€60,000 payments cap ‘will not happen’ says Irish expert
A cap of €60,000 on direct payments per farm proposed by EU leaders will not happen, says Irish CAP expert Alan Matthews.
He says fine print in the EU Commission’s CAP reform plan will allow farmers escape the cap, by deducting salaries and family wages from direct payments.
How farmers can do this is set out in a leaked draft of Commission legislative proposals, which requires Member States to first deduct the value of salaries paid from direct payments received, before a cap is applied.
This concession is already available for Member States applying the existing mandatory reduction of at least 5% on amounts above €150,000, and for Member States making use of the option in the last CAP reform to cap payments at €150,000 or above.
But the leaked draft of new Commission legislative proposals extends this loophole, to also include the value of own family labour engaged on the farm.
Mr Matthews said it was misleading and disingenuous for Commission President Juncker to tell the Belgian Parliament that “the European Commission will propose a €60,000 limit on individual direct payment,s to support small farm holdings instead of ‘agricultural factories’”, because it ignores what is likely to be the fine-print in the Commission proposal.
The effect of the proposed loopholes makes capping meaningless, according to Mr Matthews’ latest post in the capreform.eu blog.
It follows that the claim of President Juncker and Commissioner Hogan that capping will ensure that direct payments in future will be concentrated on small and medium-sized farms is without foundation and misleading.
He explained that the proposed budget cut of 4% on average in direct payments will reduce the average direct payment per hectare in the EU to about €250, so a farm of 240 ha would become subject to a cap on direct payments at €60,000, on average (€250 by 240).
But only farms where the labour cost deduction is less than the average direct payment per hectare would have payments capped. For the €250 labour cost deduction to match the average direct payment requires one labour unit per 120 hectares, and average gross wage per labour unit of €30,000.
But the actual average labour cost deduction is much greater than €250 per hectare in the EU, said Mr Matthews. The only possible exceptions are in Bulgaria, Romania and Lithuania.
If capping is to be effective, the labour cost loopholes must be removed, preferably before publication of the final Commission legislative proposals, said Mr Matthews.
