Spain: CAP Strategic Plan 2023-27

Posted on

March 2022

Strategic priorities

Spain proposes a CAP Strategic Plan 2023-2027 that “aims at the sustainable development of agriculture, food and rural areas to ensure the food security of society through a competitive sector and a living rural environment”.

On the basis that the agri-food system is strategic for Spain, the Plan aims to lay the foundations for it to continue to be so over the next decade. To this end, the CAP will make more efficient use of the budget by linking aid to the fulfillment of objectives, mainly in three areas:

1. Greater equity in income support, through an improvement in the system for distributing direct aid; 2. Ensuring compliance with environmental commitments and objectives, combining regulatory measures with payments that remunerate farmers’ efforts beyond the baseline; 3. Putting into operation a broad set of measures aimed at contributing to the environmental, economic and social sustainability of the sector: investments, innovation, training and advice, as well as a determined effort to facilitate the incorporation of young people and the reduction of the gender gap in the sector.

As for the economic challenges, the plan is to support farmers in improving the competitiveness of their farms through income support, farm advisory services and rural development measures in favor of innovation, improved knowledge, investments, the use of technology and digitalization, among other aspects. It will be especially necessary to leave no one behind, particularly accompanying small and medium-sized farms, since they are the most socially important, and the ones that keep rural areas alive to a greater extent, which is why the plan makes use of all the redistribution measures within its reach: capping, degressivity and redistributive payment. 

In relation to the environmental and climate challenges, in the specific case of Spain, the fight against desertification and erosion, the improvement of soil structure and organic matter content or the maintenance of the high biodiversity linked to agricultural habitats are important needs.

This greater environmental and climate ambition has budgetary backing, as Spain estimates that approximately 43% of the total CAP budget will contribute to environmental and climate objectives. Starting from the baseline of enhanced cross-compliance, the CAP aims to encourage productive changes through additional voluntary payments, both national (eco-schemes) and regional (mainly aid for environmental and climate commitments, but also other measures under the EAFRD).

The eco-schemes are intended to respond to those needs present in general throughout the national territory for which a relatively homogeneous design response is also suitable in the territory. For those needs more specific to certain territories, or with particular characteristics or for which a differentiated territorial response is more effective, the response will come from EAFRD interventions. In addition, greater support will be given to the digital transition, innovation and knowledge transfer, as this is considered a necessary complement to the environmental transformation of farms.

There are also social challenges; through income support, security is provided to the agricultural sector, favoring the maintenance of agricultural activity with the implications this has on the maintenance of rural communities. There are also rural development measures that allow the revitalization of these areas, such as aid for the creation of companies or for basic services. In addition, the Plan will cover other aspects of a social nature that are particularly relevant in Spain, such as reducing the gender gap and supporting generational replacement. Likewise, for the first time, the social dimension is incorporated into the CAP and Spain, taking into account the importance of the presence of employees in our sector, intends to do so from 2024.

The green architecture 

This proposal for the CAP Strategic Plan represents a great step forward in the environmental ambition of this policy in Spain. 

Spain will make coordinated use, fundamentally, of three types of actions: regulatory measures not included in the CAP, but whose compliance will be reinforced by their inclusion in the reinforced cross-compliance by raising the baseline; the reinforced cross-compliance itself; and the environmental interventions of the Strategic Plan.

Specifically, the Spanish Plan proposal, in quantitative terms, represents:

1. an environmental and climate expenditure of 42.7% of the total of its CAP budget;

2. An expenditure on eco-regimes of more than 1,107 million euros per year, equivalent to 23% of Spain’s allocation for direct payments. 

3. An environmental expenditure in EAFRD of more than 47%, which means a slight increase in the current expenditure, despite the fact that in the new period aid to areas with natural limitations only counts for 50% as environmental expenditure (with the calculation criteria of the previous period the EAFRD environmental contribution was 6.76% and now it would reach 50.95%).

4. A 40% increase in the budget available for aid to organic farming.

Eco-schemes included in the Spanish Strategic Plan:

  • Eco-scheme Increasing carbon sink capacity and improving biodiversity in humid grassland areas.

Annual indicative financial allocation: 103,168,071.00 euros

  • Eco-scheme Increasing carbon sink capacity and improving biodiversity in Mediterranean grassland areas.

Annual indicative financial allocation: 115,305,912.00

  • Eco-scheme in dry cropland

Annual indicative financial allocation: € 234,845,259.00

  • Eco-scheme in rainfed wetlands

Annual indicative financial allocation: € 37,456,883.20

  • Eco-scheme in irrigated cropland.

Annual indicative financial allocation: € 171,471,478.40

  • Eco-scheme woodland crops on flat lands

Annual indicative financial allocation: € 73,205,212.00

  • Eco-scheme woodland crops on medium slope lands

Annual indicative financial allocation: € 79,390,381.00

  • Eco-scheme woodland crops on high slope lands

Annual indicative financial allocation: € 154,962,683.00

  • Eco-scheme biodiversity sites on arable and permanent cropland (with sustainable irrigation management)

Annual indicative financial allocation: € 137,687,603.12

The Spanish National Plan provides that for each of these eco-schemes and landscapes a whole set of practices that farmers can follow to fit into the scheme and thus receive support. This approach allows ample flexibility to allow as many farmers as possible to fit into the eco-schemes.

Internal Convergence

Internal convergence will consist of:

Between 2022 and 2026 there will be 5 equal steps, in which, in order to reach the minimum value of 85% in each region, this threshold will be progressively increased in each step by 3%, so that in 2022 all entitlements reach at least 73% of the regional average value and 85% in 2026. Basic aid entitlements whose initial unit value is lower than the regional average value will be increased in each stage by one-tenth of the difference between their initial unit value and the regional average value.

Between 2027 and 2029, convergence will continue so that full convergence of the nominal values of entitlements to the regional average value is achieved in the aid applications corresponding to the year 2029.

Degressivity, Capping & Redistributive payment

Spain has decided to apply the redistributive payment at the regional level, using the territories established in basic income support given the structural differences. The total amount will be 10% of the budget of the First Pillar, i.e. approx. 2, 414 billion, therefore, the amount will be distributed to each region and distributed to farmers according to certain thresholds calculated taking into account the characteristics and structure of the farms and the amount available. The aid will be destined primarily to the medium-sized farms most dependent on agricultural income, without harming the more pluri-active The thresholds have been calculated, for each region, taking into account the characteristics and structure of the farms and the amount available.

Spain proposes a degressivity in the reduction of payments, with the percentages initially proposed by the European Commission, namely:

25% reduction rate from 60,000 to 75,000 euros of aid;

Reduction rate of 50% from 75,000 to 90,000 euros of aid;

Rate of reduction of 85% from 90,000 to 100,000 euros of aid.

Spain will also apply a 100% reduction to payments received above 100,000 euros.

 The amount of basic income support to be granted will be reduced by the labor costs related to agricultural activity actually paid and declared by the farmer in the previous calendar year, including taxes and social contributions related to employment. 

In any event, the maximum amount of basic income support that a farmer may receive may not exceed 200,000 euros.

The exception provided for cooperatives, Agricultural Transformation Companies and Shared Ownership Farms will be applied to degressivity and capping.

Coupled payment

Spain will devote approximately 15% of the budget for direct payments, or 3.461 billion to coupled support. The sectors that will be eligible for coupled aid are: sustainable cow’s milk production, extensive cattle ranchers, cattle ranchers fattening their calves on the farm of birth, sustainable calf fattening ranchers, extensive and semi-extensive meat production sheep and goat ranchers, sustainable sheep and goat milk production, Coupled support for extensive sheep and goat ranchers grazing fallow land, stubble or residues of horticultural crops, including extensive and semi-extensive livestock farms without available pasture, sustainable production of plant-based proteins, sustainable production of rice, sustainable production of sugar beets, sustainable production of tomatoes for processing, producers of nuts in areas at risk of desertification, traditional production of raisins.

Risk management

The strategy considered most appropriate in Spain in terms of agricultural risk management for the period 2023-2027 is based fundamentally on the maintenance and improvement of agricultural insurance as a national policy financed with State aid, complemented by specific crisis management measures aimed at certain sectors, in application of the Common Organization of Agricultural Markets.

Spain’s agricultural insurance system is one of the most developed in the world. It currently has 44 lines of insurance: 28 for agriculture, 12 for livestock, 3 for aquaculture and 1 for forestry. Among vegetable crops, the greatest degree of insurance implementation is in fruit trees, rice and extensive herbaceous crops. In livestock production, dairy cattle and laying poultry stand out.

Its subscription is voluntary, although it is incentivized by means of subsidies that reduce the cost of premiums to producers, which are granted by both the Minister of Agriculture and the Autonomous Regions (they grant aid in highly variable percentages according to territories and productions).

During the 2014-2020 period, public support for agricultural insurance is around 2,000 million euros. This figure maintains Spain as the Member State that devotes the greatest resources to agricultural risk management.

Therefore, during the next programming period, Spain intends to continue basing its risk management policy on the maintenance and improvement of The Combined Agrarian Insurance System as a national policy, financed with equally national funds.  The Combined Agrarian Insurance System in Spain is a very consolidated system with a high degree of maturity. This is a complex public-private insurance scheme. The insurance sector contributes unquestionable value through underwriting techniques and by assuming the established level of risk. The public sector plays a coordinating and planning role. In addition, the role played by the public entity Consorcio de Compensación de Seguros as the mandatory reinsurer of the system is extremely important. The leading role of the agricultural sector itself should also be emphasized.

Additionally, it is necessary to reinforce risk prevention by means of instruments which cover other less frequent eventualities, but which are more difficult to be managed by the farmer on his own. This category includes production risks associated with climate and biological factors. In this regard, climate change predictions point to agriculture as one of the sectors most affected by climate change, especially in countries located in areas of greater vulnerability, such as the Mediterranean basin. Indeed, the forecasts point to a trend towards a decrease in rainfall and an increase in temperature in a large part of Spain, which will lead to a reduction in yields and, therefore, in agricultural profitability. Likewise, an increase in the volatility of production is foreseeable due to the greater frequency of extreme weather events such as drought, heat waves or hail. For this reason, risk management policy must also aim to improve the gradual adaptation of farms to the effects of climate change. In this sense, agricultural insurance is a useful tool to enable such adaptation, as stated in the National Plan for Adaptation to Climate Change.