The European Commission has adopted a proposal on the application of the financial discipline mechanism for the CAP budget for the financial year 2017.
In order to ensure that the crisis reserve of €450.5m is available in the 2017 budget, the proposal aims to reduce CAP Direct Payments exceeding €2,000 by 1.366744%, with the exception of direct payments for farmers in Croatia as they are still being phased-in.
This rate is slightly lower than the 1.393041% that was applied in 2016 (for a reserve of € 441.6 million) as the 2017 exercise will include Romania and Bulgaria for the first time because Direct Payments in those countries will be fully phased-in.
The Crisis Reserve was created under the last reform of the CAP.
The new safeguard clause was introduced for all sectors to enable the Commission to take emergency measures to respond to general market disturbances – such as the measures taken during the e-coli crisis in May-July 2011.
According to EU budget rules, the Commission is obliged to table a proposal on financial discipline before the end of March.
The Council and European Parliament now have until 30 June 2016 to fix the rate of financial discipline. In the absence of such an agreement by 30 June, the Commission will set the rate.
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.
European Agriculture and Rural Development Commissioner Phil Hogan recently raised the possibility that the Common Agricultural Policy’s (CAP) Crisis Reserve mechanism may have to be activated to help solve market difficulties in the dairy and pigmeat sectors.
Commissioner Hogan was addressing the European Parliament’s Agriculture Committee this week in advance of a key meeting of European Agriculture Minsters on March 14.
Hogan highlighted that last year the Commission had at its disposal funding from the superlevy to fund dairy sector initiatives a funding source which will not be available this year.
The Commissioner said that this raises more starkly the possibility of activating the Crisis Reserve.
However, he said that this is a road he would prefer not to go down as he said the fund is effectively farmers own money.