Single Farm Payment (SFP)

The 2003 reform of the Common Agricultural Policy (CAP) introduced a new single payment system per farm and separated aid from production (decoupling). Most of the common market organisations (CMOs) went over to the new system in 2005 or 2006 (with the exception of the new Member States). Existing direct aid may be continued until 2012, subject to certain conditions (cross-compliance), but will be gradually reduced. Certain crops are eligible for additional support to compensate for the loss of income resulting from the reform and the transition to the single farm payment.

ACT

Council Regulation (EC) No 1782/2003 of 29 September 2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers and amending Regulations (EEC) No 2019/93, (EC) No 1452/2001, (EC) No 1453/2001, (EC) No 1454/2001, (EC) No 1868/94, (EC) No 1251/1999, (EC) No 1254/1999, (EC) No 1673/2000, (EEC) No 2358/71 and (EC) No 2529/2001 [See amending acts].

SUMMARY

The two pillars of the June 2003 reform of the common agricultural policy (CAP) are the decoupling of direct aid to producers (cutting the link between support and production) and the introduction of the single payment scheme. The CAP is based on a system of direct aid linked to the area of the holding, production and the number of livestock units. Following decoupling, aid paid to producers no longer depends on the type of production.

DIRECT PAYMENTS

Cross-compliance

Farmers may receive direct payments provided that they maintain their land in good agricultural condition and comply with the standards on public health, animal and plant health, the environment and animal welfare (cross-compliance) contained in the Regulation.

If a farmer fails to comply with those rules through negligence, direct payments may be reduced by at most 5%. In the event of deliberate non-compliance, payments will be reduced by at least 20% and the producer may be completely excluded from receiving aid. This reduction may not be applied to amounts of up to 100 euro per farmer and per calendar year. It may also be decided not to apply the reduction if the non-compliance is considered minor in terms of its gravity, duration and persistence.

Amounts not spent are to be paid back into the European Agricultural Guarantee Fund (EAGF), which in 2007 replaced the European Agricultural Guidance and Guarantee Fund (EAGGF). Member States may keep 25% of those sums, however.

In March 2007 the Commission issued a report on the operation of the cross-compliance system (see "Related acts").

Degressivity, modulation and financial discipline

Between 2005 and 2012, direct payments – other than those to farmers in the outermost regions and the Aegean Islands – are to be reduced each year: by -3% in 2005, -4% in 2006 and then -5% annually (degressivity). The sums saved in accordance with this reform are to be divided among the Member States and allocated to rural development measures supported by the European Agricultural Fund for Rural Development (EAFRD). Each Member State is to receive at least 80% of the sums generated. It may even receive up to 90% of the amount in order to alleviate the effects of abolishing the intervention mechanism for rye.

In order not to penalise small farms, farmers may receive additional aid.

Farm advisory system

Farmers may take part in the advisory system set up by Member States. The system must ensure compliance with regulatory requirements and good agricultural and environmental condition.

Integrated administration and control system (IACS)

Each Member State is to set up an integrated administration and control system which enables farmers’ payment applications to be checked. Through this system, the State is able to check agricultural parcels, payment entitlements and aid applications.

Payment

Payments will be made once a year between 1 December and 30 June of the year following the application. The additional amount of aid is to be paid at the latest by 30 September of the year following the calendar year concerned. The Commission may also extend the period of payment in the oils and fats sector and authorise advances. Farmers who have artificially created the conditions required for obtaining payments will not receive them.

SINGLE PAYMENT

The single payment comprises aid allocated to farmers irrespective of their production. This system of support has been introduced to ensure that farmers' income remains stable and to improve the competitiveness and sustainability of European agriculture.

National ceilings

For each Member State, the ceilings for single payments are as shown in the following tables (millions of Euros):

(Ceilings updated in accordance with the latest amendments)

National reserve

Member States are to set up a national reserve, which is to be used to prevent certain tracts of agricultural land from being abandoned and to grant aid to new farmers and to those deemed to be in special circumstances.

The reserve is made up of:

• the difference between the ceiling and the total amounts to be granted to farmers;
• an amount deducted from the sum due to farmers and which may represent up to 3% of that sum.

Allocation of the single payment

In order to receive a single payment, farmers must have previously received certain direct aid payments. The single payment is calculated on the basis of the aid received by farmers during a reference period (as a general rule 2000, 2001 and 2002, but in certain circumstances 1997, 1998 and 1999 can be regarded as the reference period). The Regulation lists the payments which are taken into account when allocating the single payment and in particular area-based payments and other payments allocated as support (e.g. deseasonalisation premium, slaughter premium, special premiums for male cattle and suckler cows, and milk products premium).

Land use

Land conferring payment entitlement is to be used for any agricultural activity, except for certain permanent crops. However, hops, olive trees, bananas, permanent fruit and vegetable crops and nurseries are included among the crops which may be eligible for aid.

Land set aside also receives an amount fixed by the entitlement, provided that the land in question complies with cross-compliance. It may also be used to cultivate oilseeds or bio-mass not intended for food production.

Regional implementation

Member States may opt to allocate payments at regional level. In that case, regional ceilings are to be established and divided among the farmers in the region. Consequently, the unit value of entitlements may vary depending on whether implementation is regional or centralised.

Partial implementation

In order to combat the abandonment of land, Member States have had the option of partially implementing the single payment system. In this case, Member States keep part of the aid and pay it to farmers in the form of a supplementary payment in addition to the single payment. The portion paid in the form of a single payment depends on the agricultural product.

Optional exclusion

Member States have also had the option of excluding some aid from the single payment scheme, such as that for growing cereals in the Nordic countries, the dairy premium and certain types of aid for producers in the outermost regions.

Communication

The Member States and the Commission exchange any information required to implement the Regulation.

Committee

In implementing the Regulation, the Commission is to be assisted by a Management Committee for Direct Payments (EN), consisting of representatives of the Member States and chaired by a representative of the Commission.

ADDITIONAL PREMIUMS

Durum wheat

For durum wheat, the per-hectare aid available for improving quality is to be €40, subject to national limits. If the area in respect of which it is applied for turns out to exceed the limit, then the amount is reduced proportionately.

Where the single payment scheme is partially implemented, an area payment supplement of €291 per hectare for 2006/07 onwards is to be paid, subject to national limits. If the area in respect of which the payment is applied for exceeds the limit, then the aid is to be reduced proportionately.

Protein crops

For peas, field beans and sweet lupins, the amount of aid is €55.57 per hectare for a maximum guaranteed area of 1.648 million hectares for the EU. If the area is exceeded, the aid is reduced proportionately.

Rice

In order to preserve certain traditional production areas, rice producers will receive aid set on the basis of the yield for the maximum guaranteed area in the Member States concerned. If the area is exceeded, the aid is reduced proportionately.

For further information, see the CMO for rice.

Nuts

Production of hazelnuts, walnuts, pistachios and almonds is eligible for Community aid set according to the guaranteed maximum area allocated to each Member State. In addition, national aid of €120.75 per hectare may be paid for the production of these products. If the area is exceeded, the amount of aid is reduced proportionately. Community aid is granted if farmers comply with a minimum tree density and plot size.

Energy crops

Aid of €45 per hectare is to be available for producers of energy crops (crops intended for the production of biofuels or electric and thermal energy) the production of which is covered by a contract with a processing plant, subject to a maximum guaranteed area of 1.5 million hectares for the EU. If the area is exceeded, the aid is reduced proportionately.

Starch potatoes

Producers of potatoes intended for the manufacture of starch are allocated aid of €66.32 per tonne of starch from the 2005/06 marketing year. Aid is granted only if a contract has been concluded between the producer and the starch manufacturer.

Dairy premium and additional payment

Dairy products are eligible for an annual premium granted to each holding according to the individual reference quantity. From 2006, the premium corresponds to the reference quantity multiplied by €24.49. From 2004 to 2007, and subsequently in the event of exclusion from the single payment scheme, Member States are to make additional payments to each farmer. An overall amount is to be set for each Member State.

For further information, see the CMO for milk.

Specific regional aid for arable crops

In the event of exclusion from the single payment scheme, in Finland and Sweden north of the 62nd Parallel, farmers producing cereals, oilseeds, linseed, flax and hemp may receive aid of €24 per tonne, subject to the limits set by the Commission.

Seeds

If seeds are excluded from the single payment scheme, the amount of aid is to be granted subject to the limits set by the Commission for additional aid.

Area payments for arable crops

These payments are to be made if the single payment system is partially implemented in the arable crops sector. The area payment is calculated by multiplying the basic amount of €63 per tonne by the average cereal yield determined in the regionalisation plan for the region concerned. If the base areas are exceeded, the payment is reduced proportionally for all farmers. For flax and hemp, the area payment will be made if processing is guaranteed.

Farmers must set aside at least 10% of the arable crops area forming the subject of a payment application. This set-aside land may be used for products not intended for human or animal consumption and for organic production. Member States may grant national aid up to 50% of the costs associated with establishing multiannual crops intended for bio-mass production on set-aside land.

Mediterranean package

In 2004 specific support schemes were introduced for Mediterranean products. Adopted under the name "Mediterranean package", these schemes concern hops, cotton, olive groves and tobacco.

Sheep and goats

The premium for maintaining ewes is to be €21 per head or €16.80 if the farmer markets sheep’s milk. For female-goats, provided that they are intended for meat production and that they are reared using techniques similar to those for male-goats, the premium is to be €16.80 per head. A supplementary premium of €7 per head will be paid to farmers rearing sheep and goats in less-favoured areas or in geographical areas where transhumance is a traditional practice.

Farmers may transfer their premium rights after sale of the holding. If the rights are transferred without transfer of the holding, a maximum of 15% of those rights is to be surrendered to the national reserve. Member States may take measures to avoid premium rights being moved away from regions where sheep production is especially important for the local economy. They are also to allocate premium rights from the national reserve to newcomers, young farmers or other priority farmers.

For further information, see the CMO for sheepmeat and goatmeat.

Beef and veal

If the single payment system is partially implemented for beef and veal, farmers may apply for various premiums:

• the special premium of €210 for bulls (uncastrated male bovine animals) or €150 for steers (castrated male bovine animals);
• the suckler cow premium (€200), which may be accompanied by an additional premium of €50 allocated by the Member State;
• the slaughter premium, subject to ceilings to be determined, is to be €80 for cows, bulls and heifers and €50 for calves.

For further information, see the CMO for beef and veal.

RELATED ACTS

Implementing rules

Regulation (EC) No 795/2004 [Official Journal L 141, 30.04.2004]. Single payments will be subject to farmers' complying with the conditionality provisions (e.g. cross-compliance). The decoupling of payments will result in a large proportion of aid for agriculture being shifted from the “yellow box” (e.g. export refunds, which are regarded as a source of market distortion under the rules governing the WTO) to the “green box” (e.g. rural development aid, which causes limited or no market distortion with regard to the WTO).

For the new Member States, access to the new single payments is not necessarily subject to conditionality.

See consolidated version (pdf).

Regulation (EC) No 796/2004 [Official Journal L 141, 30.04.2004]. This Regulation specifies the rules applicable to Member States and farmers in respect of maintenance of land under permanent pasture. It further states that the integrated system put in place must guarantee a single system to record the identity of farmers submitting aid applications and each reference parcel. The administrative and on-the-spot checks provided for are intended to ensure effective monitoring of compliance with the conditions for aid and the applicable cross-compliance standards. The checks concern eligibility criteria and cross-compliance. The Regulation provides that direct payments within its scope may not be made before the checks to be performed by the Member States with regard to the eligibility criteria have been completed. It also lays down the basis for calculating aid and specifies the reductions and exclusions provided.

See consolidated version (pdf).

Regulation (EC) No 1973/2004 [Official Journal L 345, 20.11.2004]. This Regulation contains the detailed implementing rules for aid to the sectors eligible for specific support under Regulation (EC) No 1782/2003. It also governs the support schemes' implementation in the new Member States.

See consolidated version (pdf).

Optional modulation

Regulation (EC) No 378/2007 [Official Journal L 95, 05.04.2007]. In some cases, Member States may apply a reduction (called "optional modulation") to direct payments granted on their territory during the period 2007-12. The amounts resulting from optional modulation are to finance rural development programmes subsidised by the EAFRD on their territory.

New Member States

Council Decision of 22 March 2004 [Official Journal L 93, 30.3.2004]. The new additional premiums (new direct payments or aid schemes) will gradually become applicable to the new Member States, from 25% in 2004 to 30% in 2005 and 35% in 2006. After this last date, they will be gradually increased until 2013.

The compensatory direct payments for the dairy sector will be increased. The tables on quotas and fat content covering the new Member States will also be amended.

The single area payment scheme (SAPS) will be maintained for these countries until 2007, and additional direct payments will be maintained until the end of 2008 with regard to the SAPS.

In the framework of the new farm payments, the additional payments may be applied from 2005.

Regulation (EC) No 583/2004 [Official Journal L 91, 30.3.2004]. The Regulation fixes the national ceilings for additional premiums for the new Member States. The principle of a gradual introduction of these additional premiums does not apply to dried fodder.

In the case of access to the new single payment scheme in the absence of a reference period, aid will be based on regionalised per-hectare payments, distributed between regions and divided by the number of farmers who meet the eligibility criteria.

Cross-compliance

Report from the Commission to the Council on the application of the system of cross-compliance (under Article 8 of Council Regulation (EC) No 1782/2003 establishing common rules for direct support schemes under the common agricultural policy and establishing certain support schemes for farmers) [COM(2007) 147 final – Not published in the Official Journal]. his report identifies the problems encountered by the Member States and farmers in implementing cross-compliance and proposes measures to improve the system. This initial evaluation is based on audits carried out by the Commission in 2005 and 2006 in 10 Member States and will be followed by a final conclusion after other studies have been completed. In the light of this evaluation, the Commission intends to provide further information on the implementation of cross-compliance by Member States and to make a proposal to the Council or submit draft rules to the Management Committee for Direct Payments concerning a number of aspects of cross-compliance, including its introduction in the new Member States, the simplification of certain rules and tolerance for minor cases of non-compliance.

Last updated: 15.04.2008