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• who should get EU-funded direct payments and how they can be more fairly distributed both among and within member states,

• the measures that farmers should take to protect the environment better,

• how best to help young farmers, small farmers, and those in areas with natural constraints,

• how to strengthen farmers' price bargaining position, and

• how to improve spending controls while cutting red tape

NB: "direct payments" are payments granted directly to farmers under certain support schemes, such as the current Single Payment Scheme and the Single Area Payment Scheme.

These payments provide farmers with a safety net in the form of a basic income support, decoupled from production, to stabilise their income from sales on the markets, which are subject to volatility. Direct payments also help to provide basic public goods delivered through sustainable farming.  

Who will get direct payments.

The precise definition of an "active farmer", i.e. the entity entitled to receive EU-funded direct payments, should be decided by member states and not by the EU, says the committee.

However, some entities, such as transport and real estate companies, airports, sports clubs, campsite operators, mining companies or other non-agricultural enterprises, to be defined by member states, should automatically be excluded from these definitions unless they can prove that their agricultural activities form a significant part of their overall economic activities, MEPs add.

It should be up to member states to extend the list of excluded entities (the "negative list"), on objective and non-discriminatory grounds and after notifying the Commission, says the committee.

This greatly simplifies the Commission's original proposal, which defined "non-farmers" as those whose income from direct payments amounts to less than 5% of their total receipts from non-agricultural activities (excluding those who get less than €5,000 in direct payment income).


How to allocate direct payments more fairly

MEPs want the levels of payments to farmers to be rebalanced among member states slightly faster than originally proposed by the European Commission.

The committee agreed that member states with direct payments per hectare below 70% of the EU average (down from the Commission proposal of 90%) should see the shortfall reduced by 30%.

In member states with direct payments amounting to 70% - 80% of the EU average, the shortfall should be reduced by 25% and in those with over 80% of the EU average, by 10%.

This measure should ensure that farmers in no member state receive less than 65% of the EU average.

By contrast, to achieve greater consistency and convergence of direct payment rates within member states, the committee slightly relaxed the rules to balance payments among farmers within any given one.

As of 2019, payments received by all farmers in any given member state are to be  based on a uniform unit value, as proposed by the Commission, but could nonetheless in some cases deviate from the average by up to 20% so as to avoid sudden sharp falls in support, says the committee.

However, where payments are reduced, their level in 2019 may not be more than 30% below that of 2014.

Capping direct payments

MEPs endorsed Commission proposals to cap direct payments to any one farm at €300,000, reduce payments to those receiving between €250,000 and €300,000 by 70%, and payments to those receiving between €200,000 and €250,000 by 40%. Payments to farms receiving between €150,000 and €200,000 would be cut by 20%.

Other amendments, seeking to reduce payments to bigger farms even more, or on the contrary calling for the capping to be completely rejected, failed to win the support of a majority in committee. MEPs nonetheless adapted the rules proposed by the Commission so as to exclude cooperatives and other groups of farmers who distribute payments received to their members and ensure that capped money remains in the region where it was capped and is used for rural development programmes.


How to improve environment protection

New environmental rules for farmers should be more flexible and linked to the size of the holding, says the committee. The three key measures proposed by the Commission – crop diversification, maintaining existing permanent grassland and permanent pasture and ecological focus areas – would remain, but certain exceptions should be made to reflect geographical conditions and size of holding, say MEPs.

Farmers whose holdings are certified under national or regional environmental certification schemes, and hence are already using environment-friendly practices, would be exempt from mandatory greening measures on condition that these practices have an impact at least equivalent to that which the mandatory greening measures would have.

Crop diversification

Farmers with holdings of 10 ha – 30 ha of arable land should be required to plant at least two different crops (rather than requiring three crops for all farmers cultivating more than 3 ha, as proposed by the Commission). None of these crops should cover more than 80% (as compared to 70%) of the arable land.

Farms of more than 30 ha of arable land should be required to cultivate three crops with the main one covering not more than 75% and two main crops together not more than 95% of the arable land.

Holdings in northern Scandinavia (north of the 62nd parallel) with more than 30 hectares of arable land should be exempt.

Permanent grassland and permanent pasture

Member states must ensure that the share of land under permanent grass and permanent pasture is maintained at national, regional or sub-regional level, to be decided by member states. Up to 5% and in exceptional circumstances up to 7% could be converted, MEPs say, adding that exceptions should be possible for carbon-rich soils, wetlands, semi-natural grasslands and pastures.

Ecological focus areas

Initially, – during the first year's application of the new rules, farmers with more than 10 ha of arable land would have to ensure that 3% (rather than 7% as proposed by the Commission), excluding permanent grassland, permanent pasture and permanent crops, is reserved for so-called "ecological focus areas" (EFAs).

EFAs could include, for example, land left fallow, terraces, landscape features including hedgerows, ditches, stone walls, in field trees, ponds, land planted with nitrogen-fixing crops, buffer strips and afforested areas. Farmers could use EFAs for production provided they do not use pesticides or fertilisers on them, MEPs stress.

EFAs could be weighted on the basis of their ecological significance. Weighting coefficients should be drawn up by member states and approved by the Commission. The EFAs should be expanded as of 1 January 2016 to cover 5% of arable land, says the committee.

By the end of March 2017, the Commission would have to present an evaluation report and if necessary a legislative proposal to further increase the percentage to 7%. This proposal, if tabled, would be subject to approval by both the European Parliament and the Council.

The committee backs Commission plans to make 30% of the national budget for direct payments conditional upon compliance with greening measures. Farmers who fail to comply would lose the "greening" funds, but should not face further reductions in their remaining direct payments, MEPs decided.

More money for optional greening measures

To further support greening efforts, the committee raised the ceiling on EU co-financing of agri-environmental  and climate measures by 5%.

This would make less-developed and outermost regions and also the Aegean islands, eligible for up to 90% co-financing (as compared to 85% proposed by the Commission). For other regions, the co-funding ceiling would be set at 55% (as compared to 50%).

At least 25% of the total spending earmarked for rural development programmes would have to be reserved for agri-environmental and climate measures and support for organic farming.


How best to help young farmers, small farmers, and those in areas with natural constraints

Young farmers

To attract youngsters into farming, the committee approved an additional 25% payment for young farmers (under 40 years old), but for a maximum of 100 hectares (rather than an average-sized holding).

Member states will have to use 2% of their national budgets to fund the support scheme for young farmers, and not up to 2%, as proposed by Commission.

Small farmers

Member states will be free to decide whether to set up a support scheme for small farmers. If so, then farmers entitled to less than €1,500 in direct payments must be automatically included in the scheme, says the committee, thus scrapping the Commission proposal to oblige small farmers to apply to join the scheme.

Small farmers would receive a minimum of €500 and a maximum of €1,500 (compared to the Commission proposal of €1000) or €200 – 500 in the case of Croatia, Cyprus and Malta.

Areas with natural or other constraints

By the end of 2014 Commission should table a legislative proposal for mandatory bio-physical criteria to determine areas facing natural or other constraints (ANCs) and for necessary transitional arrangements.

Mountain areas and areas in northern Scandinavia (north of the 62nd parallel) should be automatically included. Other areas with natural constraints such as low soil productivity and poor climate conditions where extensive farming activity is important for land management should be designated by member states.

In the meantime, member states should be allowed to use current criteria to decide which areas would be eligible for special support under the ANC scheme, say MEPs.


How to strengthen farmers' bargaining position

To equip farmers better to cope with market volatility and manage crises but also to strengthen their price bargaining position, producer organisations should be given significantly wider powers and new tools, say MEPs.

New rules should be introduced to allow these organisations to use crisis-prevention and crisis-management instruments such as private storage, processing, promotional sales and, as a last resort, market withdrawal, says the text.

Competition rules

EU competition rules for the agricultural sector should be clarified to improve the functioning of the single market and strengthen farmers' position in the food supply chain, says the committee.

Agreements, decisions and concerted practices of farmer organisations or associations should be allowed unless they harm competition, as they are necessary to achieve objectives of the EU farm policy, it adds.

Furthermore, farmers or groups of farmers should not be deemed to hold a dominant position on the market unless their market shares are bigger than those of the largest undertaking on the same market at the next stage in the supply chain, say MEPs.

EU competition rules should be applied uniformly, to prevent their being interpreted differently by each member state's national competition authorities, they add.

Collective negotiations

To boost farmers' bargaining power to get fair prices for their products, farmers' organisations should be allowed to negotiate, on behalf of their members, input supply contracts and delivery of agricultural products and foodstuffs to processors or distributors, without falling foul of competition law.

Contractual relations

The committee voted to extend contract provisions already in force for dairy farmers (adopted by Parliament in February 2012) to all agricultural sectors.

Member states should be able to decide whether or not to impose contracts covering delivery of farm produce from farmers to processors or distributors for their territory, says the committee.

But if these contracts are made compulsory, they must be drawn up before delivery and state the price, payment periods and arrangements for collecting and delivering the product in question. Member states should also be able to stipulate a minimum duration for these contracts of at least six months.

Supply management for all PDO and PGI products

To improve the working of the market for products registered under a protected designation of origin (PDO) or protected geographical indication (PGI) and to improve their quality, the committee inserted a provision enabling member states to establish a supply management system, provided that it in no way harms competition or free movement of goods. Such measures must not allow price fixing, MEPs stress.


How to improve spending controls while cutting red tape

Since the start of the CAP reform debate, many MEPs have stressed that the new CAP must cut bureaucratic red tape, including that involved in checking proper compliance with EU rules and efficient spending of EU funds.

To make farmers' lives easier while keeping a close eye on compliance with common rules and how EU funds are spent, the committee approved several measures designed to get remove unnecessary bureaucracy for farmers and ensure that penalties for breaching rules are proportionate.

More proportionate checks and sanctions

The checks and sanctions used to enforce the "cross-compliance" (i.e. paying farmers to conform to basic environmental, food safety and animal welfare standards) must be proportionate and tailored to the level of risk, says the committee.

Member states should focus on claims involving the highest risk and could reduce number of on-the-spot checks where the error rate is at an acceptable level.

MEPs also somewhat relaxed cross-compliance rules, so as to avoid imposing sanctions on farmers for failing to comply with differently-enforced rules for implementing the water and sustainable use of pesticides directives. Several requirements were deleted, in the areas of protecting ground water against pollution, minimum soil cover, minimum land management to limit erosion and protection of wetlands and carbon rich soils.

Early warning system

To avoid duplicating work, member states may create an aid application that would remain valid for several years provided that the farmer reports any changes.

Rather than imposing sanctions immediately, member states could set up an early warning system to deal with cases in which non-compliance does not constitute a direct risk to public or animal health. An alert would be sent to a beneficiary who breaches a rule for the first time and inform him of the need to remedy it. This alert should be followed by checks to ensure that the breach has been put right. If this is done, payments should not be reduced. However, if the problem persists, payments the farmer should be reduced, even retrospectively, MEPs say.

Transparency should not breach privacy

The committee rejected a Commission proposal to make public the names and addresses (albeit only the municipality) of those in receipt of direct payments and or money from rural development programmes, including the amounts received and the measures that these payments would cover.

In the debate following the publication of this updated Commission proposal last year, many MEPs voiced concerns that such extensive transparency rules would breach beneficiaries' privacy rights and could be rejected by the European Court of Justice.