CAP Direct Payments: Budget update means 2.45% rate of Financial Discipline this year
The Amending Letter No 2 to the 2014 draft budget updates the estimates for agricultural expenditure in the 2014 draft budget and allows the Commission to make a separate proposal to the Council to adapt the rate of Financial Discipline foreseen for this year’s Direct Payments within the Common Agriculture Policy – to apply a rate of 2.45% [2.453658%], rather than the rate of 4.00% [4.001079%] previously introduced.
When the draft 2014 budget was proposed, the budgetary estimates, including the new agricultural crises reserve financed from financial discipline, were € 1 471.4 million above the 2014 budgetary sub-ceiling for the first pillar of the CAP in the MFF. This meant that, by exempting the first € 2000 of farmers’ Direct Payments from any reduction (in line with the Council and the European Parliament in the recent CAP reform package), a rate of 4.00% was needed in order to make the necessary savings.
However, the Amending letter has now updated the figures, notably confirming that the amount of assigned revenue carried forward into the 2014 budget year will be substantially higher than originally expected.
With these updated figures, it is now only necessary to save € 902.9 million. Consequently, with the € 2000 threshold, the Commission is now proposing to adjust the applicable rate to 2.453658% in order to respect the MFF budgetary ceiling.
This proposal will now be put to Council, with a view to agreement by December 1. If Member States are unable to adopt the proposal by then the rate of 4.001079% would apply.
This decision refers to Direct Payments claimed by farmers in 2013 (applications were submitted in May), which will be paid out from December 1 onwards, ie from the 2014 budget.
NB: This year, Member States have the possibility to make 50% of the payment from October 16. The financial discipline mechanism does not apply to Bulgaria, Romania and Croatia where Direct Payments are still being phased in.