Agricultural aspects of the Omnibus

The Omnibus proposal was introduced in September 2016 and could be regarded as a mini mid-term review of all EU spending. Today in Plenary then was the culmination of sixteen months of work on the Agricultural aspects of that Omnibus file. 

The main rule changes to the four CAP regulations – direct payments, rural development, common market organisation and horizontal regulation – include the following:

 

Direct payments

  • Active farmer: the distinction between active and non-active farmers becomes optional;
  • Permanent grassland: current rules are modified so as to provide greater flexibility for Member States in implementing the requirement;
  • Greening: areas farmed with plant varieties such as silver grass (miscanthus) and silphion (silphium perfoliotum), as well as land left fallow for melliferous plants, will also be considered as ecological focus areas;
  • Young farmers: payments for young farmers will be granted for five years from the submission date, as long as the submission was made within five years from the setting up of the farm. In addition, Member States may increase young farmers' payments in the first pillar up to 50% within the existing ceilings;
  • Voluntary coupled support: Member States will be able to review their decision annually.

 

Common market organisation

  • Producer organisation (POs): The Institutions decided to stick to the status quo concerning the voluntary recognition of POs, the requirement by which their economic activity must be genuine;
  • POs and competition rules: Some POs' objectives such as planning production, optimising production costs, and negotiating contracts for the supply of agricultural products on behalf of members, already existing in sectors such as olive oil, beef and arable crops, will be extended to all sectors with a view to improving the position of farmers in the supply chain.

 

Rural development

  • Income stabilisation tool: While the support linked to the general income stabilisation tool will continue to be triggered when a farmer's income drops by more than 30% of his/her average annual income, the threshold for the new sector-specific tool will be 20%. Similarly support for insurance contracts which cover for, among others, losses caused by adverse climatic events, will become available when more than 20% of the average annual production of the farmer is destroyed;
  • Financial instruments: Several changes are made to the rules to be respected by financial instruments, to promote their use and harmonise them with other EU Structural and Investment Funds.

 

Horizontal regulation

  • Crisis reserve: While no changes were made to the current rules, the Commission undertook in a statement to review the operation of the reserve in the context of the preparations for the next Multiannual Financial Framework (MFF);
  • 50/50 rule: The proposal to eliminate the so-called "50/50 rule" was not retained. Member States and the EU budget will keep sharing equally the financial consequences of sums lost as a result of irregularities and not recovered within a reasonable period.

 

The good and the bad for Ireland

As shadow for our group my goals from an agricultural perspective was to broaden the definition of “permanent grassland” to address the contested issue of land eligibility and try to improve the implementation of the “young farmer’s” scheme.

On the definition of permanent grasslands there have been positive moves, specifically, article 4 of the direct payment regulation 1307/2013 has been broadened to allow a wider range and variety of vegetation to be classed as permanent grassland.  These new flexibilities should allow the department to move away from the adversarial approach and maximize the amount of land considered to be forage area in Ireland.  This is vital in the context of mitigating the GHG emissions from Agriculture.

 

Also on the “young farmer” there has been steps forward, young farmers will now get a five-year payment irrespective of when they apply within the five-year period of first taking over the farm, a positive change, as before if they applied in year 3 they were eligible only for a two-year payment., disappointing here was the Irish request for a derogation to applying this in a retroactive manner to all applicants in this programming period.   In addition to this, and important in an Irish context, Member states can now take a linear cut to all Direct Payments to fund not only young farmers but also the “specific disadvantage” category under which some of the “forgotten farmers” were catered for previously.  

It is important to note the situation of the forgotten farmers is most acute in Ireland given the previous mismanagement of the scheme and the minimal convergence of payments in Ireland which leaves many young farmers trapped with low payments.  Perhaps it is now time for the government to step up to the mark on this, and address this glaring inequality.

I have always been negative toward Income stabilization tools and financial instruments in agriculture. I take the view that expanding risk management can be considered a giveaway to insurance companies and financial services from rural development budgets and more deeply integrates the banking and financial sectors into controlling positions in farming.  Implicit here also is a threat to our current system of farm supports and a move to an American style of supports, crop insurance instead of direct payments and soft loans instead of grants.   

Other areas that will have an impact in Ireland are changes to the “greening “and the use of “producer groups to strengthen the position of farmers in the food chain.

It is hoped that the Government will implement these changes in January 2018.  This would give some time to assess their impact in advance of the next CAP reform in 2020.