Chapter on Agriculture and Rural Development

Single Payment Scheme

The European Union has started decoupled payments, namely the Single Payment Scheme (SPS) with Common Agricultural Policy (CAP) Reform in 2003. Thus, direct payments to farmers have become payments paid once a year in the scope of the Single Payment Programme. The connection between the production and support has been eliminated by the implementation of SPS. Main objectives in the implementation of SPS are as follows:

Providing opportunities for farmers to produce according to the market demand

Support the environmentally and economically sustainable farming,

Simplification of CAP applications for farmers and executives.

Strengthening the position of the EU in WTO agricultural trade negotiations.

The foundation of SPS implementation was established by Council Regulation No. 1782/2003 . Accordingly, the maximum amounts of direct payments to be spent by each state (known as national ceiling / envelope), are calculated as the sum of direct payments (and equivalent payments) paid in a historic reference period in each member state. Council Regulation No. 1782/2003 has been repealed by Council Regulation No. 73/2009 of January 19, 2009. Rules regarding the implementation of SPS are regulated via the new Regulation.

Farmers any Member State engaged in agricultural activities shall be entitled to SPS payments at the time when the related state starts SPS implementation. Payment entitlements are distributed depending on the reference quantities (it usually refers to the amount of direct payments to each farmer in the 2000-02 period; for special situations, different calculation options are applied). Each entitlement is calculated by dividing the reference amount by the number of hectares which gave rise to this amount in the reference years.

Member States have various options regarding the calculation and implementation of the payment. In this context, the basic difference arising in SPS calculations is that calculations are based on direct payments received by individual farmers in historic reference period (therefore, SPS level becomes different for each farmer) or that the calculation consists of the average of all payments in a state or region.  There are three main options:

Basic (historic) approach: each farmer is granted payments (reference amounts) he has received during the reference period (reference amounts) and payment entitlements in relation to the number of hectares on which the farmer carried out farming activities.

Regional (flat rate) approach: Reference amounts are not calculated for individual farmers, it is calculated at regional level. Reference amounts are calculated as the sum of the payments received by the farmers of the related region during the reference period. Later, regional reference amounts are divided into available number of hectares declared by the farmers of the region in the year when SPS implementations started in order to determine the single payment entitlement of the region. Consequently, each farmer gets payment entitlement in amounts equivalent to (flat price) the number of hectares declared to be available by the farmer at the time when SPS implementations started.

Mixed Models: Member States are entitled to apply different calculation systems in their different regions. SPS payments can be calculated as the partially historical and partially regional SPS. Such hybrid systems can show difference between periods when SPS was first applied and when it is fully implemented. As a conclusion, dynamic and static hybrid systems emerge. “Dynamic hybrid” systems function as a means for transition from the historical approach to regional approach.

 

Single Area Payment Scheme (SAPS) in New EU Member States

New member states could choose a different direct payment programme not implemented in EU 15, in the first year of their accession to EU. Single Area Payment Programme consists of payments in uniform amounts (national ceilings in the accession agreement) per hectare of agricultural lands of the member state.


CAP Budget

EU BUDGET 2011

Toplam AB Butcesi 

Source: http://ec.europa.eu

 

2010 GENERAL BUDGET IN COMMON AGRICULTURAL POLICY

 

No

Heading

Payments (€)

Share in Total CAP

1

Administrative expenditure of Agriculture and rural development policy area

133.377.414

0,2%

2

Interventions in agricultural markets

4.100.534.000

7,2%

3

Direct aids

39.273.000.000

68,8%

4

Rural development

13.396.500.000

23,5%

5

Pre-accession measures in the field of agriculture and rural development

131.500.000

0,2%

6

International aspects of Agriculture and rural development policy area

6.275.322

0,01%

8

Policy strategy and coordination of Agriculture and rural development policy area

36.269.586

0,1%

9

TOTAL

57.077.456.322

100,0%

EU Rural Development Policy

​Council of Europe came to a political agreement on regulation regarding the support of rural development by means of Agricultural Funds for Rural Development for the period 2007-2013 on June 21, 2005. Agricultural Council adopted strategic principles of EU for Rural Development on February 20, 2006. Main components of the new regulation are such:


- All available measures will be re-grouped under one single funding and programming instrument named Europe Agricultural Development Fund. A new strategic approach to ensure the consistency and coordination with EU priorities (enlargement, employment, sustainability), to accompany market support reform and to serve as a basis for national strategies and programmes will be put in place.


- It has a consolidated and strengthened monitoring, evaluation and reporting mechanism that will enable the policy to be made more transparent and visible for all shareholders.


- Minimum expenditure rates per axis and less detailed suitability rules will leave more area for free movement for Member Countries to focus on definite axis and measures while the policies showing the necessity of experience for sustainable rural areas are implemented levelly.


-  A more proper stress on local development strategies is supported to respond better to the variety and needs of the situation European rural areas have.


- Networking among European rural areas and pertinacious role playing for cooperation will facilitate the transfer of good practices and give rural policies a European dimension.


- Allocation of responsibility between Member States and the Commission has been defined more clearly.


Reformed new rural development policy has four major axes:


Axis 1: Improving Competitiveness in Agricultural and Forestry Sectors


Renewal and restructuring strategy focuses on dimensions of humane and physical capital and quality.


Priority 1; Upgrading knowledge and strengthening human potential


Priority 2; Modernisation, re-structuring and improving physical potential.


Priority 3; Improving the quality of agricultural production and products.


Priority 4; Improving the quality of the investments in human resources.


Axis 2: Land Management and Enhancement of Rural Environment


Agri-environmental precautions are mandatory. That beneficiaries should abide by EU and national requirements as regards agriculture and forestry is a general condition regarding Axis 2 measures.


Priority 1; Biodiversity and sustainable use of agricultural lands.


Priority 2; Sustainable use of forestry land


Axis 3: Improvement of Life Quality and Economic Diversity


The measures in this section target farmers, their families and a larger rural population.    More diversified labour markets and a better presentation of service will create new enhancement and employment possibilities in rural areas. Thus, contribution to providing rural population stability and creation of extrinsic economies for farmers and their families will be realised. The most successful way to putting diversity and services in effect is through local development strategies.


Priority 1; Diversifying rural economy


Priority 2; Improving life standards in rural areas


Priority 3; Acquisition of a profession, skills and activation


Axis 4: LEADER


This axis expresses bottom to top vertical approach towards rural development. The main target of LEADER approach is to contribute to employment and growth in rural areas by giving support to local development strategies defined as public-private partnerships. The basis of this approach are on-site teaching, active contribution of local population to policies and to policy making process, their ability to make the decisions for their own lives.


LEADER approach has some principles:


1- Organisation of a local partnership called “Local Action Group” with a small group of constant implementers responsible for the definition and implementation of an action plan,


2- Development and implementation of a “local action plan” to define various intervention lines for certain numbers of development projects in rural areas.


3- As part of an integrated global strategy, a systematic research for the establishment of links between a multi-sectorial approach and actions.


4- Joint financing of these action plans by European Commission, Member Countries and/or regions in a global financial distribution way, not in a certain number of sectorial budget lines.


Networking among the said rural areas will be facilitated by “LEADER European Monitoring Centre”, which is located in Brussels and supported by National Coordination Units in the field is another objective in this regard.​

Common Agricultural Policy

​As well as the concerns for famine emerged after the Second World War, the requirement of the protection of the income levels of those engaged in the agricultural sector which constitute a crucial part of the active population of the European Union and the requirement of the elimination of the disparities among the member countries’ national agricultural policies, have led the Union to create a common agricultural policy. Accordingy in 1962, a Common Agricultural Policy (CAP), which all member states are supposed to accord with, was adopted. CAP is based on the principle of the management of the agricultural policies of EU member states in a common framework in terms of both economic and political aspects and it constitutes the first common policy of the EU.


A- OBJECTIVES:

Common Agricultural Policy of the European Union, aims to enhance agricultural production and productivity within the Union, to create a better life for the producers of the EU, to protect and stabilize the agricultural products market, to offer agricultural products at reasonable prices to consumers.


The objectives of the CAP whose legal framework was established by the Articles 38- 47 of Treaty of Rome establishing the European Union, (Articles 32 – 38 of the Treaty of Amsterdam) are listed in Article 33 as follows.


- Promotion of technical progress, rationalization of agricultural production and increasing production factors, particularly the optimal use of workforce and the efficiency,


- Enhancement of life standards of the agricultural population, particularly by way of increasing the incomes of those engaged in agricultural activities,


- Stabilization of the markets,


- Ensuring a regular product supply,


- Ensuring the access of consumers to agricultural products at reasonable prices.


B- PRINCIPLES:

CAP is based on three principles in order to achieve these objectives: 'the single market principle', 'the community preference principle' and 'the joint financial responsibility principle'.


The Single Market Policy envisages the removal of restrictions that prevent the free movement of agricultural products in member countries and the establishment of a single market, therefore; requires common prices and competition rules, stable exchange rates in the member countries and common protection at the borders against foreign markets. This principle taking the market as a whole, foresees the application same prices for the same products within the Union.


Community preference principle aims to give priority to products produced in the Union, therefore it requires the protection of EU agricultural products against imports and subsidization of the exports of agricultural products.


Joint financial responsibility principle aims to undertake all expenses related to CAP jointly by the members of the Union. In this context, in April 1962, the European Agricultural Guidance and Guarantee Fund (EAGGF) was established in the scope of the EU budget. The funds required by CAP are provided jointly by member countries. Revenues obtained via this policy, constitute the equity of the Union.​

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