CAP rules for 2021-22
On 1 June 2018, the European Commission presented legislative proposals on the common agricultural policy (CAP) for the period 2021-27. In June 2021, following extensive negotiations between the European Parliament, the Council of the EU and the Commission, agreement was reached on the new CAP. Subject to formal approval of the necessary legislation by the European Parliament and the Council in the autumn of 2021, the new CAP will begin on 1 January 2023.
In order to allow for continued payments to farmers and other CAP beneficiaries, a transitional regulation has been introduced for the years 2021 and 2022. During these years, funding will be drawn from the CAP’s budget allocation for 2021-27, bolstered by an additional €8 billion from the NextGenerationEU recovery instrument (EURI) assigned to the European agricultural fund for rural development (EAFRD).
The transitional regulation will extend most of the CAP rules that were in place during the 2014-20 period, while also including new elements to make a stronger contribution to the European Green Deal and to ensure a smooth transition to the future framework of the CAP strategic plans.
The transitional period should provide EU countries with sufficient time to design and prepare for the implementation of their respective CAP strategic plans, with the assistance of the Commission.
Strong and sustainable recovery
The transitional regulation will direct the additional resources of the EURI towards funding a resilient, sustainable and digital economic recovery, in line with the objectives of the European Green Deal.
Benefiting climate and the environment
EU countries must at least maintain the current level of environmental and climate ambition in their existing rural development programmes and ensure that the same share of EURI resources is applied to measures that are particularly beneficial for the environment and climate (‘non-regression principle’). Overall, at least 37% of the EURI resources should be devoted to measures that benefit the environment and climate, as well as to animal welfare and LEADER.
Sustainable social and economic development
At least 55% of EURI resources should be devoted to measures that promote economic and social development in rural areas. Specifically, investments in physical assets, farm and business development, support for basic services and village renewal in rural areas, and co-operation.
In order to allow EU countries to apply funding where it is most needed, the transitional rules permit some flexibility between meeting the 'non-regression principle' and providing 55% of additional resources to promote economic and social development.
A smooth transition
The regulation will shorten certain multiannual commitments, schemes and programmes to enable a smooth transition to the new CAP legislation.
Multiannual commitments in rural development programmes
The duration of new multiannual commitments in relation to agri-environment-climate, organic farming and animal welfare should, as a general rule, be limited to a maximum period of three years. From 2022, the extension of existing commitments should be limited to one year. A derogation to this rule is possible based on the nature of the commitments, as well as the environmental and climate objectives and the animal welfare benefits sought.
Aid schemes and operational programmes
EU Regulation 1308/2013 (laying down rules for the common organisation of agricultural markets) includes aid schemes and operational programmes to support certain sectors. The transitional regulation sets out rules regarding the duration of aid schemes and operational programmes that are due to be renewed in 2021 and 2022, in order to ensure their smooth integration into the new CAP.
- Regarding the aid scheme in the olive oil and table olive sector, the work programme drawn up for the period running from 1 April 2018 until 31 March 2021 has been followed by new work programmes running from 1 April 2021 until 31 December 2022.
- Existing operational programmes in the fruit and vegetable sector that have not reached their maximum duration of five years may only be extended until 31 December 2022. New operational programmes in the fruit and vegetable sector should only be approved for a maximum duration of three years.
- Existing national programmes for the apiculture sector drawn up for the period running from 1 August 2019 until 31 July 2022 should be extended until 31 December 2022.
Countering income volatility
In response to the economic and environmental risks brought to farmers by climate change and increased price volatility, the transitional regulation loosens restrictions on the application of risk management instruments and state aid rules.
- Under EU Regulation 1305/2013, EU countries may incorporate an income stabilisation tool in their rural development programmes to compensate farmers who suffer a 30% drop in their average annual production or income. In order to further promote the use of this tool, the transitional regulation provides EU countries with the possibility to reduce the threshold for compensation from 30% to 20%.
- State aid rules shall not apply to national tax measures where the income tax base applied to farmers is calculated over a multiannual period. By permitting EU countries to even out the tax base over a number of years, the regulation aims to alleviate the effects of income volatility and encourage farmers to make savings in good years to cope with bad years.
Regulation (EU) 2020/2220 laying down certain transitional provisions for support from the EAFRD and EAGF in the years 2021 and 2022.