CAP payments are set to be reduced by 1.30 per cent in 2015. This is due to the European Commission recently adopting a proposal on the application of the financial discipline mechanism for the CAP budget for the financial year 2015.

According to the commission in order to ensure that the market crisis reserve of €433 million is available in the 2015 budget, the proposal is to reduce CAP Direct Payments exceeding €2000 by 1.301951%, with the exception of direct payments for farmers in Bulgaria, Romania and Croatia as they are still being phased-in in those Member States.

This compares with a rate of 2.453658% that was applied on payments being made in 2014.

According to the budget rules, the Commission is obliged to table a proposed rate of financial discipline before the end of March, if forecast spending for the following year (including the crisis reserve) is higher than the maximum budget available amount for CAP Direct Payments & market measures (the so-called “1st Pillar” of the CAP, funded through the European Agricultural Guarantee Fund) defined in the 2014-2020 Multi-Annual Financial Framework.

Under the rules, the Council and European Parliament have now until 30 June 2014 to fix the rate of financial discipline. In the absence of such agreement by 30 June, the Commission will set the rate.

In October, the Commission will present an amending letter to the draft 2015 budget, which will update forecast budget needs, and will therefore also update the rate of financial discipline no later than 1 December.

According to CAP legislation, amounts generated by financial discipline which remain available in the EAGF budget at the end of the financial year, including those of the crisis reserve, shall be reimbursed to farmers.