Czech CAP Strategic Plan – Redistributive Payments and the Counter-Productive Tension Between Small and Big
The text below is an adaptation of an ARC 2020 publication
The Czech CAP Strategic Plan has now been approved by the European Commission. But in the weeks leading to the final approval, Agricultural Associations representing the larger farms of Czech Republic had been strongly protesting against the proposed 23% share of direct payments dedicated to redistributive income support. From the outside, one might think that these demonstrations were aimed at defending the exclusive interests of large farming corporations and landowners. But the reality is not so simple, as the situation could affect small and medium sized farmers as well.
What is a redistributive payment?
An effective and well-designed redistributive payment scheme is key to reducing inequalities between CAP beneficiaries and farming systems. The majority of farms in the European Union have an area of less than 28 hectares. Due to their small size, these farms cannot benefit from economies of scale. In order to overcome this problem, EU countries can decide to support smaller farmers through a redistributive payment. To redistribute support to smaller farmers, EU countries can set aside up to 30% of their national income support budget for a redistributive payment. The payment is targeted at the first few hectares of the farm, meaning that additional support is provided for all hectares below a certain threshold.
The Czech strategic plan and redistributive payments
Through its now approved CAP Strategic Plan, Czech Republic implemented the highest redistributive income support budget of all Member States (23% of the direct payments envelop). This subsidy will be granted to all farms, on the first 150ha. Other countries have dedicated less budget share, but designed a more targeted approach via narrower eligibility criteria which can effectively shift money specifically towards the first hectares of small-medium farms. Some other countries have instead set up both low shares of redistributive payments (just the minimum 10%), and/or vague eligibility criteria that water down the very essence of this tool. Finally, other countries like Italy proposed a minimum redistributive payment as a way to remove capping over large landowners, thus backsliding in terms of fairness compared to the previous CAP.
In Bulgaria, additional redistributive income support for sustainability is a non-production payment per hectare that is provided to farmers for the first 30 hectares that are claimed and eligible for support under the basic income support for sustainability. Additional income redistribution support for sustainability is provided to farms with an area of up to 600 hectares and is supported throughout the whole country. The budget of the redistributive payment scheme in Bulgaria is 10% of the package for direct payments.
It is important to note that small/large scale farming does not bear the same meaning as it might in western Europe. In the Czech context, farms could be considered small even when ranging up to 200ha. Large scale Farms in the Czech Republic are these over 500 hectares and some large agricultural holdings are owned by one or a few farmers. However others are owned by many farmers. The increased budget for the redistributive payment is a mean to attract a number of small farmers into the countryside. Considering this situation and the country's decisions on redistributive payments, it can be concluded that the most affected will be farmers participating in cooperatives - usually small family farms with long traditions or young farmers operating within a cooperative, in order to realize their production more easily. Thus, the application of the tool, which was created to support mainly such a profile of farmers, is discredited.
France - the good example
In France, farmers can decide to form cooperatives to farm some land together. Those legal entities are called GAEC (Groupement Agricole d’Exploitation en Commun / agricultural grouping for collective management), a French acronym not to be confused with the Good Agricultural and Environmental Conditions.
In order for each farmer that is part of a cooperative to be able to benefit from redistributive payments on his share of land, France has developed the “transparency for GAECs” mechanism, ensuring the recognition of activities provided by farmers that are part of a cooperative. Under certain conditions that ensure equity between individual farmers and farmers in cooperatives, each partner of the cooperative can thus apply for the same amounts of subsidies as individual farmers, for a similar share of land being farmed.
Different solutions do exist, but it turns out that they are not sufficiently known to the decision-makers or the farmers' representative bodies in the different Member States. This is also the case in the Czech Republic. If we let the divide between individual small farmers and small farmers under cooperative or company structures deepen, it is the biggest landowners, who do not live in the region and just use it to generate profit at the cost of degrading the land and the region as a whole, that might end up benefiting. That would give yet another edge to the globalised food market and imported food, a hard blow for Czech food sovereignty.