A simpler, fairer CAP, promised Commissioner Hogan, does it deliver?

The Commission is proposing a reduction of payments as of €60,000 and compulsory capping for payments above €100,000 per farm. Labour costs will be taken fully into account. This is designed to ensure a fairer distribution of payments.

The amounts freed up will be redistributed within each Member State either through a redistributive direct payment or rural development, primarily to ensure that a higher share of each country’s direct payment allocation goes to small and medium-sized farms.

Notably, here is the exclusion of a compulsory redistributive or “front loaded payment” on the first hectares.  This was included in earlier drafts and also called for and fully endorsed in the Dorfmann report, adopted recently in the European Parliament.  Under the Commission proposal, beneficiaries of higher payments will be protected by offsetting their own labour costs against cuts to their payment.  On these farms, there will be an incentive to take on additional labour even if it makes a limited contribution to output, because the effective cost of this labour will be reduced by the additional direct payment that it attracts.

Why would one want to deduct labour costs before applying the cap, apart from deliberately creating a loophole to make it ineffective? The argument goes that larger farms may have a considerable hired labour force.  The problem with this argument is that it runs counter to the expressed objective of capping and the redistribution of direct payments generally which is to focus support on small and medium-sized farms, in part because of their higher employment potential. In other words, the labour intensity of smaller farms is often at least equal to, or even greater than the labour intensity of large holdings.

We will now create the perverse situation where one farmers payment will be based on his labour input, whereas his neighbours will not. This is a gross inequality that cannot be accepted in a publically funded support scheme.

Add to this the ambiguity on the contested issue of active farmer;

“The definition must ensure that no support can be granted to those whose agricultural activity forms only an insignificant part of their overall economic activities or those whose principal business activity is not agricultural. The regulation also stipulates that the definition agreed in each Member State must not exclude by definition pluri-active farmers (i.e. those who are actively farming but who are also engaged in non-agricultural activities outside their farm)”.

This text is not only contradictory, it seems divorced from the reality that, for many farmers they have no option but to work off farm.  How does this square with the intention to support “smaller farms”.

As it stand the current proposal on “fairer payments” is meaningless and disingenuous, a master class in deception.  Without a compulsory “front loaded” payment redistribution will not happen, Commissioner Hogan and his lobbyists in the background are well aware of this, which is precisely why it has been removed from the final text.