The coming agricultural reform is to become “greener” with conditionality and eco-schemes in the 1st pillar. Reason: The previous basic premium, then basic income support, calls for new requirements for environmental and climate protection. The previous greening is no longer necessary. Direct payments will therefore fall considerably and will hardly contribute to income.
In the future, it will become more important to evaluate the already complicated bonus applications from a business point of view and to submit optimized application forms. Or it has to be decided whether it is worth applying for EU money at all, depending on the location, given the rising producer prices.
Are the eco-regulations really worth it?
For the economic evaluation of the eco-regulations, i.e. the eco-schemes, it is decisive whether they make a contribution to income or not. Every farm manager has to assess this for his own farm. A study by Prof. Dr. Friedrich Kerkhof from the University of Applied Sciences (FH) Südwestfalen shows that above all.
- on good sites and
- in processing regions
the costs are higher than the planned remuneration.
What loss of income are processing companies threatened with?
The example is a processing operation with 100 ha, of which 30 ha are grain maize, 35 ha are winter wheat and 35 ha are winter barley, and 2,000 pig fattening places. He may lose almost 15,000 euros a year.
If the eco-regulations or eco-schemes have an income-neutral effect, this example farm would be missing a premium of around 9,100 euros in 2023 compared to 2020, calculates Ruth Beverborg, economic adviser to the Lower Saxony Chamber of Agriculture. The reasons are:
- the reduced basic premium, which is then called basic income support, and
- the loss of the previous greening bonus, which will then no longer apply because greening will no longer exist from 2023.
What does the agricultural reform from 2023 mean for EU direct payments?
With 4 percent set aside, the farm still misses out on the contribution margin of 4 ha. In the example, this is assumed to be 3,000 euros (see table). Ruth Beverborg, Oldenburg, calculates that mulching as the minimum management of the fallow land costs 180 euros.
In addition, the soil must not be bare over winter. For the 30 hectares of grain maize, the business consultant estimates 1,800 euros for the greening. On the other hand, she deducts the costs saved for greening, in the example 1,020 euros.
Due to the fallow area, liquid manure or manure is also to be used on an inter-company basis in the pig farm. That adds up to 1,500 euros if you calculate with 25 m³ and 15 euros/m³.
All in all, the 100-ha example farm will have an economic disadvantage of 14,500 euros in 2023 compared to before.
What economic losses are threatened for forage farms?
For forage farming operations, the ban on renewing and plowing up grassland on peat sites and in Natura 2000 areas, i.e. flora-fauna-habitats (FFH) and bird sanctuaries, is particularly important in good agricultural and ecological condition (GAEC). In many cases, this results in real yield depressions.
They have to be compensated for, for example, by buying additional basic feed, which is often expensive. “According to current draft regulations, intensive dairy farms on moorland sites or in Natura 2000 areas could have considerable economic disadvantages in the new CAP compared to the previous funding period,” Ruth Beverborg summarizes.
What are the economic consequences for organic farms?
According to the current status of the CAP, organic farms are also threatened with significant economic disadvantages. They are not exempt from the new conditionality, i.e. the requirements for good agricultural and environmental condition of land (GAEC) and the statutory requirements for farm management (GAB), which must be complied with for basic income support (formerly the basic payment). So far they have not been affected by the greening.
In addition, the currently proposed eco-schemes for organic farms are of no economic interest, according to the economic consultancy of the Lower Saxony Lok. The red-green-yellow traffic light government wants to reassess and possibly rework the CAP implementation in 2024 at the earliest.
