land used for farming. 

Market measures aim to support and stabilise agricultural markets, prevent market crises from escalating and boost demand for products.

One example of these measures is intervention buying. This is where products are bought and stored by EU countries’ governments or their agencies and then sold back on the market at a later date to prevent prices from dropping to unsustainably low levels.

The rural development section of CAP aims to do just that: strengthen the social, environmental and economic sustainability of rural areas.

What changes are being made to the CAP?

Ahead of the 2023-2027 period, the EU are reforming how the income support system will be distributed “to ensure a fairer distribution of financial support for farmers and workers across the EU”.

Under the new CAP, which will come into force in January 2023, EU countries will have to dedicate at least 10% of their direct payments to the Complementary Income Support for Sustainability (CRISS), which is designed to support farmers of smaller farms. 

They will also have to distribute at least 3% of their direct payments budget towards young farmers, in the form of income or investment support or start-up aid.

McConalogue has proposed implementing capping of direct payments at €100,000 and reducing payments over €60,000 by 85%, resulting in an effective cap of €66,000.

According to figures published by the Department of Agriculture, 169 out of over 122,000 eligible farmers received over €100,000 in direct payments last year.

The new legislation will also contain a new, mandatory definition of an “active farmer” in an attempt to limit the subsidies going to large businesses and landowners. 

Other objectives included in the CAP reform plan is to improve the gender balance in farming, and to boost the competitiveness of the agri-food sector.

What are the climate change elements in these changes?

In an effort to make the CAP more “green”, a number of changes are also being made to the policy ahead of the 2023-2027 period which aims to align with the EU’s European Green Deal.

40% of the CAP budget will now have to be “climate-relevant” and strongly support the general commitment to dedicate 10% of the EU budget to biodiversity objectives by the end of the relevant period.

At least 35% of funds will be allocated to measures to support climate, biodiversity, environment and animal welfare.

Mandatory requirements will also be stronger for CAP payment recipients. According to the European Commission, at least 3% of arable land on every farm will be dedicated to biodiversity and non-productive elements, with a possibility to receive support via eco-schemes to achieve 7%. Wetlands and peatlands will also be protected.

A “green payment” had been issued to farmers since 2015. Representing 30% of the direct payment budget, it was given as a reward for taking care of the environment under three compulsory practices: crop diversification, ecological focus areas and permanent grassland.

However, it was deemed to be ineffective in a 2018 report by the European Court of Auditors (ECA), which found that 65% of audited farmers did not have to change their farming practices in order to qualify for green payments.

“Eco-schemes” will now replace greening in the new CAP.

These schemes aim to provide stronger incentives for climate and environment-friendly farming practices, such as organic farming and carbon farming, as well as animal welfare improvements.

25% of the budget for direct payments, or approximately €297 million per annum, will be allocated to eco schemes. Farmers can opt out of these schemes, but they will lose a portion of their direct payment if they choose to do so.

The Public Consultation on Proposed Interventions lists five eco scheme proposals being considered by the Department of Agriculture. 

The five proposed actions are devoting an increased proportion of land to non-productive areas, keeping within a specified maximum overall livestock rate each year, limiting chemical nitrogen usage, planting a minimum number of native trees per eligible hectare and using GPS-controlled fertiliser spreaders.

The proposal states that a farmer would have to select two of the five actions to maximise their payment, which is envisaged to work out at around €75 per hectare, payable on all hectares.

If a farmer selects one of these five actions, or selects two but only complies with one, it is expected that they will only receive a half-rate payment.

How have farmers in Ireland reacted to these changes?

Following McConalogue’s announcement, president of the Irish Farmers Association (IFA) Tim Cullinan accused the Government of not being interested in supporting active farming.

“A cohort of our most productive farmers are going to be devastated by the CAP decisions at EU level. The Ministers own decisions today will do nothing to help these farmers,” he said in a statement. 

“The total emphasis is on rewarding farmers for reducing production. The Greens are clearly running the show, with Fianna Fáil and Fine Gael being led by the nose.”

The IFA joined protests across the country in June before the reforms were finalised, objecting to climate policies being implemented “without any assessment of the economic and social impact they will have on farmers and rural Ireland”.

At the time, Cullinan said that he has warned the government that “unless there is a change in the current direction of the CAP and changes to the flawed Climate Action Bill, farming in Ireland, as we know it, will cease to exist.” 

Kildare-based scientist and farmer Emma Carroll told The Journal that it’s good to see the shift towards more environmentally-friendly objectives, but thinks that clarity is needed on what the outcomes will be for farmers. 

“I think it needs to be a more broad picture of Irish farms, and I’m not sure it really captures that as it is,” she said.

It kind of feels almost tokenistic, in a way. It feels like they’re doing these little bits that help a tiny bit here and a tiny bit there, and it doesn’t feel like it joins up altogether to make a coherent picture of helping.

Carroll also said that she would like to see “a more farm-scale plan” that could be personalised to each individual farm across the different farming industries. 

Nevertheless, she added that the reforms to the CAP are needed. 

“With the climate crisis that we’re in, we know changes do have to be made and we have to make them as efficiently as we can,” she said. 

“Hopefully with good negotiators at the table on behalf of farmers, I hope this continues interest around putting climates to the fore and supporting farmers in doing that, hopefully we can get to really interesting and really positive supportive iterations of CAP out there.”

This work is co-funded by Journal Media and a grant programme from the European Parliament. Any opinions or conclusions expressed in this work is the author’s own. The European Parliament has no involvement in nor responsibility for the editorial content published by the project. For more information, see here.

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