To be noted that on top of the implementation of the CAP, the Dutch government plans to implement a national program providing each year twice the Dutch CAP budget, financed by national budget, to incentivise the transition of the agricultural sectors to more sustainable ones. National financings will support innovation and investments, some will be devoted to extensification. 

Dutch CAP Strategic priorities

For decades, Dutch agriculture and horticulture have been highly innovative, creating prosperity and improving the quality of life in rural areas. However, agricultural production for years has focused primarily on reducing costs and increasing production at the expense of biodiversity, drinking water quality, and landscape diversity. 

A transition in agriculture is therefore necessary. In the Netherlands, farmers are already working on this. The new CAP focuses on supporting farmers who actively contribute to the desired transition in agriculture. If farmers are rewarded for their efforts and are supported in their developments and investments, they will be able to provide solutions. This can be done by helping farmers make changes on their farms, but also by allowing farmers to work together in their area, chain, or sub-sector to find solutions.  

The new CAP supports farmers by rewarding their public services to the climate and environment with subsidies for public goods. Through the eco-scheme, a farmer can choose from a list of about 25 eco-activities that fit their business and interests and the climate and environmental goals. The more effort a farmer is willing to put in, the higher the compensation.

The green architecture 

The green architecture -or the “Green-blue architecture” (GBA) as the Dutch Government prefers to call it- plays a major role in the Dutch NSP. A better network of green and blue interweaving in the landscape will help Netherlands to achieve climate and environmental goals. With the basic premium and cross-compliance in which the majority of farmers participate, there is an improvement in the living environment, biodiversity, climate change, and broader water quality. Through the eco-scheme, each farmer can make extra efforts. Interventions under the second pillar, complement this. Measures can be agreed upon over several years and targeted in an area-specific approach to the most pressing challenges. But other interventions such as investments, sector programs, knowledge and innovation also contribute directly or indirectly.

In some areas of the Netherlands, the environmental challenges are particularly severe. Through the CAP, the Netherlands is investing in business support in these areas. There will be subsidies for integrated area plans, innovations and area processes where the water level is raised and farms are extended. The same goes for farms near Natura 2000 areas, which emit nitrogen near sensitive wildlife. Urgent challenges in areas such as climate, nitrogen, and biodiversity require specific interventions, particularly in the second pillar. To meet these new needs, funds are being transferred from Pillar I to Pillar II. The transfer to EAFRD will be 15% in 2023 and will gradually increase to 30% in 2027. 

In 2023, the 25% of the Pillar I budget that remains after the transfer is dedicated to eco-scheme. The amount available is maintained at this level throughout the CAP period. Since the percentage is calculated after the transfer, this means that the percentage after the transfer increases to about 30% (after the transfer) in 2027. This means that for basic income support, an amount of € 447 millions is available in 2023 after the transfer of 15% to the second pillar (and the budget for the eco-scheme is € 152 million). This amount drops to € 339 million in 2027 (with always about 152 million for eco-scheme).   

Land-based eco-scheme for climate and environment 

The eco-scheme includes the following eco-activities :

Main crop :

1 Permanent crops as main crop at least 1 in 3 (parcel)

2 Early variety of uprooted crop (harvest < 1 September)

3 Early variety of grub (harvest < 1 November)

4 Protein crops as main crop

5 Arable crops, crop from list of permanent crops is on field for more than 18 months

6 Long standing grassland (> 5 years)

7 Buffer strip with herbs

8 Grass/clover

9 Grassland with herbs

10 Strip cultivation, at least 10 strips in a combination of at least 3 crops in strips of at least 3 and maximum 24 m wide

11 Wet cultivation

12 Mange cultivation

13 Small-scale plot (< 2 ha) more than 60% enclosed

Bottom crop :

14 Underseeding catch crop

15 Keeping plots covered (including non-productive rest crop) until 1 March. 

16 Under-working sward (without using glyphosate herbicides).

17 Permanent green cover (direct sowing in green manure, covered until harvest of main crop)

Cultivation measures :

18 Biological control (sterile males, nematodes)

Livestock measures :

19 Maximum 1.5 LU per farm (grassland)

20 Extended pasture grazing 1500 hours

21 Extended pasture time 3000 hours

Non-productive agricultural land :

22 Wooded element (hedge, hedgerow, thicket) is maintained

23 Woody element is present (other woody elements)

24 Water element ecologically cleaned. The element has been cleaned 25% to 75% after June 15

25 Non-productive field (edge) minimum 12 months (edge minimum 3 m)

Sustainable farm :

26 Organic farm 

The list of activities can be modified after testing and practical experience later, optimization can occur based on annual monitoring and mid-term evaluation in 2025. 

The climate and environment eco-scheme has three entry criteria:

1 Farmers or groups of active farmers

2 Eco-activities take place on agricultural land,

3 The farmer or group of farmers has carried out sufficient activities to meet the points system applicable to their area. 

Indeed, the eco-scheme is programmed as a point system for all farmland in the Netherlands with area-specific emphases. There is virtually 100% overlap at the farm level between basic income support hectares and eco-scheme hectares. The tasks for the climate, soil/air, water, biodiversity, and landscape objectives are different for each region. The choice of a national point system with regional accents ensures consistency and balance in terms of objectives, actions and their evaluation. The weighting factors for regional accents are landscape type, industry, soil type, specific urgencies in relation to European climate and environmental regulations, spatial location, and coverage. 

The eco-scheme is used to promote change toward future-proofing agriculture and to encourage the implementation of agricultural practices that contribute primarily to five sub-goals: climate, soil/air, water, biodiversity, and landscape. Payment rates depend on the use of the scheme. The projected uniform “unit amount” per hectare is 106 euros per year, based on the assumption that 80% of eligible farmers use the scheme. The actual payment is made at the bronze, silver and gold levels with corresponding unit amounts. The payment level is determined based on the eligible value of the assets after meeting the entry criteria, including the point system. Organic farming automatically receives the gold level for farmland that is certified as organic. 

Redistributive income support

To support smaller and medium-sized farms the funds available for the Basic Income Support are redistributed from larger to smaller farmers. A higher basic premium is provided for the first 60 hectares, to meet the obligation to redistribute at least 10% of the direct payments. The Netherlands will aim for the minimum compulsory 10% because it does not want to artificially maintain companies that are not viable and therefore have no future prospects. In that respect, Dutch Government thinks that targeted support through investments and knowledge acquisition is better for making small and medium-sized companies stronger and more future-proof than a higher basic premium. 

Coupled payment

The Netherlands does not apply coupled income support. 

Risk management

Through the Action Programme on Climate Adaptation in Agriculture, the Dutch government is promoting – with national resources – the preparation of the sector to face consequences of climate change. The Netherlands is also working to make the soil and water system more robust (through the National Soil Strategy) and to promote knowledge of risk management and preventive measures. The CAP will also be used to promote knowledge in this sector. Funds from the Investment intervention can be used to take preventive measures. Insurance is seen as the final element in risk management. For the (residual) risks of extreme weather, the Netherlands will use the Broad Weather Insurance (to be co-financed with CAP support) Indeed, without financial support, this insurance is still too expensive and is not taken out enough to keep the weather risks of open crops on the market. 

This intervention is a premium subsidy to active farmers who insure any crop damage caused by extreme weather. The annual grant budget is paid on a pro-rata basis at a maximum of 63.7% of the cost of the insurance premium.

Total budget 2023- 2027: € 87,5 million (€17.5 million per year)

Young farmers

Generational renewal is supported in various ways. The supplement to the basic support for young farmers will be a fixed amount. It is expected that around 3,500 young farmers will be entitled to the top-up, which will therefore be more targeted for the new group of young farmers thanks to the link with the setting-up aid. Young farmers will receive a higher subsidy than under Pillar II. This means that only young farmers who receive establishment support in Pillar II will be eligible for additional, so-called “top-up” support.  The total budget for this additional support is 10 million per year. The top-up is a fixed amount of 2,800 euros on an annual basis. 

Young farmers who have already received a full top-up previously in the previous CAP period, i.e. the entire five-year period, are not eligible again. For young farmers who have not yet fully utilized the five-year period during the previous CAP period, transitional rules will be provided.

IFPRI REPORT ON REPURPOSING AGRICULTURAL POLICIES AND SUPPORT

February 2022

The World Bank has just published a study, with the International Food Policy Research Institute (IFPRI), entitled “REPURPOSING AGRICULTURAL POLICIES AND SUPPORT”.

In the study different scenarios were analysed. From a business-as-usual scenario, to modelling the impact of restructuring support (maintaining support for agriculture at the current levels but restructuring it either by moving to uniform rates of assistance for all products, or by favoring low-emission products), or introducing conditionality (making support conditional on reducing emissions), or repurposing for green innovation(which would redirect a part of domestic support toward targeted investments in technologies that are both productivity-enhancing and emissions-reducing).

Some of the reports key findings speak for themselves:

“The report finds that greenhouse gas emissions would increase substantially in the future if current policies are untouched. Simply rearranging or even removing current support would not bring about the changes needed for sustainability.” “Given a ‘business-as-usual’ scenario of unchanged support, GHG emissions from agriculture would increase by 58 percent, and 56 million hectares would be converted to agricultural land between now and 2040”. 

Ending current support would not be a good option either: “The current farm-support regimes were not designed to reduce poverty or to improve diets, but their abolition would likely increase food prices, contributing to more poverty (albeit marginally) and raising the cost of healthy diets”. 

“Policy conditionality tying support to the adoption of environment friendly but lower-yielding farm practices could potentially reduce emissions, but would entail tradeoffs for people, nature, and economic prosperity with lower agricultural production, higher poverty, higher agricultural land use and an increase in the cost of healthy diets”. 

“Both changes in incentives and investments in innovations that simultaneously pursue productivity enhancements and greenhouse gas emission reductions are needed in order to deliver broad and long-standing wins”. “Simulation results suggest that investments in innovations designed to lower emissions and raise productivity by 30 percent could reduce emissions from agriculture and land use by more than 40 percent, returning 105 million hectares of agricultural land to natural habitats, while delivering substantial gains in poverty reduction, nutrition, and the overall economy.” 

“The repurposing option, which would redirect a part of domestic support toward targeted investments in technologies that are both productivity-enhancing and emissions-reducing, appears to hold the potential to deliver “triple wins” for a healthy planet, economy, and people. Productivity-driven growth reduces poverty and makes nutritionally adequate diets more affordable. In this scenario, global extreme poverty would fall by 1 percent, while the cost of a healthy diet would drop by a substantial 18 percent.”

This report from a well-known and respected international organization lends additional clout to those reports and analyses that show that the Commission F2F and Biodiversity approach – the “conditionality” scenario in the World Bank/IFPRI report – would be detrimental to agricultural production, poverty, and healthy diets, and likely lead to increased deforestation.

The preferred scenario according to the report is “repurposing for green innovation”. The key policy change in this scenario is a re-allocation of support to investments that lower emissions and raise productivity at the same time. Or, as Farm Europe has phrased it, dual-purpose investments.

The World Bank/IFPRI report extensively uses modelling, and a number of assumptions, which can always be questioned; and the quantified outcomes are a function of these assumptions and the model used. For instance the report assumes “…an international consensus, under which all governments would repurpose support toward common global objectives”, which can be overly optimistic.

Having said that, the issue at stake is not so much the magnitude of the results, but their direction – and the report is crystal clear that shrinking agriculture production is not the right path, on the contrary.

The proposed shift of public resources to dual-purpose investments, to foster sustainable productivity growth, comes well in line with the current USDA thinking, as expressed by the US Secretary of Agriculture. This shows that the Commission approach finds little resonance outside the EU, and on the contrary is giving rise to a building body of criticism and alternative proposals.

January 2022

Strategic priorities: organic farming and livestock 

The Plan recognizes the importance of organic farming to contribute to the achievement of all environmental objectives; indeed, the sector is allocated about 2.5 billion euro in the five-year period within the rural development. The allocation already foreseen by rural development (1.5 billion euros) is in fact integrated with an additional endowment of about 1 billion euros, partly transferred from the first pillar (90 million euros/year) and partly coming from the increase in national co-financing. 

The relaunch of Italian livestock farming and its competitiveness goes through a great attention to sustainability. With this objective, a significant share of the resources for eco-schemes is dedicated to animal welfare and the reduction of the use of antimicrobial in animal husbandry (about 1.8 billion euros). This initiative is accompanied by other important interventions in rural development for the adoption of good zootechnical practices for animal welfare (330 million euros), for commitments aimed at improving the management of livestock effluents (70 million euros). 

The green architecture 

In total, around 10 billion euros, between Pillar I and II, are allocated to interventions with clear environmental aims. 

In this context, great importance will be given to the 5 national eco-schemes, to which 25% of direct aid resources will be allocated (around 4.4 billion euros) to support farms in adopting agro-ecological practices for climate and environmental sustainability. The eco-schemes will operate in synergy with the 26 agro-environment-climate measures (AECM)  (1.5 billion euros), measures in favor of sustainable forestry (500 million euros), productive, non-productive and infrastructural investments for environmental purposes (650 million euros), with the environmental actions foreseen within the sectoral interventions and the environmental investments of the NRRP, an integral part of this strategy. 

ECO-SCHEME 1  – Payment for the reduction of antimicrobial resistance and animal welfare 

A specific eco-scheme has been foreseen to pursue the goal of reducing the use of drugs in animal husbandry, to counter the antimicrobial resistance, a real global health emergency. A significant part of the resources for eco-schemes, i.e. around 1.8 billion euros for the entire programming period, has been allocated to this intervention. In particular, payment for animal welfare and antibiotic reduction is foreseen, with two levels of commitment, the first relating to compliance with thresholds for the use of veterinary drugs (antibiotics), the second for farms that commit to specific obligations in the field of animal welfare and practice grazing or semi-wild farming. This initiative is accompanied by a specific intervention in rural development aimed at supporting the adoption of good zootechnical practices for animal welfare (330 million euros). 

Approximately 360 million euros per year, around 41% of the resources foreseen for the adoption of eco-schemes go to the eco-scheme 1.

ECO-SCHEME 2 Weeding of tree crops, for which all areas occupied by permanent crops and other permanent tree species in quick rotation are eligible.

The total cost of this intervention is estimated at 161 million euros / year, about 17.8% of the resources provided for the adoption of eco-schemes. 

ECO-SCHEME 3 – Safeguarding olive trees of particular landscape value, on which the following specific commitments are met: 

-annual pruning of the foliage according to established criteria; -prohibition of burning on site of pruning residues, unless otherwise specified as a result of adherence to certified quality systems or by the competent phytosanitary authorities.

To access the support of ECO-3 it is necessary to adhere also to the commitments provided by ECO-2, with the possibility of combined payments. 

The total cost of this intervention is estimated at 156 million euros/year, about 17% of the resources provided for the adoption of eco-schemes. 

ECO-SCHEME 4 – Extensive fodder systems, aimed at encouraging the introduction in rotation of leguminous and fodder crops, as well as renovation crops with a commitment to residue management in a carbon sink perspective, in order to support production guidelines less impactful in terms of use of productive inputs. 

The total cost of this intervention is estimated at 169 million euros/year, around 19% of the resources foreseen for the adoption of eco-schemes. 

ECO-SCHEME 5 – Specific measures for pollinators (both on herbaceous and tree crops), arable land and land occupied by permanent crops are eligible on which the following commitments are met: 

-cultivation of crops of melliferous interest in arable land, including a commitment not to use herbicides and other plant protection products in the field and borders in the year of commitment; -cultivation of crops of melliferous interest in the inter-row of permanent crops, including a commitment not to use herbicides and other phytosanitary products in the field and in the borders in the year of commitment. 

The total cost of this intervention is estimated at 45 million euros/year, about 5% of the resources provided for the adoption of eco-schemes. 

In addition to the eco-schemes in the first pillar, the green architecture is supported by the agro-environment-climate measures (AECM) and forestry interventions in the second pillar. A total of 26 AECM interventions are foreseen with a planned expenditure of around 1.5 billion euros, 5 forestry interventions with clearly environmental objectives with around 250 million euros. 

Essential elements of green architecture are also all the measures of the innovation system that can be envisaged both in rural development and in sectoral interventions. Training and advice are fundamental to ensure that in their path towards ecological transition, each beneficiary is accompanied by adequate support action aimed at strengthening their skills and/or offering dedicated advisory services. 

Internal Convergence

The process of progressive equalization of the level of income support continues, taking the entire national territory as a reference. The reference to Italy as a single region puts into effect – through internal convergence to 85% of the national average by 2026– a considerable rebalancing in the allocation of direct payment resources, to the advantage of intermediate rural areas and rural areas with development problems, as well as to the advantage of mountainous areas and some inland hill areas. At the same time, 10% of the national envelope is allocated to redistributive support, focusing attention on small and medium-sized farms; also in this case there are no territorial or regional differentiations.

Coupled payment

In order to take into account the challenges and difficulties faced by sectors and products that are important for social, economic or environmental reasons, and with the aim of improving their competitiveness, sustainability and quality, the Strategy allocates 13% of the direct payment budget to coupled support. 

To this is added a further 2% of resources to be allocated to the support of protein crops, in order to reduce the relative deficit of Italy and the Union, supporting crops that also allow to achieve an improvement of organic matter in the soil. 

Coupled payments for: durum wheat; rice; sugar beet; tomatoes-processing; oilseeds; citrus fruits; olives; protein crops; cow’s milk; mountain milk, buffalo milk, suckler cows, ewe lambs for replacement; slaughtered sheep and goats.

Risk management

Almost 3 billion euros allocated to subsidized insurance and the new national mutual fund, to which farmers also contribute through a 3% deduction from direct payments. 

In order to increase the participation of farmers, the activation of a basic mutual coverage against catastrophic weather and climate events has been foreseen for all farms receiving direct payments, through the establishment of a national mutual fund. This intervention is integrated with support for the subscription of subsidized insurance policies, which cover losses caused by adverse weather, animal and plant diseases or parasite infestations. 

Young farmers

The Plan foresees the strengthening of policies in favor of young people, integrating the instruments of the first and second pillar, so as to mobilize a total of 1,250 million Euros. In fact, young farmers are more receptive to innovation and digitization, thus more ready to face the new challenges of competitiveness and resilience of the agricultural sector. With these objectives, 2% of the direct payments ceiling (350 million euros) will be used as complementary income support for young farmers and 1% will be transferred to the second pillar. In this way, the allocation already provided for in rural development (540 million euros) is supplemented by an additional endowment of around 360 million euros, partly transferred from the first pillar, partly from the increase in national co-financing.