Impacts of national implementations of SPS

A central decision of the Mid-Term Review of the CAP in 2003 is the far-reaching decoupling of Direct Payments by the Single Payment Scheme (SPS). Instead of the former coupled Direct Payments related to eligible crops or livestock, decoupled payments are brought together, and entitlements are defined per hectare of eligible land. Member States are allowed to define entitlement levels on historical references at the farm level (historic model), on regional references (regional model) or a combination of both (hybrid model). The entitlements can be activated only by proof of eligible areas.

Changes of the direct payments are shown in the following examples of France (historical model) and Germany (regional model). The model calculations are carried out on basis of EU FADN data. Starting from 2007, the payments are projected for 2013, for both the historical model in France, and the fully established regional model in Germany. In addition, premium reductions based on the modulation scheme are taken into account, though without consideration of co-financing and the backflow of Pillar 2 funds.

With the historical model applied in France, the premium volume of farms remains constant2 (Figure 9.1), the premiums are progressively reduced by modulation by up to 10% for farms with Direct Payments over the franchise of EUR 5000. In contrast, a strong premium rearrangement arises in Germany with the static hybrid model introduced in 2007.3 Farms with a premium volume up to EUR 7 000 have strong premium increases on average. Farms with EUR 10 000 to EUR 50 000, representing structural conditions of West Germany, have to expect premium losses from 5 to 10%. Slight premium increases arise in farms with EUR 100 000 to EUR 300 000, and in even bigger companies (dominant in the eastern part) the premium volume remains steady. Premium reductions up to 13% are to be expected in the bigger companies due to modulation.

Figure 9.1. Change of Direct Payment due to National Implementation ± Modulation

(Germany, France), 2013

DP: Direct Payments.

Source: EU-FADN-DG AGRIL-3, own calculations.

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