A mandatory increase in modulation
The modulation rate of CAP Pillar 1 payments will rise from 5% in 2008 to 10% in 2012. The appropriated funds will be channelled to Pillar 2, where they will be earmarked for the “new challenges:” climate change, renewable energies, biodiversity, and water management (according to unspecified mechanisms). They will also go towards funding innovation in these four environmental fields and accompany the dismantling of dairy quotas. All the moneys raised are retained by the member states.
Elimination of dairy quotas by 2015
In order to achieve the progressive elimination of the European Union dairy quota, its level will be increased by one per cent per year, starting in 2009. This change in the rules of the Common Market Organisation (CMO) will in all likelihood have an impact on the location and dynamics of dairy farms, as well as downstream processing facilities. In France, after 25 years of dairy quotas, the issues raised by this decision are particularly relevant in view of its unique mode of managing quotas (free right to produce, free allocation of the quantities “released” to priority farmers, strong link between the quota and the land, administrative management of supply at the Dipartement level, etc.), and because less favoured areas contribute to the national milk supply in a fairly substantial way (Lelyon et al., 2008).