The European Commission has adopted a proposal on the application of the financial discipline mechanism for the CAP budget for the financial year 2017.
In order to ensure that the crisis reserve of € 450.5 million is available in the 2017 budget, the proposal aims to reduce CAP Direct Payments exceeding € 2000 by 1.366744%, with the exception of direct payments for farmers in Croatia as they are still being phased-in. This rate is slightly lower than the 1.393041% that was applied in 2016 (for a reserve of € 441.6 million) as the 2017 exercise will include Romania and Bulgaria for the first time because Direct Payments in those countries will be fully phased-in.
According to EU budget rules, the Commission is obliged to table a proposal on financial discipline before the end of March. The Council and European Parliament now have until 30 June 2016 to fix the rate of financial discipline. In the absence of such an agreement by 30 June, the Commission will set the rate.
In drawing up the 2017 Draft Budget, the first budgetary estimates for direct payments and market related expenditure show that the net balance available for EAGF expenditure for 2017 is not likely to be exceeded and an additional financial discipline for budget year 2017 is therefore not needed for the purpose of respecting the EAGF ceiling.
In October, the Commission will present an amending letter to the 2017 draft budget, which will update forecast budget needs.
In that context, the Commission may then also update the rate of financial discipline no later than 1 December.
According to CAP legislation, amounts generated by financial discipline which remain available in the EAGF budget at the end of the financial year, including those of the crisis reserve, shall be reimbursed to farmers.