Some greater clarity on the implementation of both Pillar 1 payments to farmers and Pillar 2 rural development measures was provided last week in the Department’s announcement of indicative funding allocations for the CAP Strategic Plan 2023-2027.
The total funding for the five-year plan will amount to €9.8bn, made up of €5.97bn for Pillar 1 direct payments and €3.86bn for rural development.
The latter figure includes €2.3m of national funding to add to the co-financing from the EU budget.
There are 129,000 beneficiaries of the Pillar 1 payments, so nearly all farmers have an interest in how the Pillar 1 money will be distributed. This article concentrates on the changes for farmers in accessing these supports.
The Irish envelope for Pillar 1 payments was decided as part of the negotiations on the EU’s long-term budget framework last year. It amounts to €1.19m annually in nominal terms in the 2017-2021 period.
This is a small decrease in nominal terms from the €1.21m available in 2020 although, depending on the future rate of inflation, the real value of these payments will show a larger decrease.
However, the higher budget announced for Pillar 2 implies a significant increase in CAP spending as a whole in real terms.
Ireland will continue to use payment entitlements to distribute basic income support. The definition of an eligible hectare to receive a payment is likely to be broadened to possibly include, for example, landscape features or some non-productive areas important for nature and biodiversity.
However, farmers will still need to be in possession of an entitlement for each eligible hectare they notify in order to receive the basic payment.
The unit value of payment entitlements will be adjusted to reflect changes in the overall envelope for Pillar 1 payments, the need to make provision for various targeted payments described below, and the need to proceed further towards greater convergence in the value of payments.
By 2026, all payment entitlements must have a value of at least 85pc of the planned average unit amount (compared to the current minimum value of 60pc of the national average).
Whereas the current average unit amount for payment entitlements (including the greening payment) is €265, the future average national value will be around €165, with a minimum value of €145.
It should also be noted that Minister for Agriculture Charlie McConalogue proposes to cap the maximum amount of payment a farm can receive in basic income support at €66,000.
However, farmers will be able to add to this basic payment in various ways.
There will be a redistributive payment of €43 per hectare that will be paid automatically on the first 30 hectares.
In addition, farmers can apply to take part in the new eco-schemes designed to deliver climate and environmental benefits.
If all farmers were to participate in eco-schemes, the average payment per hectare would be €63. This could increase to €74 if only 85pc of farmers decide to apply.
Further payments will be made to young farmers, farmers who plant protein crops, and for fruit and vegetable producers who are members of a producer organisation.
The bottom line is that the overall budget for Pillar 1 payments in the CAP Strategic Plan remains virtually unchanged in nominal terms, but it will be distributed differently, mainly due to the requirement for greater internal convergence in the value of entitlements and the introduction of the new redistributive payment.
In addition, farmers must decide if they wish to enrol in the voluntary eco-schemes, which will require some additional commitments over and above the GAEC standards all payment beneficiaries must observe as part of enhanced conditionality, the new term for cross-compliance.
Alan Matthews is Professor Emeritus of European Agricultural Policy at Trinity College Dublin.