Politics National Strategic Plan
New CAP: doing more for 70 euros per hectare less
Farmers' incomes are declining in the National Strategic Plan (NSP), the national implementation of the Common Agricultural Policy (CAP). That is the conclusion that can be drawn from the NSP concept and the economic calculation that was sent to the House of Representatives on Friday 3 December.
In the new CAP - which will enter into force in 2023 - Member States are expected to make ambitious national implementation of the goals in the CAP. The countries are given a lot of freedom in this regard. Among other things, the Netherlands has chosen to gradually transfer from 15% in 2023 to 30% in 2027 from the first pillar (Guarantee Fund or direct payments) to the second pillar (Rural Policy). In the current CAP, approximately 8% of the first pillar is transferred to the second pillar.
Less money more conditions
In concrete terms, this means for the farmer that the basic payment will be €2023 per hectare in 255 and that it will decrease to €194 per hectare in 2027. The premium for the Eco-scheme will remain the same during the term at €109 per hectare. For comparison: this year (2021) the value of a payment entitlement is €259,73 per hectare and the greening payment is €111,96 per hectare. Additional efforts are required from the agricultural sector to meet the conditions for the new CAP. In the NSP concept and the new CAP, a different interpretation of the standards for good agricultural and environmental conditions (GAECs) has been chosen. The WUR has examined the economic consequences of a number of these GAECs.
For example, the model calculations of the WUR show that a total ban on renewing permanent grassland in peat meadow areas costs €292,50 per hectare per year in net additional yield of the grass, compared to renewing the grassland once every ten years. The ministry is offering €50 per hectare as extra basic income support. For arable farming, it is mainly the greening obligation that ends up in the paper. 4% of the arable land must be classified as non-productive area. Because the most productive land will probably not be used for this, WUR has applied a correction of 10% to the balance in the calculation, so that the effective decrease in the balance is 3,6%. For wheat this means a decrease in the balance of €39,67 per hectare, for ware potatoes €197,14 per hectare, for sugar beet €90,72 per hectare and for onions €171,07 per hectare. On an arable farm with one in three potatoes and wheat and one in six onions and sugar beet, the obligation of 4% non-productive area results in an average loss of approximately €120 per hectare.
Major differences per company
However, these are model calculations. Much is still unclear about how the NSP will play out at company level. It is expected that the more intensive companies with high-yield crops will be hit harder than the more extensive companies. The RVO is working on a simulation tool, which should be online before the summer of 2022, in which farmers can see the impact of the NSP and the consequences of the various eco-schemes on their own farm.
Sources within and around the ministry are now concerned about how the NSP will turn out at company level. In addition, they are not only afraid of consequences for the revenue model, the competitive position compared to farmers in other EU countries and the consequences for farmers' incomes. It is also feared by some sources that farmers are making a cost-benefit analysis and some may conclude that it is no longer interesting to participate in the CAP. If this turns out to be a substantial group, the government will lose an important instrument for steering agricultural policy. Little is achieved in practice of the goals laid down in the new CAP and the NSP thus overshoots its target. These sources therefore argue in favor of incorporating safeguards so that the CAP remains feasible for the vast majority of farmers.
Less certainty about where the money will end up
Incidentally, transferring the budget does not have to mean that less money ends up on the farm, that will ultimately depend on how the second pillar budget is made available. But for the budget that is transferred, the guarantee that it will benefit the primary farmers and market gardeners disappears; and it is an omen, according to the concept of NSP. "Many of the ambitions described in this NSP appeal to the second pillar. For example, the ANLb, cooperation in peat meadows and transition areas N2000, an area-oriented approach for water and investments, innovation and knowledge. That is why a transfer is desirable", says in the concept of NSP.
The concept of NSP is not yet final. A Committee debate on the NSP will be held in the House of Representatives on Wednesday 8 December. However, the time to make any changes to the draft plan is running out. The NSP must be in Brussels by the end of 2021. The European Commission then has three months to assess the plan and make any recommendations.
The documents sent to the House in preparation for the debate are: here to find.
Jurphaas Lugtenburg
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