Members of the European Parliament Committee on Agriculture and Rural Development (COMAGRI) met on 23-24 of January to vote on the compromise amendments (CA) and those on which no compromise had been reached for the CAP reform package as compiled by their respective rapporteurs and shadow rapporteurs and agreed in December 2012. There were four voting sessions throughout the two-day meeting, chaired by Paulo de Castro (IT MEP, S&D). COMAGRI MEPs were invited to vote on the draft CA documents and individual amendments on sections of the legislative text where no compromise had been reached or deemed necessary to facilitate the vote.

This article focusses on the outcomes of the COMAGRI votes for the direct payments and rural development regulations as the two key areas of reform with the most at stake for the environment.

Direct payments

The final vote on the provisional negotiating mandate for direct payments was passed with a significant majority with 31 in favour, 12 opposed and 1 abstention. In addition to the amendments to the greening measures, highlights from the votes include the amendments on capping, the addition of provisions for a complementary annual payment to farmers on their first hectares and the broadening of the scope of voluntary coupled payments.

On capping, the majority vote favoured the Commission proposals to cap payments, limiting the highest possible payment to beneficiaries at €300,000 (as per the Commission proposals, but with a few small tweaks introduced by the rapporteur). The complementary annual payment for farmers’ first hectares is a new element, whereby Member States could choose to allocate an additional annual payment to farmers up to a limit of 50 hectares. It is thought that this French inspired amendment seeks to address the balance of payments in favour of small and medium farmers. The amendment specifies that Member States can use up to 30 per cent of their national Pillar 1 budget for this (CA13). Disappointingly, COMAGRI voted to increase the proportion of the budget that could be allocated to coupled payments to 15 per cent (from 10 per cent) and extended the coverage of the measure to virtually all agricultural sectors, including tobacco.

Importantly, COMAGRI approved an amendment on the Commission proposals regarding the transfer of funds between Pillars (CA4). This increases the proportion of Pillar 1 funds that can be transferred to Pillar 2 to 15 per cent, greater than the ten per cent proposed by the Commission. Far less welcome, and of concern from an environmental perspective, is the increase from five to ten per cent of the proportion of funds that can be transferred in the opposite direction (from Pillar 2 to Pillar 1) for those Member States receiving less than the EU average for direct support payments (BG, EE, ES, FI, LT, LV, PL, RO, SE, SK, UK). Although the rapporteur’s original proposal was that transfers from Pillar 1 to Pillar 2 should not require national co-financing, the amendment passed limits this to only those Member States who currently have preferential co-financing arrangements as a result of economic crisis. The amendment also proposes that any unused funds allocated to the greening measures could be transferred to Pillar 2 and used to supplement funding for the agri-environment-climate measure.

Greening

COMAGRI MEPs passed the first of the two alternative greening options on the table (CA15), albeit by a very narrow margin (22 in favour to 21 opposed) underlining the scale of disagreement that remains on this element of the reform. The key points are outlined below.

COMAGRI MEPs voted in favour of a greening payment as additional to the basic payment. As confirmed in the vote on the financial regulations, although it would still account for 30 per cent of the Pillar 1 budget, the link to the basic payment has been removed. This would mean that any non-compliance with the green measures would lead to farmers only forfeiting the green payment and not any part of the basic payment. In effect this makes the greening measures optional for farmers (although this has been challenged by some). When considered alongside the rural development amendments, it also raises questions about whether or not the green measures will still be considered as the environmental baseline for Pillar 2 environmental measures, even for those farmers choosing not to implement them, as was originally intended.

On the issue of farmers considered to be ‘green by definition’, COMAGRI have voted in favour of an extended definition. The amendment states that farmers receiving agri-environment-climate payments will be entitled automatically to the greening payments, alongside organic farmers and those within a Natura 2000 area, raising questions of double funding – as confirmed by the later vote on rural development. The majority position for the first greening option put to the vote means that this entitlement applies to the whole holding irrespective of whether or not only a small proportion is covered by these definitions. Additionally, farmers on holdings where more than 75 per cent of their land is permanent grassland and where the remaining land does not exceed 50 hectares would be exempt from the crop diversification and EFA measures.

In addition, farmers with holdings certified under national or regional environmental certification schemes that have ‘at least an equivalent impact as the relevant practices [as greening]’ would be deemed to be compliant with the greening measures. The certification schemes will need to be validated by the Commission to ensure that they are ‘equivalent’ and it is proposed that they could include measures such as: an on farm nutrient management plan; an on farm energy efficiency plan on their holding, including optimisation of the use of effluents; a biodiversity action plan – includes creation or maintenance of biodiversity corridors; a water management plan; soil cover; or integrated pest management. In terms of the specific greening requirements, COMAGRI has agreed the following changes to the Commission’s original proposals:

Ecological Focus Areas (EFAs) (CA18):

• An EFA would be required only on arable land over 10 hectares, removing permanent crops from the obligation. Eligible landscape features existing on non arable land would also be able to be utilised to count towards the requirement.
• New types of EFA have been specified, including ‘hedgerows, ditches, stone walls, in field trees, ponds and land planted with nitrogen fixing crops’ alongside the original examples of ‘land left fallow, terraces, landscape features, buffer strips and areas afforested using Pillar 2 funding;
• In addition, farmers should be permitted to use their EFA for production as long as no fertilisers or pesticides are used;
• A smaller percentage EFA of five per cent has been proposed and phased in over time - three per cent in the first year of agreement, moving to 5 per cent from 2016. It is proposed that the Commission should carry out an evaluation of the impacts of the EFA by 31 March 2017 and at this time would propose an increase to seven per cent if deemed appropriate;
• Under the discretion of the Member State, the required EFA percentage can be reduced by three per cent if implemented at the regional level to achieve ‘adjacent ecological areas’;
• Farmers are to be permitted to lease back ‘a high nature value agricultural area which has entered public ownership as a result of land consolidation or similar procedures’ and count this towards their EFA.

Crop diversification (CA16): Requirements are proposed to be tailored to the size of the holding. The measure would not apply to arable land under 10 hectares. Arable land between 10 and 30 hectares would only be required to cultivate two crops (down from the Commission’s proposed three) with the main crop not covering more than 80 per cent (as opposed to the Commission’s proposed 70 per cent). Arable land that exceeds 30 hectares would be required to cultivate three crops (apart from holdings north of the 62 parallel - northern Scandinavia) whilst ensuring that the main crop does not cover more than 75 per cent and that two crops together do not account for more than 95 per cent.

Permanent grassland (CA17):

• The definition has been extended to include both permanent pasture and permanent grassland, defined as ‘land used to grow for forage herbaceous plants, shrubs and/or trees or any other species suitable for grazing, naturally (self-seeded) or through cultivation (sown), and that is not included in the crop rotation of the holding and not ploughed for seven years or longer
• The requirement has changed and no longer requires permanent pasture to be maintained at holding level. Instead, the ratio of land under permanent grassland and permanent pasture to the total agricultural area has to be maintained and this can be applied at national, regional or sub regional level.
• The reference year remains 2014.
• Conversion of a maximum of 5 per cent of the reference areas under permanent grassland and permanent pasture is permitted, which may be increased to seven per cent under exceptional circumstances. Importantly for the environment, no conversion of carbon rich soils, wetlands and semi natural grassland and pastures are permitted under any circumstances.

Rural development

On a positive note for rural development, COMAGRI voted in favour of requiring Member States to earmark 25 per cent of EAFRD towards agri-environment-climate and land management payments. Although less than what the EP rapporteur for rural development, Luis Capoulas Santos, proposed (30 per cent), it still goes beyond the Commission’s proposals, which only proposes earmarking in the recitals, not in the legislative text. MEPs also voted in favour of increasing EU cofinancing rates for the agri-environment-climate measure to 55 per cent from 50.

To confuse the issue on double funding somewhat, COMAGRI rejected both the CAs which explicitly made reference to double funding (one permitting it and one excluding it), instead carrying forward elements of individual amendments 1298 and 1323, which explicitly permits EAFRD funding to be used to support agri-environment actions that are also funded via the Pillar 1 greening measures. This is justified on the basis that the ‘greening’ measures should not be viewed as a baseline for Pillar 2 environmental measures.

Interestingly, the agreed amendment to the agri-environment-climate measure also includes some minor changes that could have significant environmental ramifications, for example focussing the measure solely on farmers, removing the reference to ‘other land managers’ as well as proposing that the minimum length of agreements could be shortened. In a move that is seemingly counter to WTO rules, it is also proposed that 20 per cent of the payment calculation should be allowed to cover an incentive element as well as transaction costs In relation to capital investments, the agreed amendment excludes provisions made by the Commission that investments in irrigation infrastructure must demonstrate at least 25 per cent reduction in water use (CA28). COMAGRI also voted in favour of incorporating risk management measures under Pillar 2 and the introduction of an income stabilisation tool. On the measure relating to payments for Areas of Natural Constraints (ANC), COMAGRI have called on the Commission to present a legislative proposal by 31 December 2014 on the designation of ANCs with mandatory bio-physical criteria (CA22).

Efforts by environmental NGOs to increase the visibility of support for High Nature Value Farming were unsuccessful, leading to continuing concerns that the need to support these farming systems for the important role they play in maintaining biodiversity and providing other ecosystem services is not sufficiently prioritised.

Cross-compliance

Disappointingly COMAGRI voted to weaken cross-compliance considerably. They have proposed to delete the new standard of Good Agricultural and Environmental Condition (GAEC) to protect carbon rich soils and wetlands as well as the inclusion of two new Statutory Management Requirements relating to the Water Framework Directive and the Sustainable Use of Pesticides Directive.

Strong Stakeholder Reactions

The reactions from different stakeholders to the outcome of COMAGRI’s vote have been mixed, reflecting the heated debates and continued disagreement on the issues of greening and double funding. On the issue of double funding there is a clear split between political parties, with the Socialist and Democrats (S&D), the Greens and the liberals (ALDE) strongly opposed to double funding and centre right political groups largely in favour of double funding. Mr Capoulas Santos (S&D) even went so far as to call the decision to permit double funding as ‘immoral and illegal’ and Martin Häusling (Greens) expressed disappointed with the greening amendments stating that the ‘plans are voluntary and riddled with exceptions’. A number of statements have put on the record that they will seek to have the amendments on double funding overturned at the Plenary meeting in March.

Beyond the European Parliament, environment stakeholders have reacted strongly. Incensed with the direction taken by COMAGRI, press releases and statements have been issued by WWF, Friends of the Earth Europe, EEB and BirdLife Europe, all stressing that the compromise agreements, if accepted, would be environmentally damaging, not just limiting the potential of farming to deliver environmental benefits but actually marking a step backwards in term of the environmental advances made in past reforms. On double funding, the message from these environment stakeholders is unanimous and clearly expressed by a representative for BirdLife Europe as ‘blatantly unaffordable and shows just how little regard the Committee has for the concept of value for money’. By contrast, industry representatives such as COPA-COGECA have welcomed the vote, particularly the flexibility towards greening offered by the COMAGRI amendments. Despite this, they still maintain that the greening proposals will hinder production levels at a time when demand for agricultural products is expected to increase.

Next steps

Attention is now turning to the special Council summit on 7-8 February at which it is hoped agreement will be reached on the multi-annual financial framework (MFF). Irrespective of whether agreement is reached on the MFF or not, the CAP amendments are scheduled to be voted on in the European Parliament plenary session in March (11-13) as a means of agreeing the negotiating mandate of the Parliament. COMAGRI has reserved its right to make further changes to the legislative texts if the CAP budget is cut significantly during the MFF discussions. In addition, MEPs can propose new amendments to those agreed this week in advance of the plenary meeting. To be tabled, however, any amendment must have the support of 40 MEPs. Once MEPs agree amendments in plenary, negotiations with the Agriculture Council in trilogue with the Commission can commence.