CAP reform sealed – What are the next steps for farm policy 2023-2027?

The CAP reform is home and dry. The legislative package for reforming the Common Agricultural Policy (CAP) presented by the European Commission on 1 June 2018[1] has made it through the ordinary legislative procedure in the first reading. The European Parliament, sitting in plenary on 23/11/2021, adopted parliamentary resolutions endorsing the package. The Council followed suit on 2/12/2021 giving its blessings to the deal[2]. The ratification by the co-legislators brings a 3½-year legislative procedure to a close.  

Three EP/Council-Regulations become law on 7/12/2021:

Law-making, first part – EU Regulations

Regulation (EU) 2021/2115 of the European Parliament and of the Council of 2 December 2021 establishing rules on support for strategic plans to be drawn up by Member States under the common agricultural policy (CAP Strategic Plans) and financed by the European Agricultural Guarantee Fund (EAGF) and by the European Agricultural Fund for Rural Development (EAFRD) and repealing Regulations (EU) No 1305/2013 and (EU) No 1307/2013[3]
➜ the ‘Strategic Plans Regulation’

Regulation (EU) 2021/2116 of the European Parliament and of the Council on the financing, management and monitoring of the common agricultural policy and repealing Regulation (EU) No 1306/2013[4]
➜ the ‘Horizontal Regulation’

Regulation (EU) 2021/2117 of the European Parliament and of the Council of 2 December 2021 amending Regulations (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products, (EU) No 1151/2012 on quality schemes for agricultural products and foodstuffs, (EU) No 251/2014 on the definition, description, presentation, labelling and the protection of geographical indications of aromatised wine products and (EU) No 228/2013 laying down specific measures for agriculture in the outermost regions of the Union[5]
➜ the ‘Amending Regulation’

This tripod of Union secondary law, now published in the Official Journal and entering into force  the day following that of their publication, puts the EU’s farm policy on a new footing for the period 2023-2027. The adoption of the EP/Council-Regulations marks a major step in law-making, however, important aspects (and by far not just details) are still to emerge. While in the grand scheme of things decisions are being made [➜ Reform objectives of the new CAP], a whole trail of follow-up decisions still need to be taken to make the package operational — and at different levels: national/European [➜ NSPs], European [➜ tertiary law[6]], and European/international [➜ FTAs[7]]. In a way, now the EP/Council-Regulations are black letter, work is starting afresh and with breakneck speed. Interested parties need to stay alert to the developments in the year of change from one CAP to another in 2022.

In a way, now the EP/Council-Regulations are black letter, work is starting afresh and with breakneck speed. Interested parties need to stay alert to the developments in the year of change from one CAP to another in 2022.

Jens Karsten, SPECIAL ADVISOR,Food & Farm Law

Reform objectives of the new CAP

The package represents a reform, not a paradigm shift, in the EU’s 60-year old farm policy. It aims at a fairer, greener and more performance-based farming policy (the ‘new delivery model’) that integrates the EU agricultural sector into the overall EU Green Deal ambitions. Proposed before the Green Deal and the Farm to Fork-strategy but heavily influenced by the policy priorities of the 2019-2024 administration, the new CAP aims to be significantly greener.  

With a quarter of direct payments reserved for sustainable farming practices and guarantees for adequate employment conditions for farm workers it is both the greenest and most social instalment of the CAP so far. Indeed, as novelties also include social conditionality, labour law is part of the package. Overall, the new CAP is based on nine objectives. These are: 

• to ensure a fair income to farmers
• to increase competitiveness
• to rebalance the power in the food chain
• climate change action
• environmental care
• to preserve landscapes and biodiversity
• to support generational renewal
• vibrant rural areas
• to protect food and health quality

These objectives have to be observed specifically by Member States in their follow-up activities and in combination with the recommendations for eco-schemes (new instruments designed to reward farmers for environmental care and climate action) and guidelines for CAP Strategic Plans.

Horizontal Regulation

Europe’s farm policy has a share of a third of the EU’s budget. The Regulation on the financing, management and monitoring of the CAP organises these massive hand-outs and aims to align the new CAP with the 2021-2027 multiannual financial framework (MFF) and Next Generation EU. It provides the legislative framework for adapting the financing, management and monitoring rules to a new CAP delivery model and seeks to achieve a higher degree of subsidiarity, with greater responsibility given to Member States and a shift from ensuring single transaction compliance to monitoring system performance in each Member State.

Law, second part – Tertiary law to be adopted by the European Commission

The adoption of the EP/Council-Regulations provide the (secondary law) legal base to adopt (tertiary law) delegated acts and implementing acts. A whole stack of DAs/IAs are in the making and the European Commission, helped in the preparation process by the Expert Group for Horizontal Questions concerning the CAP[8], the Expert group for monitoring and evaluating the CAP[9] and the Expert Group on the Implementation of the CAP Strategic Plans Regulation[10], with plans for a roll-out still in December 2021.

Numerous other DAs/IAs are foreseen in the three Regulations which will be negotiated in 2022 and which will allow for more time to observe the process of their adoption.

Jens Karsten, SPECIAL ADVISOR,Food & Farm Law

Absolutely crucial to have are those delegated acts and implementing acts necessary for the submission of National Strategic Plans (NSPs). Political players therefore seem to be prepared to waive their right of scrutiny. On 9/12/2021, Members of the European Parliament’s Committee on Agriculture and Rural development will possibly vote an early non-objection on the tertiary law adopted on the basis of the new CAP. Numerous other DAs/IAs are foreseen in the three Regulations which will be negotiated in 2022 and which will allow for more time to observe the process of their adoption.

Law-making, third part – Law to be adopted by Member States: Strategic Plans Regulation

A novel feature of the new CAP and a major shift in its delivery model is the introduction of National Strategic Plans (NSPs), obliging Member States to adapt the provisions of Union farm law to the needs of their farming communities and involving a shift from compliance towards results and performance. It includes a new distribution of responsibilities between the EU and Member States. A new planning process is proposed which will cover both Pillar I (direct payments) and Pillar II (rural development) of the CAP. Member States thereby recuperate powers and responsibilities for shaping farm law previously long lost to ‘Brussels’.

While principles are still defined by Union law and targets set centrally, national capitals define how these are achieved. They are long busy formulating the NSPs given they are obliged, in an extraordinarily ambitious timeframe, to submit them to the European Commission by 1/1/2022 for evaluation and approval. The Commission will have six months to assess and approve the plans, the first three months reserved for the preparation of observation letters. Each CAP strategic plan includes an intervention strategy explaining how each EU country will use CAP instruments to achieve the CAP objectives in keeping with the Green Deal ambitions (addressing deficiencies as they relate to climate, environment and biodiversity and existing environmental legislation). The Commission has the task to assess Green Deal ambitions on the NSPs with particular attention being paid to eco-schemes and ambitions related to agri-environmental measures.

Law, fourth part – International trade: Amending Regulation

In its ‘domestic’, that is, inner-European part, the Amending Regulation introduces changes to rules governing the common market organisation (CMO) in agricultural products – including the rules on wine –, the EU quality schemes (geographical indications) and the support measures for remote regions. The aim is to equip agricultural markets and support measures to face new challenges, update provisions, simplify procedures and ensure consistency with other regulations on the future CAP.

In order to maintain fair competition and ensure reciprocity in international trade, the EU pushes for alignment between European food standards and agricultural products imported into the EU (and, somehow wishing to square the circle, at the same time giving assurances of adherence to WTO rules)

Jens Karsten, SPECIAL ADVISOR,Food & Farm Law

The new common market organisation, however also has a ‘international’ dimension with bearings for the EU’s relationship with the rest of the world. In order to maintain fair competition and ensure reciprocity in international trade, the EU pushes for alignment between European food standards and agricultural products imported into the EU (and, somehow wishing to square the circle, at the same time giving assurances of adherence to WTO rules). Consequently, import of agri-food products from the EU’s trading partners should only be allowed if they comply with environmental and health standards and obligations applying to the same products in the internal market. Politically, this ambition was resolved by political declarations[11] that were intent influence the EU as a trade bloc’s relations to its trading partners overseas:  

• Joint statement by the European Parliament, the Council and the Commission on proactive engagement at multilateral level concerning the application of EU health and environmental standards to imported agricultural products[12]
• Joint statement by the European Parliament and the Council concerning the application of EU health and environmental standards to imported agricultural products[13]
• Joint statement by the European Parliament, the Council and the Commission on the CMO provisions related to the EU sugar sector[14]

This ‘soft law’ may impact on the ‘hard law’ of free trade agreements and other instruments of the EU’s trade policy – with a potential to complicate trade relationships with countries overseas and WTO obligations of the EU.

Outlook 2022

The coming year will be busy implementing the new CAP. 1/1/2022 will also see the coming into force of the new Regulation on organic farming[15] reforming the organics sector. In this shifting landscape of agricultural law it is important to keep sight of the moving targets and to step forward when required. Once set, it will be 2027 before the package is re-opened. Moreover, the hot phase of the new CAP’s implementation coincides with the French Council presidency, opening the ‘Trio’ of France-Czechia-Sweden. Traditionally, France is keenly interested in the EU’s farm policy and is also an outspoken protagonist of food security, actively pursuing a policy of (a newly coined term) food sovereignty.

Either term underlines the crucial importance of Europe’s ability to feed its citizens in an overpopulated and polluted world where trade flows may be disrupted by international conflict and pandemics. The stakes are high and the processes of decision-making intensely political. Best to keep eyes and ears wide open to understand and perhaps influence Europe’s new farm policy.

[1] European Commission press release IP/18/3985 of 1/6/2018 “Common Agricultural Policy beyond 2020”
[2] Council press release of 2/12/2021 “Council adopts fairer, greener and more performance-based farming policy for 2023-2027”. Also adopted were new rules on farm statistics (29/11/2021) Council press release “Agreement reached on collection of regional farming data”.
[3] OJ L 435 of 6/6/2021, p. 1
[4] OJ L 435 of 6/6/2021, p. 187
[5] OJ L 435 of 6/6/2021, p. 262
[6] Delegated acts and implementing acts, sometimes misleadingly referred to as ‘secondary legislation’.
[7] Free trade agreements and other deals governing EU external trade.
[8] E02734
[9] E02789
[10] E03806
[11] Plus a bilateral statement by the Parliament and the Council inviting the Commission to prepare a report on these issues by June 2022.
[12] OJ C 488 of 6/6/2021, p. 6
[13] OJ C 488 of 6/6/2021, p. 7
[14] OJ C 488 of 6/6/2021, p. 6
[15] Regulation (EU) 2018/848 on organic production and labelling of organic products