1- The CAP reform at the EU level
The first pillar, representing the Direct Payments, has been reformed. The payment disparities between Member States, known as external convergence, will be reduced through the introduction of a minimum national average direct payment per hectare across all Member States by 2020. Currently, the level of direct payments per hectare is based on historic parameters in many countries, including France.
The new architecture of Direct Payments include some compulsory and voluntary elements:
Compulsory: The Basic Payment per hectare can be increased with the Green Payment if the three environmental requirements are respected: maintenance of permanent grassland, ecological focus areas and crop diversification. The Green Payment accounts for 30% of the national direct payment budget, but if non-compliant, one loses the whole payment. A special payment for young farmers can be added for a maximum of five years.
Then, each Member State has the option to further target direct payments through optional schemes. A redistributive payment can be attributed to the first hectares of farms, to provide more targeted support to small and medium-sized farms. A possible support for natural constraints can be implemented and will contribute to specific environmental and territorial objectives. A coupled support is another option for the future securement of potentially vulnerable sectors. Furthermore, a specific and simplified support scheme for small-scale farmers is possible for the Member States. It can facilitate access to direct payments for small farmers and reduce their administrative burden. The voluntary payment funds are shared between the Member State and the EU.
With the voluntary payments, the new CAP increases the flexibility of Member States with regard to the budgeting and implementation of its first pillar instruments. It acknowledges the wide diversity of agriculture and agronomic production potential as well as climatic, environmental and socio-economic conditions and needs across the EU.
The second pillar, which represents the Rural Development Policy, was also reformed. Member States will have to build their RDP’s based upon at least four of the six common EU priorities. The environmental objectives are one of the main focuses of the second pillar; at least 30% of the budget of each Rural Development program must be reserved for voluntary measures that are beneficial to the environment and to climate change. The second pillar includes a start-up aid for young farmers, as well as a special focus on bridging the gap between R&D and practices via the Farm Advisory System, as well as training and innovation programs.
Furthermore, a new crisis reserve of $0.5 billion per year has been established to secure the financial resources needed in case of crisis.
Alongside this reserve, a new Fund for European Aid to the Most Deprived (FEAD), which will cost €3.8 billion between 2014 and 2020, will support Member States’ actions to provide a broad range of non-financial material assistance including food, clothing and other essential goods for personal use such as shoes, soap and shampoo, to materially-deprived people.
2- Livestock is at the core of implementing the new CAP in France
The new Common Agriculture Policy (CAP) in France is designed to be more environmentally friendly and fair, with the goal of placing special focus on young farmers and employment in agriculture. With an annual budget of $12.3 billion, this new policy will allocate $10.4 billion to farmers’ subsidies and $1.9 billion to rural development programs. In order for French agriculture to remain competitive in every sector, one of the top priorities of the CAP 2014 is to support livestock. The French President, François Hollande, announced an annual $1.35 billion increase for livestock sector subsidies. By supporting livestock, the new CAP will put a very special focus on helping farmers with less favorable terrains. On a more general scale, the French agriculture policy will help farmers modernize their infrastructure and become more environmentally friendly. Subsidy inequality among farmers will also be addressed, with the objective of reaching a 70% convergence rate towards the average subsidy amount for every farmer.
– Implementing coupled payments for bovine livestock
The French bovine livestock sector has one of the lowest current profits before taxes – about 3.6 times lower than those netted for average large-scale crops. To address this inequality, the new CAP will implement coupled payments for the livestock sector. About $337 million will be added to the current $1.2 billion already dedicated to livestock direct payments. Among the new measures, the CAP 2014 will set up direct payments for milking cows and will strengthen the existing direct payments for calf fattening. Funds will also be dedicated to developing the production of vegetal proteins and by doing so helping farms to gain autonomy regarding their sources of feed.
– Better access to specific subsidies for milk producers
Since a quarter of French milking cows are raised on low and medium mountain terrains, it is crucial to focus on those areas in order to support the French livestock sector. The special indemnity for less-favored agricultural areas will be increased, simplified, and eligibility for this subsidy will be given to all milk producers in those areas. Some conservation measures specific to grass-fed operating systems will be extended to all terrains. In total, specific support for less-favored areas will reach an annual budget of $1.5 billion, benefitting from a $405 million increase.
– Redistributing agricultural subsidies
The French government wants to reach the goal of a 70% convergence rate towards the average subsidy per acre by the year 2019. This means that every farmer would get a subsidy per acre equal to at least 70% of the current subsidy average, though the losses for one farmer due to redistribution cannot exceed 30% of their original subsidy amount.
Farmers will receive higher subsidies for the first 128 acres of their farms. The average livestock farm size ranges from 201 acres for dairy farms to 280 acres for mixed bovine farms, whereas the average large-scale crop farm acreage ranges from 284 to 303 acres. This measure is especially aimed at the typically smaller-scale operations such as mixed-farming, dairy and livestock farms. With a budget of $2 billion, this subsidy system would be the first of its kind in French agriculture policy.
– Supporting the modernization of agriculture
French agriculture is suffering from an aging active population and a lack of new active farmers to replenish the number of retirees every year. The livestock sector is perhaps hit hardest by this issue. For example, the number of dairy farms has decreased by a third over the past 10 years. To address this issue, the new CAP will allocate $135 million to complementary subsidies for young farmers and $270 million to modernize livestock production infrastructure.
With this new CAP, the French government established the specific goal of helping the French livestock sector in all of its forms from meat and dairy to mixed-farming. Specific subsidies designed to keep this sector competitive and preserve agricultural employment will help the French livestock sector overcome its current challenges.