The common agricultural policy: 2023-27

A new way of working

The CAP 2023-27 is a modernised policy, with a strong emphasis on results and performance.

On 2 December, 2021, the agreement on reform of the common agricultural policy (CAP) was formally adopted. The new legislation, which entered into force on 1 January 2023, paves the way for a fairer, greener and more performance-based CAP.

It seeks to ensure a sustainable future for European farmers, provide more targeted support to smaller farms, and allow greater flexibility for EU countries to adapt measures to local conditions.

Agriculture and rural areas are central to the European Green Deal, and the CAP 2023-27 will be a key tool in reaching the ambitions of the Farm to Fork and biodiversity strategies.

 

Ten specific objectives

The policy focuses on ten specific objectives, linked to common EU goals for social, environmental, and economic sustainability in agriculture and rural areas.

National strategic plans

Each EU country designed a national CAP Strategic Plan, combining funding for income support, rural development, and market measures. When designing their strategic plans, EU countries contributed to the ten specific objectives through a toolbox of broad policy measures provided by the Commission, which could be shaped around national needs and capabilities.

Focus on performance and results

CAP legislation lays down a common set of indicators as part of a new performance, monitoring and evaluation framework. The indicators will be monitored through annual performance reports and a biannual review of the performance of CAP Strategic Plans to assess the progress of EU countries in reaching their targets and the objectives of the CAP.

Key areas of reform

The CAP 2023-27 contains a number of policy reforms to support the transition towards sustainable agriculture and forestry in the EU.

A greener CAP

The CAP 2023-27 supports agriculture in making a much stronger contribution to the goals of the European Green Deal:

• higher green ambitions: CAP plans are in line with environmental and climate legislation. In its CAP strategic plan, each EU country is obliged to display a higher ambition on environment and climate action compared to the previous programming period (no “backsliding”) and is required to update the plan when climate and environmental legislation is modified;
• contribute to the Green Deal targets: the national CAP Strategic Plans contribute to the Green Deal targets (the CAP recommendations set out how this contribution is expected);
• enhanced conditionality: beneficiaries of the CAP have their payments linked to a stronger set of mandatory requirements. For example, on every farm at least 3% of arable land is dedicated to biodiversity and non-productive elements, with a possibility to receive support via eco-schemes to achieve 7%. Wetlands and peatlands are also protected.
• eco-schemes: at least 25% of the budget for direct payments is allocated to eco-schemes, providing stronger incentives for climate-and environment-friendly farming practices and approaches (such as organic farming, agro-ecology, carbon farming, etc.) as well as animal welfare improvements;
• rural development: at least 35% of funds are allocated to measures to support climate, biodiversity, environment and animal welfare;
• operational programmes: in the fruit and vegetables sector, operational programmes allocate at least 15% of their expenditure towards the environment;
• climate and biodiversity: 40% of the CAP budget has 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 EU's multiannual financial framework (MFF) period.

A fairer CAP

The CAP 2023-27 directs support to those who need it most:

• redistribution of income support: EU countries have to dedicate at least 10% of their direct payments to the redistributive income support tool, to better address the income needs of smaller and medium-sized farms;
• active farmers: the new legislation contains a mandatory but flexible definition of an active farmer to be established by EU countries, including the level of activities undertaken. Only active farmers may receive certain EU support;
• social conditionality: CAP payments are linked to the respect of certain EU labour standards and beneficiaries are incentivised to improve working conditions on farms;
• convergence of payments: in the CAP 2023-27 levels of income support converge more, both within individual EU countries and between EU countries;
• supporting young farmers: EU countries 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 for young farmers;
• improving the gender balance: gender equality and increasing the participation of women in farming are – for the first time – part of the objectives for CAP Strategic Plans. EU countries must assess these issues and address the identified challenges.

Improving competitiveness

The CAP 2023-27 will strengthen the position of farmers in the supply chain and boost the competitiveness of the agri-food sector:

• improved bargaining power: new rules reinforce producer cooperation, encouraging farmers to work together and enabling them to create countervailing power in the market;
• market orientation: the CAP 2023-27 maintains the overall market orientation from the previous reforms, encouraging EU farms to align supply with demand in Europe and beyond;
• crisis reserve: to cope with future crises, the reformed CAP includes a new financial reserve amounting to at least €450 million per year;
• support for the wine sector: specific rules have been agreed to improve support for the wine sector.

A strong budget

The CAP will continue to benefit from a robust long-term budget.

CAP funding

€387 billion in funding will be allocated to the CAP for the 2021-27 period. This comes from two different funds: the European agricultural guarantee fund (EAGF), which has been set at €291.1 billion (in current prices); and the European agricultural fund for rural development (EAFRD), which will amount to €95.5 billion.

Next Generation EU

The budget for the EAFRD includes €8 billion from Next Generation EU to help rural areas make the structural changes necessary to achieve the goals of the European Green Deal and the digital transition.

Transfers between allocations

To allow EU countries to better adapt the policy to their farming sectors’ priorities, they are entitled to transfer up to 25% of their CAP allocations between income support and rural development. EU countries can apply additional flexibilities for certain purposes, such as supporting environment and climate objectives, supporting young farmers and where countries have below-average direct payments.

Knowledge, research and innovation

Advancing research, knowledge-sharing, and innovation is essential for securing a smart and sustainable agricultural sector.

As part of its commitment to support research and innovation in agriculture, the Commission has proposed to set aside €10 billion from the Horizon Europe programme for projects relating to food, farming, rural development and the bioeconomy.

The reformed CAP benefits from this increased investment, incorporating stronger agricultural knowledge and innovation systems (AKIS) to boost the development of innovation projects, disseminate their results, and encourage their use as widely as possible. Farm advisory services are a key tool in sharing new knowledge and ideas.

Legal basis

The reform covers three regulations, which generally applies from 1 January 2023:

• Horizontal regulation
• Strategic Plan regulation
• Common Market Organisation regulation

For the years 2021 and 2022, a transitional regulation was in place, bridging the gap between current and new legislation.