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The EU Council of Ministers, European Parliament and Commission came to a political agreement on the future rules for the Common Agricultural Policy (CAP) at the end of June 2013. This agreement follows two years of negotiation since the Commission published detailed reform proposals in 2011.

The new agreement includes: a new Basic Payment scheme which will represent 70% of a Member State’s Direct Payments to farmers, a requirement to use 30% of their allocation to give a ‘greening payment’ to farmers for required farming practices supporting environmental improvements, and an end to sugar beet production quotas in 2017. Most Direct Payment (Pillar 1) reforms will come into play in January 2015 with 2014 acting as a transitional year.

The Government has said that the package agreed is an acceptable outcome for the UK but is not the genuine reform that it had been hoping for. However, the UK Government did secure a great deal of flexibility within the package for Member States to tailor their national approaches to their own particular needs. This should be a potential benefit for UK farmers but it means that implementation details are still being developed in-country and regionally and hence the exact impacts of the new arrangements for UK farmers are still not completely clear.

The National Farmers Union is concerned that the UK will use the considerable flexibility within the agreement to reduce Direct Payments to farmers and to “goldplate” the environmental requirements. Meanwhile, the greening element of the agreement has been criticised by some environmental organisations as a missed opportunity by not going far enough.

Some parts of the agreement are still under discussion as they were dependent on the overall agreement of the EU budget. Negotiations regarding transfers of funding between Pillars 1 and 2, external convergence and restrictions on the highest subsidies are now being overseen by the Lithuanian Presidency and are expected to be finalised in December 2013.

This note will be developed over the next few months to include emerging implementation details and stakeholder comment across the UK, as well as more statistical information.

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