On 2 December, 2021, the agreement on reform of the common agricultural policy (CAP) was formally adopted. The new legislation, which is due to begin in 2023, paves the way for a fairer, greener and more performance-based CAP.
It will seek 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.
A new way of working
The new CAP is a modernised policy, with a strong emphasis on results and performance.
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 will design a national CAP strategic plan, combining funding for income support, rural development, and market measures. When designing their strategic plans, EU countries will contribute to the ten specific objectives through a toolbox of broad policy measures provided by the Commission, which can 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 new CAP contains a number of policy reforms to support the transition towards sustainable agriculture and forestry in the EU.
A greener CAP
The new CAP supports agriculture in making a much stronger contribution to the goals of the European Green Deal:
- higher green ambitions: CAP plans will be in line with environmental and climate legislation. In its CAP strategic plan, each EU country will be obliged to display a higher ambition on environment and climate action compared to the previous programming period (no “backsliding”) and will be required to update the plan when climate and environmental legislation is modified;
- contribute to the Green Deal targets: the national CAP strategic plans will contribute to the Green Deal targets (the CAP recommendations set out how this contribution is expected);
- enhanced conditionality: beneficiaries of the CAP will have their payments linked to a stronger set of mandatory requirements. For example, on every farm at least 3% of arable land will be dedicated to biodiversity and non-productive elements, with a possibility to receive support via eco-schemes to achieve 7%. Wetlands and peatlands will also be protected.
- eco-schemes: at least 25% of the budget for direct payments will be 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 will be allocated to measures to support climate, biodiversity, environment and animal welfare;
- operational programmes: in the fruit and vegetables sector, operational programmes will allocate at least 15% of their expenditure towards the environment (compared to 10% during the current programming period);
- climate and biodiversity: 40% of the CAP budget will have 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 new CAP directs support to those who need it most:
- redistribution of income support: EU countries will 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 will be linked to the respect of certain EU labour standards and beneficiaries will be incentivised to improve working conditions on farms;
- convergence of payments: in the new CAP levels of income support will converge more, both within individual EU countries and between EU countries;
- supporting young farmers: EU countries will 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.
The new CAP will strengthen the position of farmers in the supply chain and boost the competitiveness of the agri-food sector:
- improved bargaining power: new rules will reinforce producer cooperation, encouraging farmers to work together and enabling them to create countervailing power in the market;
- market orientation: the new CAP 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.
€387 billion in funding has been allocated to the CAP for the 2021-27 period. This will come 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 will be 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 will be 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 will benefit 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 will be a key tool in sharing new knowledge and ideas.
CAP reform timeline
The Commission will undertake a second performance review of each CAP strategic plan.
In 2026, an interim evaluation will assess the performance of the new CAP.
The Commission will undertake a first performance review of each CAP strategic plan and request - if necessary - specific follow-up actions to EU countries.
As of 2024, each EU country will present an annual performance report and hold an annual review meeting with the Commission.
- December 2023
At the end of 2023, the European Commission will submit a report to assess the joint effort of all CAP strategic plans, with a particular focus on the collective ambition to achieve Green Deal targets.
- January 2023
CAP strategic plans begin.
- December 2021
On 2 December 2021, the agreement on reform of the common agricultural policy (CAP) was formally adopted. By 31 December 2021 each EU country will submit its CAP strategic plan. The Commission will have six months to assess and approve the plans.
- June 2021
Following a series of trilogues, a provisional political agreement on the CAP reform was reached on 25 June 2021.
- November 2020
The European Parliament and Council of the EU agreed on their respective negotiating positions in October 2020, enabling the first “trilogue” between the three institutions to take place on 10 November.
- June 2018
On 1 June 2018, the European Commission presented legislative proposals for the reform of the CAP.