Common Agriculture Policy

Beginning 2007, the agriculture policy will be financed by two funds: the European Agriculture Guarantee Fund (EAGF) and the European Agriculture Rural Development Fund. (EARDF). These two funds will replace the European Agriculture Guarantee and Guidance Fund.

The Common Agriculture Policy (CAP) consists of two pillars:

• Direct support to farmers

• Rural Development

Funding opportunities within the first pillar: Direct market support
The primary funding opportunity available within the first pillar is the Single Payment Scheme (SPS).

This scheme is an annual payment that will help guarantee more stable incomes for farmers. This new system eliminates the link between support and production; the primary difference being that aid no longer depends on the type of production.

Support is based on the entitlements over the 2000 - 2002 period (excluding New Member States) and is granted to farmers holding eligible hectares (in general terms, all types of agricultural lands except those used for permanent crops). To receive aid, farmers must also comply with the cross compliance standards, meaning farmers must maintain good agricultural land conditions and respect the standards for public health, animal and plant health, the environment and animal welfare.

Direct payments are to be gradually reduced each year, with the exception of payments to farmers in the outermost regions (French overseas territories, the Azores, Madeira and the Canary Islands) and the Aegean islands. The reduction was 3% in 2005 and 4% in 2006. It has been set at 5% annually beginning 2007. The accrued savings will be divided among Member States and spent on rural development measures.

European Agriculture Guarantee Fund finances this measure.

Funding opportunities within the second pillar: Rural development
Rural development is becoming increasingly important within the EU and more funding has been made available for this issue. Rural areas account for 80% of the European territory and their development plays a crucial role in the future of the EU.

The additional funding aims to ensure sustainable development initiatives in the rural areas by helping to diversify activities and create new sources of income and employment while at the same time protecting rural heritage. Flexible decentralized aid, based on the principle of subsidiaries, plays an important role in strengthening the agriculture and forestry sector, improving the competitiveness of rural areas and preserving the environment and rural heritage.

The European Agriculture Fund for Rural Development will finance measures within this sector.

The main funds within the Common Agriculture Policy are the European Agriculture Guarantee Fund (EAGF) and the European Agriculture Fund for Rural Development (EAFRD)

More information:
DG Agiculture