Thank you for your words Carlos.

Prime Minister Costa, Commissioner Moedas, Minister Capoulas Santos, MEPs, elected representatives, dear friends,

It is my great pleasure to attend the 55th National Agricultural Fair. Portugal is a country I know and love, and I always enjoy coming back here. I was in Santarem two years ago and I'm very happy to be back.

Events such as this one are very important. I am a passionate believer in showcasing the vital work that takes place on farms, of all sorts and sizes, throughout the EU.

Educating the general public about food, farming and the countryside is a very worthwhile exercise, and I've been reliably informed that over 200,000 visitors, as well as key political leaders and media will attend.

Carlos has given you an overview of the Commission's research and innovation agenda. I am here to tell you about the European Commission's proposal for the future CAP, and how it can benefit the farmers and rural communities of this proud agricultural nation.

I'm very happy to have the opportunity to meet you this week, because I know next Friday your focus will be on something much more important: beating your neighbours Spain in the world cup!

Let me say first of all that Portugal is a strong defender of the CAP, and I greatly appreciate the huge efforts made by Minister Capoulas Santos and Prime Minister Costa in recent months to rally support across Europe for maintaining a strong and well-funded policy.

In the end, I believe we have achieved a reasonable start for the budget negotiations.  The Commission’s proposal for the MFF 2021-2027 provides €365 billion for the CAP.  I believe this is a fair result in light of Brexit and competing budgetary challenges such as security and migration.

This proposal for agriculture is against the background of a €12 billion reduction in budget due to Brexit and a further €12 billion needed by Member States for new policies such as defence and migration. Furthermore, the Commission cannot legally propose a deficit in our budget.

I have taken good note of the Portuguese reaction to the budget, which has been echoed by many other MS. The question of the EU budget and, by extension, the CAP budget is now one for the Council and the European Parliament to determine. Foremost in that debate will be the willingness of the MS to increase their contributions to the budget, which I will of course support.

The Commission's proposal will see a cut to the overall CAP budget of around 5 per cent, with direct payments to farmers being cut by less than 4%.

An equal moderate cut has been applied to market envelopes (such as wine) and support to the Outermost Regions. The Commission also proposes to take an important extra step towards convergence of direct payments: all MS will contribute to bridging half of the gap to 90% of the EU average.

This means that for some MS, direct payments will remain stable or even increase; including Portugal, which will be increased by 0.4%

Given their crucial importance, direct payments will remain an essential part of the policy, as farmers' income needs to be supported to guarantee food security for our people, and foster a smart and resilient agricultural sector.

However, given the need to have a fairer distribution of direct payments, we are proposing a number of actions:

compulsory capping on direct payments, taking into account labour to avoid negative effects on jobs. MS will have the option to set a lower cap between €60,000 and €100,000. Between these two figures a system of degressivity will apply. The proceeds of capping will be redistributed within each Member State;

Member States will also be able to offer small farmers a lump sum rather than an annual payment, a far simpler administrative procedure than filing annual claims;

And in terms of internal convergence, MS will have to ensure that, by the end of the new MFF period, no payment per hectare will be less than 75 per cent of the average payment for basic income support for that MS.

Taking into account the budget situation, and responding to the expectations of our citizens, we are following through on our promise to modernise and simplify the policy.

Our consultation process included: the largest CAP-related public consultation ever undertaken; a detailed impact assessment; the Cork 2.0 Conference on the future of rural development; extensive engagement with all key stakeholders, frequent discussions with the Council of Ministers – I thank Minister Capoulas Santos for his constructive input - and the European Parliament.

We have designed a proposal which is true to the essential mission of the CAP, yet also fit for purpose in the 21st century.

We are proposing a more targeted approach to improve efficiency and performance. A new delivery model will generate more benefits for our citizens while significantly simplifying and modernising the way the policy works, both for farmers and for Member States.

Instead of rules and compliance, the focus will shift to performance and results.

Under the new delivery model, the existing one-size-fits-all approach will be replaced by a more flexible system, with greater freedom for Member States to decide how best to meet common EU-wide objectives while, at the same time, responding to the specific needs of their farmers, rural communities and wider society. What works in Santarem may not work in Finland.

But I also want to emphasise that the CAP is, and will remain, a truly common and truly European policy.  The Commission remains fully committed to ensuring a level playing field amongst Member States. This will be achieved through a series of important safeguards, including the setting of EU-wide common objectives, the provision of common indicators to measure progress, and a central role for the Commission to keep a watchful eye on Member States, monitoring their progress and intervening whenever necessary.

Each MS will design a CAP Strategic Plan: put simply this is an integrated policy roadmap explaining how they will reach their agreed targets and deliver their agreed results.

Each CAP Strategic Plan will need prior approval from the Commission to ensure that it remains consistent with EU-wide objectives, and does not distort the single market or lead to excessive burdens on farmers or administrations.

The new system will deliver real, measurable results. For example, I have long signalled the need for the next CAP to show a higher level of environmental and climate ambition in line with the expectations of our citizens. I believe that farmers are crucial to meeting our sustainability goals.

The Commission's proposal delivers on that belief.  Actions under the CAP are expected to contribute 40 per cent of the overall CAP budget to climate mainstreaming. Specifically,

environmental and climate conditionality will be strengthened for all direct payments, including the best elements of the current rules and new requirements such as mandatory nutrient management plans at farm level;

30 per cent of rural development funding will be dedicated to environment, climate and biodiversity-related measures, such as;

agri-environment and climate measures

compensation payments relating to areas subject to Natura 2000, the Water Framework Directive and environmental commitments related to forestry

in addition to the flexibility to move funding between both pillars of the CAP, MS will have the possibility to transfer an additional 15 per cent from the first to the second pillar for spending on climate and environment (without the need for national co-financing);

incentive-based eco-schemes will be available in Pillar 1, offering farmers incentives for higher environmental and climate ambition;

Research, Innovation and Technology:

A smarter and more modern policy means greater use of research, technology and innovation. The future CAP will encourage increased investment in knowledge and innovation, and enable farmers and rural communities to benefit from it. Carlos has already mentioned the additional €10 billion in Horizon Europe funding to support specific research and innovation in food, agriculture, rural development and the bioeconomy.

Young farmers are essential for the sustainability of the agricultural sector. This is why they will benefit from a number of measures, some mandatory, others voluntary. These will include

Member States will reserve at least 2 per cent of their national allocation specifically to support young farmers setting up in the profession;

an increase in the maximum amount of aid for the installation of young farmers and rural business start-ups to €100,000;

and the inclusion in each country’s Strategic Plan of a specific strategy for attracting and supporting young farmers. This is essential because the competence for many of the necessary instruments lies with the Member State, including taxation and land law.

These proposals represent the next evolution in the Common Agricultural Policy, ensuring it is fit to meet the challenges of today.

Farm incomes are essential if we want to maintain food security and promote good environmental practices. Furthermore, farmers are key to solving many societal issues, such as fighting climate change and protecting biodiversity, but they must be fairly rewarded for this work.

The CAP is a true European success story which guarantees food security and delivers important public goods for 500 million people. All of these people – all of YOU - have a stake in the future of the CAP. I look forward to taking your questions.Thank you.