CAP reform changes to accommodate enlargement

The legal text of the recent CAP reform and the Accession act for the 10 new member states are being changed to make the two compatible.

After this year's radical reforms of the CAP, the deal done with the 10 new member states has to be amended and those changes will have to be voted on by the Agricultural ministers.

The new direct payments for dairying, nuts and energy crops will be phased in for the new member states. They will get 25% in the first year, 30% in the second year, increasing up to 100% after 10 years.

No modulation or financial discipline will apply to farmers' payments in the new member states until the phasing in period has been completed.

The new candidate countries can opt for a hectarage based single area payment scheme in the initial years after accession.

At the end of the three- to five-year period, it's envisaged that this scheme will be changed over to the decoupled single payment scheme which was agreed last June, rather than back to the traditional direct aid payments.

It's believed that the lack of accurate information for individual production in the new member states during the reference years of 2000 to 2002 would make the operation of individual entitlements too difficult.

So it’s envisaged that these countries will switch over to the regionalised decoupled payments system instead.

Savings to EU agriculture budget

The EU agricultural budget for 2004 has been revised downwards by €1.1 billion from earlier estimates. The proposed budget for the CAP market measures for next year is €40.245 billion.

That's down from the estimate of last April of €41.338 billion. The main reasons are savings on grain intervention and export refunds as a result of the lower yields in drought hit countries.

Bringing forward some farmers' direct payments into the last EU financial year also created savings.

Next year's budget is substantially below the absolute budget ceiling set by the EU heads of government in Berlin in 1999. It's €2.524 billion below this absolute limit.

This means that there is scope to assist any sector through the market support measures should the need arise. It is also important going forward to remain below this ceiling so as to avoid triggering the new "financial discipline'' measures which were agreed as part of the Fischler reforms.

The proposed rural development budget for 2004 is unchanged from earlier estimates at €4.803 billion. The budget for the 10 new member states that are due to join the union in the middle of next year is €1.733 billion.