This week we look at countries in mainland Europe. They include the big four of France, Germany, Spain and Italy who together still account for 48% of the EU CAP budget. While all of the details are not available in English, Copa cogeca pulled together a document based on information from its member organisations in the different countries.

Looking at this group of countries, only Germany, Luxembourg and Denmark moved towards flattening of payments last time round. Most stuck with the historic option but many didn’t fully decouple sectors like suckler cow, veal or sheep.

Over time, most of the coupled support was reduced, but not all. France in particular continued to support the suckler cow, beef and sheep sectors. It even started a payment for dairy cows in mountainous regions after the mid-term review.

This time, France is continuing with coupled payments and a number of countries are re-introducing coupled payments for what they clearly feel are vulnerable sectors.

A number of countries are using the Irish convergence model to reduce their highest payments per hectare and boost the lowest up to the required 60% of the national average by 2016. France pushed strongly to be able to redistribute up to 20% of Pillar I payments to the first hectares of each farm. They are using 5% of it in 2015 but plan to go to 20% by 2018. Germany are using 6.9% in this way but the only region planning to use it is the Wallonia region in Belgium.

There is a clear focus on supporting smaller livestock producers this time round.

Netherlands

The Netherlands has decided to move to a flat-rate payment by 2020 in five equal steps. It means that every farmer will end up at about €375/ha, still one of the highest in Europe. The country average has been as high as €458/ha but the cut in budget as well as redistribution to other member states will see Pillar I money drop from €831m in 2013 to €732m in 2019, a 12% fall. They will have €87m from the EU for Pillar II. An amount of €20m from the Pillar I budget will be used to meet international objectives, notably those of the Nitrates Directive and the Water Framework Directive.

The move to flat rate is due to the country’s focus on market returns and will be a big hit for some. Many dairy farmers were well above the national average due to the high milk quota per hectare when the dairy premium was converted into the Single Farm Payment.

With milk quotas going, dairy farmers are looking to push up production to replace the loss, although environmental constraints and debt levels will limit their ability. Land has increased in price to over €60,000/ha.

The Netherlands did not want any coupling during the negotiations but has decided to restructure veal production (€10m) and starch potatoes (€2m), mainly in the Northern Netherlands, where they were seen as being very vulnerable. It has also set aside €3.5m for grazing beef and sheep in nature reserves that will give around €160/cow and €24/ewe provided the hectares they are grazing are not eligible for a flat-rate payment. The state hopes that up to 6,000 young farmers will look to access the €50/ha up to 90ha under the Young Farmers’ Scheme. It will not cap payments and is just taking the 5% off farmers who received more than €150,000 in basic payment.

France

France continues to support its small farmers and livestock sector at the expense of large tillage farmers who will have had their Single Farm Payment cut dramatically since 2000. The state is using 13% of Pillar I payments for coupling, with the vulnerable suckler herd the key focus. Of the €982m set aside for coupling, €675m is for beef farms and will cover suckler cows, beef cattle and coupled payments for calves. The support is stepped, with €187/cow for the first 50 cows, €140 between 51 and 99 cows, and €75 for cows between 100 and 139 in the herd. There was also €140m set aside to maintain payment for dairy herds in mountainous regions to ensure they remain viable.

The French pushed strongly for front-loading of payments to the first hectares on each farm and they are using the option. Farmers will get €25/ha for the first 52ha (max €1,300) that will be used in 2015. This will double to 10% in 2016 to give €50/ha (€2,600) but in 2018 it will jump to €100/ha for the first 52ha, giving farmers up to €5,200 along with any coupled payments.

Despite getting a 14% boost to Pillar II funds under the CAP reforms, France intends to take 3% of Pillar I into Pillar II as early as 2014. The money will be used mainly for funding modernisation and competitiveness of the farms.

Germany

Germany went to a flat-rate payment in 2012 but is now coming back. In 2013 each of the 13 Lander regions had flat payments ranging from just €296/ha to €366/ha and they intend to move to flatten the basic payment completely.

However, in 2014 each Lander Region made additional payments for the first hectares. Farms received an additional €50 for the first 30ha (€1,500) and an additional €30 for the next 16ha (€480). About 7 % of the direct payments are used this way to improve support of small-sized and medium-sized holdings. It meant farms with less than 95ha are better off while farms with more than 95ha lost funds. Germany also introduced a special small farmer’s scheme for farms which are eligible for support funds totalling less than €1,250. This is intended to liberate very small farms from red tape.

Germany is moving 4.5% of funds under Pillar I to Pillar II from 2015. This amounts to around €229m a year extra being made available for rural development programmes between 2016 and 2020. It does not require national co-financing. These funds are earmarked to remain entirely in the agricultural sector. They are to be used exclusively for agri-environmental measures and also focus on animal welfare requirements, promotion of grassland and less-favoured areas such as mountainous regions and the promotion of organic farming. An open review of the percentage being shifted is envisaged for 2016/17, with the possibility of an increase from 2018 on. Young farmers will get €44/ha up to 90ha. Young farmers can benefit from a better promotion of operational investments under the Länder programmes for the implementation of Pillar II (EAFRD).

Henk Makkink continues to milk 80 cows in the east of the Netherlands since last time I talked to him two years ago. Last year, the cows yielded 9,700kg each. He sold 750,000kg a year from the 44ha he is farming. He will see direct payments fall from €25,000 this year to under €17,000 as the Netherlands moves to a flat-rate payment of €380/ha in 2019.

“I have not been following the CAP reform closely as I believe a better system would be to have no supports and a fair milk price from the market,” he said. He makes the point that an extra 3c/l would be €22,500 and he would not have customers complaining about what farmers get. He does get a payment worth about €6,000 a year from his co-op FrieslandCampina for grazing cows outside although he believes it is more efficient to have the cows fully housed.

Land will be the biggest restriction to expansion for farmers in the Netherlands as well as tougher environmental restrictions.

Last year Henk was forced to increase grassland from 70 to 80% of the area he farms due to nitrates restrictions on fertilizer use.

Maize had to be cut to 20% of the land. It means that he will farm over 75% grassland in 2015 and get a derogation from greening. “With milk quota disappearing, land prices have increased further. It now costs €60,000/ha in the area so if I want to go up in cow numbers to 150, big enough so my son could farm with me, it would cost €1.8m for the land alone.”

Henk’s son Maarten finished Agriculture College this year but Henk wants him to get a job first to learn more before coming home to farm, even with the additional incentives for young farmers being proposed.

Olivier Allain, who keeps around 140 suckler cows on 130ha in Brittany, is in two minds about the implementation of CAP reform in France. “For my farm, it means a 38% drop in payments by 2019,” he says – but as a local representative for the leading FNSEA union, he welcomes measures to support smaller beef farmers.

France is going for the maximum amount of coupled payments allowed under the new CAP (15% of Pillar I). More than half of that is going towards a gross suckler premium of €187/head for the first 50 cows (around €150 after transfers to Pillar II are factored in), then decreasing to a maximum of 139 cows. The government’s stated objective is to support family-sized, profitable enterprises with 70 to 80 cows.

“The amount I receive per head will go down a little, but I already had a few cows over quota – this won’t make a big difference for me,” says Olivier, who thinks the system is “fair, considering the budget we’re working with”.

He is happy that the reference year is being brought forward to 2013, as many of his neighbours who had taken up beef since the previous baseline date of 1992 were ineligible for coupled payments – and that a minimum of 10 cows was introduced to reserve the premium for farmers who are serious about beef.

A new coupled payment for protein crops will also go a long way towards helping many beef farmers, he says – though he was already growing his own feed.

The biggest shock to Olivier will come from the front-loading of area-based payments, with the first 52ha on every farm receiving a bonus taken from the national pot – 5% in 2015, 10% in 2016 and a proposed 20% from 2018.

“This will penalise me, but I defended it as a Breton union representative: the average farm size around here is 54ha, and this is important for livestock farmers.”

With his farm already fine-tuned to make the best of the new CAP, and much of his profit coming from his participation in quality assurance schemes, Olivier is not planning to make significant changes to the way he works. “I’ll just have to live with the cuts,” he says – and hope for higher prices.