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The European Parliament, the EU Council of Ministers and the European Commission have reached a political agreement this evening on the few issues on CAP reform (in the context of the Multi-Annual Financial Framework 2014-2020) that remained outstanding after the 26 June political agreement on the reform (see IP/13/613 and MEMO/13/621).
 
"Having found agreement on most of the CAP reform package in June, I am delighted that we have now been able to finalise the reform as a whole," EU Agriculture Commissioner Dacian Cioloș stated tonight. "I would like to pay tribute to Ministers and MEPs for the way in which they have been able to find a compromise on these issues which respects the co-decision process. Following tonight's accord I hope we can proceed swiftly to a formal vote in the European Parliament and Council, which will allow the legislative texts and the 2014 transition arrangements to be formally adopted before the end of the year, and apply from January 1, 2014. This is important for European farmers as it provides them greater certainty for the coming year."

Subject to formal approval by both Institutions and to the adoption of the legal acts on the overall EU budget for 2014-2020, tonight’s accord is the final part of an overall agreement which gives the Common Agricultural Policy a new direction, taking better account of society's expectations.
 
The main aspects of the agreement reached today are presented below. They come in addition to the agreement in June - see MEMO/13/621. (A consolidated version of the memo covering the whole reform package will be published shortly.)

Direct payments

"Capping" and "Degressivity”: Agreement has been reached on compulsory "degressivity", and voluntary "capping". In practice this mean that the amount of Direct Payment support that an individual farm holding receives [not including the Greening payment] will be reduced by at least 5% for the amounts above 150 000€. In order to take account of employment, salary costs may be deducted before the calculation is made. This reduction does not need to apply to Member States which apply the "redistributive payment" under which at least 5% of their national envelope is held back for redistribution on the first hectares of all farms. NB The funds "saved" under this mechanism stay in the Member State/region concerned, and are transferred to the respective Rural Development envelope, and can be used without any co-funding requirements.
 
External Convergence: The national envelopes for direct payments for each Member State will be progressively adjusted such that those Member States where the average payment (in € per hectare) is currently below 90% of the EU average will see a gradual increase in their envelope (by 1/3 of the difference between their current rate and 90% of the EU average). Moreover, there is the guarantee that every Member State will reach a minimum level by 2019. The amounts available for other Member States who receive above average amounts will be adjusted accordingly.

Transferring funds between Pillars: Member States will have the possibility of transferring up to 15% of their national envelope for Direct Payments (1st Pillar) to their Rural Development envelope. These amounts will not need to be co-funded. Member States will also have the option of transferring up to 15% of their national envelope for Rural Development to their Direct Payments envelope, or up to 25% for those Member States that get less than 90% of the EU average for direct payments.

Rural Development

National allocations: Rural Development allocations per Member State are included in the Basic Regulation, but with the possibility of adjusting these amounts through a Delegated act if technically necessary or provided for by a legislative act.

Co-funding rates: The maximum EU co-funding rates will be up to 85% in less developed regions, the outermost regions and the smaller Aegean islands, 75% in transition regions, 63% in other transition regions and 53% in other regions for most payments, but can be higher for the measures supporting knowledge transfer, cooperation, the establishment of producer groups and organisations and young farmer installation grants, as well as for LEADER projects and for spending related to the environment and climate change under various measures.

Commenting on fears that further delays to the final CAP agreement would have meant rolling back the package's start date even further,  Pekka Pesonen, Secretary-General of EU farm lobby group Copa-Cogeca, said, "an agreement is vital to enable farmers and cooperatives to get on with their production and investment plans. Outstanding budgetary issues needed to be agreed so that the new CAP can apply in full in 2015, with a transition phase in 2014."

The transition period is the result of previous delays in the CAP reform process, in which the European Parliament has played an equal role for the first time. Pesonen continued, "The political agreement on CAP reform reached this Summer is a solution farmers can live with and represents a considerable improvement on what was initially proposed."