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Home arrow Economics arrow Disaggregated impacts of CAP reforms : proceedings of an OECD workshop.

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Latitude of the member states in applying the regulations

Successive reforms have left the CAP less and less common and more and more a la carte in its implementation. Nonetheless, it continues to be mainly financed from Community funds. In fact, only Pillar 2, which is much smaller than Pillar 1, is co-financed from national budgets. This state of affairs gives rise to at least two closely linked problems: justifying Community funding of measures that are implemented differently across member states, and, more generally, justifying the very goals of the CAP, especially those pursued by the decoupled payments of Pillar 1.

These questions regarding the legitimacy of a CAP which, although funded from a common purse, is increasingly heterogeneous, need to be viewed in the context of discussions (already underway) regarding the financial position of the post-2013 European Union, to the extent that there will be no shortage of requests that a portion of the agricultural resources be diverted to targets that some will feel are a higher priority, more strategic, or sources of growth or productivity gains: training, research, employment, etc. This is all the more likely in that, in addition to questions over its goals, the CAP is also criticised for its unfair distribution of budgetary support, - especially in countries such as France which have retained the historical model. Under both the historical model and the regionalised flat-rate model, the larger an operation, the more the decoupled direct payment it will receive (all other things being equal). In the historical model, this distribution is largely frozen to reflect conditions during the 2000-02 reference period.

The decisions taken in November 2008 therefore allow member states considerable leeway in implementing the EU regulations. This creates more problems for France than for other member states (Ministry of Agriculture and Fisheries, 2008), mainly because France is less advanced in the reform process (historical model, partial decoupling, central role played by government in managing the milk supply, etc.) and must contend with a greater diversity of productive and geographical realities. However, a member state can juggle various measures in order to tailor the distribution of direct Pillar 1 and 2 aid. This “tool box”, as the French Minister of Agriculture calls it, contains:

  • Voluntary modulation. In addition to the mandatory modulation of direct Pillar 1 payments (see above), member states have the option of implementing a more far-reaching voluntary modulation. This option was chosen by the United Kingdom.
  • Article 47. This article allows member states using the historical model to incrementally adjust the value of entitlements in at least three pre-established steps and in accordance with objective and non-discriminatory criteria such as the agricultural potential or environmental criteria. Funds released by this process are reallocated on a regional basis.
  • Article 68. This article authorises a country to withdraw as much as 10% of direct payments from Pillar 1 and divert it to five objectives: 1) environment, and the quality and marketing of products; 2) compensation for geographical or sectoral handicaps; 3) higher decoupled per hectare payments in areas at risk of agricultural abandonment (decline); 4) assumption of a portion of crop insurance premiums in the arable crops sector; and 5) participation in mutual funds for combating animal and plant diseases.
  • Article 63. This article authorises member states to divert some or all of the savings from increased decoupling to establish payment entitlements or to increase the value of the payment entitlements on the basis of the type of agricultural activities exercised by farmers during one or more years in accordance with objective and non-discriminatory criteria such as the agricultural potential or environmental criteria. The Health Check postulates incremental decoupling of all Pillar 1 budgetary support except, at the discretion of the member state, the suckler cow premium and the sheep and goat premium.
 
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