Agricultural Policy Monitoring and Evaluation 2024

11. European Union

Main findings

Support to agriculture

Producer support in the European Union (EU),1 measured by the Producer Support Estimate (PSE), has stabilised since 2010, after falling in the 1990s and early 2000s. EU support to producers as a share of gross farm receipts stood at 16% in 2021-23, remaining above the OECD average.

While trade-protection measures remain in effect for several sectors – including import and export licensing, tariff rate quotas (TRQs), and special safeguards – their importance has declined substantially over the last two decades. In 2021-23, market price support (MPS) accounted for 19% of support to producers, down from 46% in 2000-02. Poultry and rice producers are the most important beneficiaries, followed by beef and veal products. Prices received by farmers in 2021-23 were on average only 4% higher than in world markets, compared to 22% in 2000-02.

On average, 45% of budgetary support in 2021-23 was based on non-current area or animal numbers not requiring production, while around 31% was based on current area or animal numbers requiring production, and 21% on input use. Around half of payments to producers were contingent on mandatory environmental constraints, while an additional 14% were linked to voluntary constraints that go beyond mandatory requirements, namely agri-environmental measures and eco-schemes.

Expenditures for general services to the sector (General Service Support Estimate, GSSE) in 2021-23 averaged 12.9% of total support, or 2.7% of the value of agricultural production – a decrease compared to 2000-02 and below the OECD average. Expenditures on agricultural knowledge and innovation systems more than doubled over the past two decades, and expenditures also rose for marketing and promotion and inspection and control.

Total support to the sector declined in relative terms over the past 20 years. In 2021-23, total support was estimated at 0.6% of the Gross Domestic Product (GDP), compared to 1.0% in 2000-02.

Key recent policy changes

The Common Agricultural Policy (CAP) 2023-27 started to apply in January 2023 with a new delivery model and more flexible implementation by Member States. EU Member States began to implement their CAP Strategic Plans (CSPs) in 2023. These contain targeted interventions designed to deliver tangible results for the ten specific objectives around which the new CAP is designed. The CAP 2023-27 will mobilise around EUR 307 billion (USD 332 billion) in public expenditures, of which almost two-thirds has been allocated to direct payments and sectoral interventions (Pillar 1), and the rest to rural development interventions (Pillar 2).

In 2023, EU Member States began implementing the new types of direct payments, including eco-schemes, which support farmers who voluntarily decide to adopt more sustainable farming methods. The new CAP also introduced so-called enhanced conditionality, with more stringent standards compared to previous CAP’s “cross-compliance”. However, the review of the CAP Regulations approved in early 2024 following widespread farmers’ protests made some of these environmental conditions more flexible. Most of the rural development expenditures under Pillar 2 were continuations of CAP 2014-22 measures.

In response to high input prices and multiple market and geopolitical disturbances, EU Member States relaxed some CAP requirements and offered exceptional direct support. Countries also used national measures such as tax concessions, investment assistance and other financial measures to help farmers and agro-food businesses cope with financial disruptions.

A comprehensive trade agreement with New Zealand was signed in July 2023 and ratified by the European Union in November 2023 to enter into force on 1 May 2024, the first agreement in force to fully integrate a new approach to trade and sustainable development. It includes a dedicated chapter on sustainable food systems, the first of its kind in the world.

Assessment and recommendations

• Agricultural productivity growth in the European Union has not consistently been matched with improved environmental sustainability, especially for farmland biodiversity and water use. The European Union seeks to balance productivity growth with environmental, social and economic sustainability using both EU-level instruments and measures at the Member State level. Given the multiple measures in place, effective policy co-ordination across all policy areas and governance levels is key for achieving the Sustainable Productivity Growth objectives.

• The European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-AGRI) fosters bottom-up multi-actor partnerships of farmers and others to co-create innovative solutions in agriculture. Gathering more evidence and learning from existing projects is essential to better understand how innovative solutions are spreading within and outside partnerships, as well as to identify the main drivers and barriers in achieving the expected outcomes. Such information will help maximise the effectiveness of these partnerships by informing future policy tools and driving innovation for agricultural sustainability.

• The agricultural knowledge and innovation system (AKIS) needs to further step-up efforts to integrate knowledge flows on environmentally-friendly practices and novel solutions, especially through advisory services. Incorporating AKIS strategies into CAP strategic plans is promising, provided it leads to concrete actions at national level. Other helpful actions would be to develop a comprehensive skills agenda for the EU agro-food sector, strengthen advisory services, especially in sustainable environmental practices, and upskill farmers through lifelong learning. Allocating a larger share of CAP funding to these initiatives, along with agricultural R&D, will put a greater focus on sustainability by helping solve environmental challenges on farms.

• The delay or withdrawal of several legislative proposals – such as the legislative Framework for the Sustainable Food Systems and the Regulation on the Sustainable Use of Plant Protection Products – show the difficulties of incorporating the European Green Deal targets into EU agricultural policy. These setbacks do not lessen magnitude of the problems faced by the European Union and the importance of finding a path towards effective solutions to pressing and longstanding environmental challenges.

• Some of the initial set of CAP 2023-27 environmental requirements were subsequently relaxed. While these changes may ease implementation, they may limit the effectiveness of this mechanism in promoting public goods or reducing environmental harm. Instead of increasing flexibilities, further consideration should be given to the potential benefits of reforming conditionality by focusing on the performance of a reduced number of practices that are enforceable and monitorable at a large scale.

• The European Union’s trade facilitation measures put in place to ease agricultural exports from Ukraine, such as through the Solidarity Lanes, have successfully helped to alleviate the difficult situation faced by Ukrainian producers and contributed to overall food security. While the temporary restrictions on the markets of certain EU Member States, introduced for selected products in response to increased imports from Ukraine, have challenged the operation of the common market, fostering co-ordination and dialogue among stakeholders presents a way forward for regional market stability.

• The EU agricultural policy agenda includes promising new approaches and priorities. How successful these will be largely depends on the design and implementation choices made by Member States. While better transparency and reporting on progress can encourage bolder action by Member States, more use of outcome-oriented approaches to policy design would do even more to increase effectiveness of policy tools.

Development of support to agriculture

Figure 11.1. European Union: Development of support to agriculture

Table 11.1. European Union: Estimates of support to agriculture

Million USD

	1986-88	2000-02	2021-23	2021	2022	2023p
Total value of production (at farm gate)	233 558	225 093	506 566	483 603	513 859	522 235
of which: share of MPS commodities (%)	74.95	73.34	74.25	73.24	75.63	73.87
Total value of consumption (at farm gate)	212 900	226 789	495 621	457 245	517 389	512 229
Producer Support Estimate (PSE)	95 385	79 781	92 924	90 064	88 137	100 571
Support based on commodity output	86 308	40 997	18 055	12 076	15 410	26 678
Market price support¹	80 672	37 067	17 795	11 804	15 158	26 422
Positive market price support	81 784	37 067	17 811	11 804	15 158	26 470
Negative market price support	-1 112	0	-16	0	0	-48
Payments based on output	5 637	3 930	260	272	252	256
Payments based on input use	5 056	6 833	15 591	15 704	15 252	15 816
Based on variable input use	960	3 047	6 149	6 668	5 787	5 993
with input constraints	0	0	44	54	41	37
Based on fixed capital formation	2 986	2 259	6 872	6 175	6 612	7 829
with input constraints	0	94	119	117	116	125
Based on on-farm services	1 109	1 527	2 570	2 861	2 854	1 994
with input constraints	90	274	16	14	1	33
Payments based on current A/An/R/I, production required	3 587	31 196	23 453	21 765	21 426	27 167
Based on Receipts / Income	147	99	1 632	2 011	1 458	1 426
Based on Area planted / Animal numbers	3 440	31 097	21 821	19 754	19 968	25 740
With input constraints	940	13 953	18 912	18 125	16 941	21 668
Payments based on non-current A/An/R/I, production required	0	0	13	12	11	18
Payments based on non-current A/An/R/I, production not required	0	10	34 188	39 002	34 848	28 714
With variable payment rates	0	0	0	0	0	0
with commodity exceptions	0	0	0	0	0	0
With fixed payment rates	0	10	34 188	39 002	34 848	28 714
with commodity exceptions	0	0	0	0	0	0
Payments based on non-commodity criteria	478	1 078	1 325	1 219	998	1 757
Based on long-term resource retirement	476	846	397	440	324	428
Based on a specific non-commodity output	2	176	805	679	586	1 148
Based on other non-commodity criteria	0	57	123	99	88	181
Miscellaneous payments	-43	-334	300	286	192	421
Percentage PSE (%)	38.43	29.77	15.96	16.03	15.02	16.86
Producer NPC (coeff.)	1.66	1.22	1.04	1.03	1.03	1.05
Producer NAC (coeff.)	1.62	1.42	1.19	1.19	1.18	1.20
General Services Support Estimate (GSSE)	9 144	8 355	13 866	14 375	12 931	14 293
Agricultural knowledge and innovation system	1 814	3 492	7 554	7 803	7 008	7 850
Inspection and control	194	281	1 244	1 246	1 192	1 293
Development and maintenance of infrastructure	1 331	2 222	2 001	2 216	1 781	2 007
Marketing and promotion	1 210	996	3 017	3 066	2 894	3 090
Cost of public stockholding	4 571	1 294	28	22	35	25
Miscellaneous	24	69	24	22	20	28
Percentage GSSE (% of TSE)	8.31	9.12	12.91	13.71	12.75	12.40
Consumer Support Estimate (CSE)	-69 408	-33 000	-17 144	-11 127	-14 811	-25 493
Transfers to producers from consumers	-80 268	-36 084	-16 960	-10 995	-14 478	-25 407
Other transfers from consumers	-1 699	-717	-711	-578	-652	-904
Transfers to consumers from taxpayers	4 992	3 537	401	447	318	437
Excess feed cost	7 567	264	127	0	0	381
Percentage CSE (%)	-33.38	-14.75	-3.48	-2.44	-2.86	-4.98
Consumer NPC (coeff.)	1.63	1.19	1.04	1.03	1.03	1.05
Consumer NAC (coeff.)	1.50	1.17	1.04	1.02	1.03	1.05
Total Support Estimate (TSE)	109 521	91 672	107 191	104 886	101 386	115 301
Transfers from consumers	81 967	36 801	17 671	11 573	15 130	26 311
Transfers from taxpayers	29 253	55 589	90 231	93 891	86 908	89 894
Budget revenues	-1 699	-717	-711	-578	-652	-904
Percentage TSE (% of GDP)	2.51	1.04	0.62	0.61	0.61	0.65
Total Budgetary Support Estimate (TBSE)	28 849	54 606	89 396	93 082	86 228	88 879
Percentage TBSE (% of GDP)	0.66	0.62	0.52	0.54	0.52	0.50
GDP deflator (1986-88 = 100)	100	152	212	207	218	..
Exchange rate (national currency per USD)	0.91	1.09	0.91	0.85	0.95	0.92

.. Not available

Note: p: provisional. NPC: Nominal Protection Coefficient. NAC: Nominal Assistance Coefficient. A/An/R/I: Area planted/Animal numbers/Receipts/Income. European Economic Community (EEC) with 12 members for 1986-88; EU15 for 2000-02; and EU27 from 2021. 1. Market Price Support (MPS) is net of producer levies and excess feed cost. MPS commodities for the European Union are: wheat, maize, barley, oats, rice, rapeseed, sunflower, soybean, sugar, milk, beef and veal, sheep meat, pig meat, poultry, eggs, potatoes, tomatoes, plants and flowers, and wine.

Source: OECD (2024), “Producer and Consumer Support Estimates”, OECD Agricultural policy monitoring (database), https://data-explorer.oecd.org/.

Policy landscape

Main policy instruments

The Common Agricultural Policy (CAP) is the agricultural policy framework of the European Union. The new CAP 2023-27 entered into force on 1 January 2023. In addition to the CAP, Member States may implement measures funded from national or sub-national budgets that target specific sub-sectors or objectives. These measures must comply with the European Union’s state aid rules and not distort competition within the common market (OECD, 2017[1]). The CAP 2023-27 is built around 10 specific objectives: to ensure a fair income for farmers; to increase competitiveness; to improve the position of farmers in the food chain; climate change action; environmental care; to preserve landscapes and biodiversity; to support generational renewal; vibrant rural areas; to protect food and health quality; and to foster agricultural knowledge and innovation.

The CAP is organised in two pillars: the European Agricultural Guarantee Fund (EAGF) finances Pillar 1, and the European Agricultural Fund for Rural Development (EAFRD) finances Pillar 2. Pillar 1 covers sectoral interventions, as well as direct payments to active farmers. Rural development policy is supported by Pillar 2. Pillar 1 is financed by the European Union2 and Pillar 2 programmes are co-financed by the Member States.3

The new CAP entails a new delivery model in which Member States play a central role in designing and implementing their CAP Strategic Plans (CSP).4 The new delivery model gives Member States more flexibility to design schemes that meet the needs of their farming sector. Member States were required to carry out a thorough assessment of their territory and agro-food sector, based on a strengths, weaknesses, opportunities and threats (SWOT) analysis, with the objective of designing more targeted and effective programmes (OECD, 2023[2]).

Each CSP contains targeted interventions designed to deliver tangible results in relation to the 10 EU-level objectives and contribute to the ambitions of the European Green Deal (EC, 2019[3]). This new programming approach applies to interventions under both pillars of the CAP and not only to rural development interventions as in the past. There is one CSP for each Member State (except for Wallonia and Flanders in Belgium, which each have their own plan), making a total of 28 plans. The “Country snapshots” section below provides an overview of all the 28 CSPs.

The European Union and the Member States aim to mobilise a total of EUR 307 billion (USD 332 billion) for approximately 2 500 interventions within the new CAP (EC, 2023[4]). Of this amount, almost two-thirds has been allocated to Pillar 1 (Figure 11.4). Direct payments make up the bulk of CAP spending: these payments are largely decoupled from production as they are based on farm area, and do not depend on current production decisions. They represent an important part of farm income (OECD, 2023[2]).

Greening payments in the previous CAP were replaced by more stringent environmental requirements under enhanced conditionality and by redirecting on average 24% of direct payments to eco-schemes (designed by each Member State), which are now a main tool to achieve environmental and climate goals. The proportion of rural development funds spent by EU Member States on the different types of interventions varies according to their national priorities as defined in their CSP (see the “Country snapshots” section). The CAP 2023-27 also introduced the concept of social conditionality, linking farmer payments to compliance with certain labour laws. Most Member States will apply such rules from 2025.

Figure 11.4. CAP 2023-27, share of planned expenditures by type of intervention

Note: Sectoral interventions includes market measures in certain sectors defined in the CAP Strategic Plans, such as fruit and vegetables, apiculture, wine, hops, olive oil and table olives and other sectors (Art. 42(f) Reg. 2021/2115); coupled payments include Coupled Income Support (CIS); other decoupled payments include Basic Income Support for Sustainability (BISS), Complementary Redistributive Income Support for Sustainability (CRISS), and Complementary Income Support for Young Farmers (CIS-YF).

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]).

Direct payments

Under the new CAP (EU Regulation 2021/2115), the Basic Income Support for Sustainability (BISS), replaced both the Basic Payment Scheme (BPS) and the Single Area Payment Scheme (SAPS).5 BISS is an annual payment decoupled from production for all eligible hectares declared by active farmers. It is compulsory for all Member States and accounts for more than the half of the Pillar 1 envelope (Table 11.2). BISS is complemented by four additional components:

• Complementary Redistributive Income Support for Sustainability (CRISS): this is an extra payment for a small, fixed number of hectares for farmers receiving the BISS, with the aim of promoting more support to small and medium-sized farms. EU countries must allocate at least 10% of their direct payments to CRISS.

• Complementary Income Support for Young Farmers (CIS-YF): this is a voluntary scheme aimed at providing enhanced income support to young farmers.6 CIS-YF may be a lump-sum payment or an amount per hectare with the number of eligible hectares per farmer defined by the Member States. The upper age limit may be set between 35 and 40 years and Member States can specify the training and skills required of beneficiaries.

• Coupled Income Support (CIS) paid per animal or hectare subject to various conditions to mitigate the risk of market distortion.7 This mechanism may only be granted to certain sectors and EU Member States must not allocate more than 13% of their direct payment budget to CIS. This may however be increased by up to 2 percentage points to support the production of protein crops.

• Schemes for the climate, the environment and animal welfare (eco-schemes) are a new element of the CAP 2023-27 that supports farmers who adopt practices that minimise the negative impact of agriculture on the environment and climate. These are intended to help farmers evolve towards more sustainable farming methods.

Table 11.2. Direct payments budget under CAP Strategic Plans 2023-27

	Budget (EUR million)	Share in direct payments	Share in decoupled direct payments
Direct payments; of which:	187 943	100.0%
Decoupled direct payments; of which:	164 912	87.7%	100.0%
Basic Income Support for Sustainability (BISS)	96 697	51.5%	58.6%
Complementary Redistributive Income Support for Sustainability (CRISS)	20 094	10.7%	12.2%
Complementary Income Support for Young Farmers (CIS-YF)	3 407	1.8%	2.1%
Eco-schemes	44 713	23.8%	27.1%
Coupled Income Support (CIS)	23 031	12.3%

Note: The data represents the planned budget of the Member States for the entire duration of the CAP Strategic Plans. Direct payments from 2023-2027 outside of the CAP Strategic Plans such as POSEI are not included.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]).

Member States have the flexibility to apply reductions of up to 85% of BISS received by a single farm (degressivity)8 for amounts exceeding EUR 60 000 (USD 65 000) and may also opt to set an upper limit (capping) for amounts exceeding EUR 100 000 (USD 108 000).

Member States that joined the European Union after 2000 may continue to implement Transitional National Aid (TNA). TNA is granted from national budgets and is mostly disbursed as decoupled payments, though limited commodity specificity is allowed. It may apply on a per hectare basis to arable land, hops and starch potatoes; on a volume basis to milk; and as a headage payment to livestock. Member States may review TNA budgets and supported commodities on an annual basis.

Member States can also choose to implement the Payment for Small Farmers (PSF), a simplified income support intervention replacing all other forms of income support payment. Farmers applying for the PSF cannot receive any other direct payment and the payment may not exceed EUR 1 250 (USD 1 424). Small farms with an agricultural area of less than 10 ha are exempt from conditionality controls.

The POSEI scheme (Programmes dʼOptions Spécifiques à lʼEloignement et à lʼInsularité) supports farming in the European Union’s outermost regions by using production-related payments. The scheme supports access to food, feed and inputs for local communities, as well as the development of local agricultural production. It represented 1.2% of the direct payments envelope in 2023.

Sectoral interventions

Under the new policy framework, market-related support to specific sectors is no longer governed by the Common Market Organisation (CMO) Regulation and is now part of the Member States’ CAP Strategic Plans9 (European Parliament, 2023[6]). These sectoral interventions are financed under Pillar 1 and, unlike in the previous CAP, now extend to all agricultural sectors. Such fundings aim at promoting greater collaboration and concentration among farmers, strengthening their bargaining power, and enhancing market efficiency and their position within the food supply chain.

The fruit and vegetables and wine sectors together represent 90% of the total financial allocations under the CSPs for sectoral support at EU level (Table 11.3). Support for the fruit and vegetables sector and “other” sectors is provided through operational programmes, which are funding programmes for members of producer organisations. Support for wine and apiculture interventions is provided through specific interventions defined in CSPs, as the beneficiaries are not producer organisations. Sectoral interventions for apiculture are co-financed by Member States, with a minimum co-financing rate of 50%.10

Table 11.3. Financial allocations to sectoral interventions in approved CSPs

Sector	Budget (EUR million)	Share
Fruit and vegetables	4 143	44.4%
Wine	4 147	44.5%
Apiculture	694	7.4%
Hops	11	0.1%
Olive	219	2.3%
Other sectors	110	1.2%
Total	9 323	100.0%

Note: Support for these sectors provided outside the CSPs is excluded. Sector support for apiculture includes national co-financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]).

Member States can provide co-financed support to the fruit and vegetables sector and to the olive oil and table olives sectors. This type of support funds a wide range of actions from production planning, quality measures, market withdrawal and harvest insurance to training, promotion and communication. Some of these measures apply at farm level while others are provided to producer organisations or the sector at large. Similarly, the wine sector is supported through promotional measures in both the European Union and third countries, restructuring and conversion of vineyards; compensation for green harvesting; setting up of mutual funds; investment in tangible and intangible capital; income insurance; development of new products, processes and technologies; and distillation of by-products.

Other market-related measures

Member States continue to implement and finance certain market-related measures outside of the CSP, under the amended CMO Regulation, including the POSEI and Smaller Aegean Islands (excluding direct payments), promotion of agricultural products, and school schemes. Pillar 1 funds the school schemes for the distribution of milk, fruit and vegetables, with a total budget of EUR 220.8 million (USD 238.7 million) per school year, of which up to EUR 130.6 million (USD 141.2 million) for fruit and vegetables and up to EUR 90.1 million (USD 97.4 million) for milk (European Parliament, 2023[6])

Within the framework of the CMO, the European Union may resort to measures aimed at stabilising agricultural markets, including public intervention and aid for private storage. An entry price system (minimum import price) is in place for some products, along with ad valorem duties, but no export subsidies. In the dairy sector, intervention prices are used for butter and skimmed milk powder (SMP), while import tariffs are applicable to all milk and dairy products. Intervention purchases may be made for butter and SMP, but these must be done via tender when amounts exceed 50 000 tonnes for butter and 109 000 tonnes for SMP. Intervention purchases are rarely used, but were opened for both products as a response to sector shocks during the COVID-19 pandemic. Nevertheless, the last public intervention purchases took place before then.

During times of low market prices, the EU can provide support to private sector operators by paying for the cost of storage of their products for a set period. Private storage may be activated as an optional scheme for butter, SMP, certain cheeses, olive oil, flax fibre, beef, pig meat, sheep meat and goat meat. This opportunity was opened for butter, SMP, cheese, beef and sheep meat in 2020-21 in response to the COVID-19 emergency and for pig meat in 2022 in response to the war in Ukraine (see Domestic policy responses to Russia’s war of aggression against Ukraine).

In addition to internal market intervention, the European Union applies trade-related measures with non-EU partners such as import and export licences, import duties, tariff quotas, safeguards and export refunds. Market support measures for beef include not only floor prices but also tariffs and TRQ support, while pig meat benefits from import protection only.11 The market support regime for sheep meat involves tariffs and TRQs, with most country-specific TRQs granted at zero customs duty. TRQs also support the poultry and egg markets.

Exceptional measures are implemented when a crisis or the threat of a crisis arises requiring a targeted response to prevent a sudden decline in prices and/or mitigate its effects. They allow the European Commission to quickly act during periods of significant market imbalances, a loss of consumer confidence due to public, animal or plant health risks, or other specific problems (EC, n.d.[7]).

In term of budgetary discipline, the new Regulation (EU) 2021/2116 starting in 2023 establishes in the EAGF an agricultural reserve of at least EUR 450 million (USD 487 million) that can be directed towards measures such as emergency buying and private storage aid, as well as exceptional measures. Before 2023, the reserve for crises was part of the CMO Regulation and activating its use would result in corresponding cuts in direct payments to farmers (following the so-called “financial discipline”). Now, the amount for the agricultural reserve enters directly from the EU budget and is established at the beginning of each year (EC, 2024[8]).

Rural development

For the 2023-27 period, Rural development interventions will receive EUR 64 billion from the EU budget and EUR 43 billion from national funds (Table 11.4). Member States may allocate further national financing in some cases, and 16 Member States committed to an additional EUR 11 billion, mainly to actions for investment and practices related to environment, climate and animal welfare (EC, 2023[9]).

Member States have the option to implement eight different types of interventions. Environment and climate measures represent the most important intervention type in financial terms (31%). The related budget is mainly allocated to area-based measures addressing specific environment and climate objectives and organic farming, but this category also includes animal welfare and forestry related actions. A large share of the budget (29%) is allocated to investments, which together with co-operation (10.4%) are the main “non-area” based rural development instruments. Around 18% of the budget goes to limit land abandonment via payments to farms in areas affected by natural and other area specific constraints. This support is mainly granted through annual payment to compensate for income foregone and additional costs related to continuation of their agricultural activity.

Table 11.4. Rural Development, planned budget under CAP Strategic Plans 2023-27, by type of intervention

	Budget (EUR million)	Share in total public expenditure
Rural Development EU funding	64 134	59.9%
Rural Development national funding	43 003	40.1%
Total Rural Development	107 137	100.0%
Environment and Climate (ENVCLIM)	33 212	31.0%
Areas with Natural Constraints (ANC)	18 716	17.5%
Areas with Specific Disadvantages (ASD)	830	0.8%
Investment support (INVEST)	31 379	29.3%
Installation aid (INSTAL)	5 175	4.8%
Risk Management (RISK)	4 592	4.3%
Cooperation (COOP)	11 160	10.4%
Knowledge and Advice (KNOW)	2 073	1.9%

Note: The budget includes support through European Agricultural Fund (EAGF) and national co-financing. It does not include additional national financing and transfers between funds.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]).

The LEADER (Liaison Entre Actions de Développement de l’Économie Rurale) programme is based on a multi-sectoral approach and local partnerships to address specific regional and local problems. Other support for co-operative activities goes to the European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-AGRI), which brings together CAP and Horizon funding for bottom-up multi-actor agricultural innovation projects. These projects tackle practical problems through a co-creation process involving farmers, researchers and other relevant actors. At least 5% of rural development funding from the EU budget must be spent on the LEADER approach.

CAP measures to promote environmental and climate benefits

The new “green architecture” of the CAP is based on a hierarchy of action and compensation based on distinguishing between minimum obligations and extra effort. Conditionality is at the base of this hierarchy, tying direct payments and some rural development measures to a series of rules12 relating to the environment, food safety, animal and plant health, animal welfare and to maintaining agricultural land in Good Agricultural and Environmental Condition (GAEC) (OECD, 2023[2]).

The new CAP introduces “enhanced conditionality”, which integrates elements of cross-compliance and greening from the previous CAP. Annex III of the Reg. EU 2021/2115 defines nine GAECs. A new requirement for protection of wetland and peatland was introduced (GAEC 2), while previous greening obligations on the maintenance of permanent grasslands and on the protection of environmentally sensitive permanent grasslands are now reflected in GAEC 1 and GAEC 9. The requirements of GAEC 7 on crop diversification and GAEC 8 on areas beneficial for biodiversity were also strengthened, although some of these were subsequently relaxed under the simplification package approved in early 2024 (see section below).

Eco-schemes are the big new building block of the CAP 2023-27 to encourage the adoption of specific farming practices with additional environmental benefits. Each Member State sets up eco-schemes for their farmers based on the framework given in the EU Regulation 2021/2115. These eco-schemes are voluntary for farmers. Payments are granted per hectare (in a few cases per livestock unit) in two forms: either as compensation for additional costs incurred or income foregone (and possible transaction costs), similar to the agri-environmental support schemes of Pillar 2, or as fixed top-up payments in addition to decoupled direct payments. Among the 163 eco-schemes, only 29 provide payments as top-ups, while the remaining 134 provide payments intended to compensate the additional costs and income loss incurred by farmers due to these commitments. Seventy-five eco-schemes aim at applying sustainable farming in arable land, 30 apply to all land types, while 22 are targeted to grassland and 18 to permanent crops. The remaining 18 eco-schemes focus on the sustainability of livestock production and on animal welfare.

As regards aid schemes for the fruit and vegetables sector under the new policy framework, Member States must allocate 15% of expenditure on operational programmes to the environment and climate change mitigation and adaptation, and 5% to strengthening research, development, and innovation (EC, 2023[9]).

The new CAP also mandates that each CAP Strategic Plan allocates at least 35% of the EAFRD funding under rural development towards environmental and climate-related objectives, including animal welfare. Eligible interventions for this ring-fenced funding include environmental, climate and other management commitments (Article 70 of Reg. (EU) 2021/2115), compensation payments for area-specific disadvantages relative to the EU Birds and Habitats Directives as well as the Water Framework Directive (Article 72). Other qualifying expenditures are investments targeting environment and climate objectives (Articles 73-74), and 50% of the allocation for areas with natural constraints (Article 71).

Innovation for sustainable productivity growth

Productivity and sustainability performance of EU agriculture

Over the last 60 years, EU agriculture has transitioned from a growth model based on intensification (use of more inputs) to one driven by technological advancements and efficiency gains. This has allowed continued growth in production and the European Union is now the largest agro-food exporter in the world. Since 2000, EU agriculture has had respectable Total Factor Productivity (TFP) performance, with annual growth rates of 1.1% during 1993-2002 and 1.3% during the 2012-21 period (Table 11.34). Most of the gains in TFP have been attributed to reductions in agricultural labour due to increased labour productivity (OECD, 2023[2]).

Structural changes in EU Member States are also reflected in their recent productivity performance. Since the 1960s, pre-2004 Member States (EU14) have maintained a high TFP growth driven by labour productivity improvements, though this growth has slowed in the last decade. In contrast, TFP growth has accelerated in the post-2004 Member States (EU13), as evidenced by a rapid increase in output and stable input use. Over this period, the quality and health of EU agricultural landscapes and farmland biodiversity has declined, although the state of biodiversity in agricultural areas differs widely between Member States and this is largely dependent on the degree of agricultural intensification of the predominant farming systems. Water use is also a growing concern and nutrient surplus continues to be problematic in many regions (OECD, 2023[2]).

While “sustainable productivity growth” is not a formal policy target for the EU’s agricultural sector, the European Union aims to simultaneously foster environmental, social and economic sustainability. The European Green Deal set out a roadmap for transforming the EU economy, including food systems. To achieve the European Green Deal’s objectives, as well as those expressed in the Farm to Fork Strategy and the EU Biodiversity Strategy for 2030, EU Member States have a range of policy tools and frameworks at their disposal. These tools help farmers adopt more sustainable practices and modernise their agricultural operations, as well as fostering the development of new innovative solutions. This section primarily focuses on the EU-level approaches and initiatives, while examples from individual EU Member States are presented in Chapter 1.

EIP-AGRI as the European Commission’s flagship instrument to foster sustainable productivity in EU agriculture

The European Union fosters sustainable agricultural productivity through the co-creation of demand-driven innovations. The European Innovation Partnership for Agricultural Productivity and Sustainability (EIP-AGRI) serves as the European Commission’s flagship policy tool for promoting bottom-up multi-actor public-private agricultural innovation partnerships. The EIP-AGRI Operational Groups (OGs, funded under the CAP and discussed in greater detail in Box 1.7 in Chapter 1) engage a wide range of stakeholders, including farmers, researchers, and agricultural advisors or other innovation brokers, to transform demand-driven grassroots ideas into innovative solutions, with about 60% of projects focusing on climate and environmental issues. After a slow start in the mid-2010s, the number of OG projects has been increasing in recent years and reached approximately 3 500 in May 2024. (EU CAP Network, 2024[10]). Additionally, also within the framework of EIP-AGRI, over 190 multi-actor projects were implemented under Horizon 2020 (Van Oost, 2021[11]).

Contributions of the CAP to sustainable productivity growth

Although the CAP does not explicitly target sustainable productivity growth, it still contributes to it. The current CAP (2023-27) outlines 10 specific objectives among which “Enhance market orientation and increase farm competitiveness” and “Improve farmers’ position in the value chain” aim to contribute to productivity growth. Meanwhile, “Contribute to climate change mitigation and adaptation”, “Foster sustainable development and efficient management of natural resources”, and “Protect biodiversity, enhance ecosystem services and preserve habitats and landscapes” focus on fostering environmental sustainability. In addition, a cross-cutting objective aims at “Fostering and sharing of knowledge, innovation and digitalisation” (OECD, 2023[2]). The EU CAP Network recently launched a Thematic Working Group to produce guidance on how to assess the CAP’s contribution to sustainable farm productivity.

The CAP serves as the primary policy framework supporting EU farmers and has traditionally provided investment support to stimulate farm modernisation and productivity. This support is manly provided through RDPs, with the overall objective of stimulating technical progress and labour productivity. These investments aim at upgrading buildings, improving energy efficiency, incorporating renewable energy sources, or developing efficient irrigation systems. Financial support can also be granted for farmers to invest in modern equipment and machinery, as well as innovative technologies, such as precision farming, IoT (Internet of Things) applications, and robotic systems. These measures can facilitate adoption of modern technologies by reducing financial barriers, thereby helping farmers operate more efficiently and sustainably. Direct payments in the CAP may also have mixed impacts on agricultural productivity.13

The evolution of CAP support shows an increasing integration of environmental and climate objectives, reflected in the increasing scope of both mandatory and voluntary input constraints that are attached to payments. The CAP support has increasingly aimed at encouraging sustainable practices,14 as well as promoting resource efficiency, biodiversity conservation and climate actions.15 A growing share of payments have been tied to agri-environmental requirements, and the newly introduced eco-schemes have been designed to further promote actions in areas such as carbon farming and nutrient management, or integrated plant protection aimed at increasing soil fertility, rational fertilisation, or improving crop quality, and ultimately expected to translate into agricultural income. The range of available interventions is broad, with support for climate-friendly animal husbandry and environmentally friendly crops, carbon farming, and agroecology being just a few examples implemented by selected EU Member States. Pillar 2 interventions also include a broad range of measures that contribute to sustainability objectives, including agri-environmental and climate interventions, as well as organic farming schemes, which offer monetary incentives to encourage practices that exceed basic regulatory standards under conditionality and eco-schemes requirements. Such interventions are combined with measures supporting on investments in the modernisation of farms, including for environmental purposes.

In their CSPs for the period 2023-27, EU Member States were required to outline their approaches to modernising their national Agriculture Knowledge and Innovation Systems (AKIS). Interventions planed under the “Cooperation” and “Knowledge and Advice” headings aim to foster collaboration among AKIS actors, and facilitate knowledge exchange, including through advice, training and demonstration farms. The European Commission (EC) aims at strengthening the role of agricultural advisors in promoting environment-friendly practices and new technologies among EU farmers. CAP instruments such as farm modernisation investment or young farmer support, incentivise farmers to upgrade their skills through minimum qualification requirements. Furthermore, knowledge transfer, research and innovation activities, are also supported through sectorial interventions under the EAGF (OECD, 2023[2]).

European Commission’s research, development and innovation initiatives

The European Commission (EC) established the European Research Area (ERA) to create a unified market for research, innovation, and technology across Europe. This initiative is essential to the EU’s research and innovation goals, as it promotes connectivity and leverages economies of scale among research entities. While EU Member States have their own research policies and funding, the EC aims to help align these national efforts and encourage joint programming. In the agricultural sector, the Standing Committee of Agricultural Research (SCAR) supports this alignment by facilitating interaction among ERA countries on research and innovation strategies. SCAR has contributed to the development of European Framework Programmes for Research and Innovation, including Horizon Europe. The SCAR’s strategic working group on Agricultural Knowledge and Innovation Systems (SWG SCAR-AKIS) is tasked with recommending improvements for knowledge and innovation systems related to agriculture and interconnected areas such as the environment, biodiversity, or food systems (OECD, 2023[2]).

Horizon Europe (HE), the EC’s key research and innovation framework programme for 2021-27, is the EU’s primary fund for fostering research and innovation, including for sustainable agriculture. Notably Cluster 6, titled “Food, Bioeconomy, Natural Resources, Agriculture, and Environment”, has a budget of EUR 9 billion for 2021-27 to support research and innovation in the areas such as sustainable land use and cultivating a resilient inclusive agricultural sector. It incorporates partnerships, networks, and initiatives like thematic networks, which compile scientific evidence and best practices into accessible materials for end-users (OECD, 2023[2]). Under HE, and its predecessor Horizon 2020, several successful projects have emerged contributing to building solutions for more sustainable agricultural sector, including in areas such as precision farming, sustainable fertiliser production, agroecology, as well as animal, plant and soil health.

HE uses partnerships to promote cross-country collaboration in research and innovation, fostering synergies between EU and national research agendas, and channelling public and private investments to address global challenges and European policy goals. Twenty-three per cent of HE’s Cluster 6 funds is allocated to partnerships, with additional commitments from the private sector and public partners. Among the eight partnerships, four are specifically relevant to sustainable farming and food systems. The Accelerating Farming Systems Transition: Agroecology Living Labs and Research Infrastructures partnership aims to promote sustainable farming practices through real-life experimentation and research infrastructure (EC, 2024[12]). The Animal Health and Welfare partnership focuses on developing new tools and knowledge to manage infectious animal diseases, combat antimicrobial resistance, and improve animal welfare. The Agriculture of Data partnership supports sustainable agricultural production by developing EU-wide datasets and using digital and environmental data. The Sustainable Food Systems for People, Planet, and Climate partnership seeks to promote healthy, safe, and sustainably produced diets, establishing a food system knowledge hub and a network of living labs (OECD, 2023[2]).

Horizon Europe recently adopted a more mission-driven approach to addressing complex societal challenges through interdisciplinary, cross-sectoral, and cross-institutional collaboration. Its new flagship initiatives, known as EU Missions, focus on delivering clear, relevant, and ambitious objectives with measurable and time-bound targets. These missions are planned as a portfolio of actions, including research projects, policy measures, and even legislative initiatives, which build on cooperation and synergies with other parts of Horizon Europe, including clusters and European Partnerships, as well as the other policy frameworks such as CAP with its Operational Group projects. “A Soil Deal for Europe” is the EU Mission benefiting the agricultural sector. With a budget of EUR 320 million for 2021-23, it targets the restoration of soil functions. This mission aligns with the European Green Deal and aims to increase the share of healthy soils beyond the current 30-40% by 2030. The mission aims to foster a common European framework for soil monitoring and knowledge dissemination, as well as support enhancing the impact of future innovations (OECD, 2023[2]).

Non-agricultural instruments of the EC contributing to sustainable productivity growth in EU agriculture

The Recovery and Resilience Facility (RRF) is a temporary instrument of the European Union, in force since 2021 until 2026, designed to help EU Member States to strengthen their economies recovering from the COVID-19 crisis, while promoting sustainable and resilient growth. The Facility brings up to EUR 648 billion (USD 700 billion) in loans and grants, with at least 37% dedicated to climate and 20% to digital initiatives. Member States submit National Recovery and Resilience Plans, which include reforms and investments to achieve specific milestones and targets. These plans include developing new research-intensive “green” technologies to address environmental issues, disseminating technological innovation related to mechanisation and precision agriculture, creating innovation hubs, introducing up-to-date upskilling programmes for adults and adapting curricula for universities and vocational schools. They can also provide support for investment in machinery and infrastructure (e.g. smart irrigation networks), as well as upgrading existing information systems and their integration with other public systems and registers.

The Digital Europe Programme (DIGITAL) supports the EU digital targets for 2030. One notable project worth EUR 8 million (USD 9 million) involves deploying an agricultural data space, enabling the agricultural sector to share and access data, thereby enhancing its economic and environmental performance, also by supporting education and training in digital areas. DIGITAL supports European Digital Innovation Hubs, which help companies develop and adopt digital solutions. These hubs offer critical services such as financing advice, training and technical expertise, along with opportunity to experiment before investing. In the area of agriculture, they are also expected to build links with the EIP-AGRI projects (EC, 2021[13]).

High level initiatives of the European Commission for agricultural sustainable productivity

“Total factor productivity in agriculture” was incorporated as a context indicator (C.27) to monitor the CAP performance. Commission services such as DG AGRI, JRC, and ESTAT work with entities like the ERS USDA, OECD (including participation in the OECD Network on Agricultural Total Factor Productivity (TFP) and the Environment), FAOSTAT, and Eurostat to help establish the productivity (and sustainable productivity) measurement, so that the analytical results are both useful and understandable for policy makers, farmers, researchers and other stakeholders.

The European Commission also actively participates in the international initiatives to accelerate the transition towards more sustainable food systems. For example, it has joined USDA-led Coalition on Sustainable Productivity Growth for Food Security and Resource Conservation (SPG Coalition), which adopts a holistic approach to productivity growth by considering impacts and trade-offs among multiple objectives and optimising agricultural sustainability across social, economic, and environmental dimensions. The European Union also participates in other United Nation Food System Summit (UNFSS) coalitions, including Food Systems Transformation Through Agroecology, Healthy Diets from Sustainable Food Systems for Children and All (HDSFS), School Meals, Zero Hunger.

Recent policy developments

Domestic policy developments in 2023-24

Overall spending

The EU budget for agriculture and rural development in 2023 was EUR 52.5 billion (USD 56.8 billion), a decrease of EUR 2.6 billion (USD 2.8 billion) compared to 2022, largely due to the decrease of Pillar 2 budget. Most of the rural development expenditures were related to the continuation of 2014-22 measures, as the majority of the new 2023-27 measures had not yet been activated. Expenditure under Pillar 1 was EUR 40.5 billion (USD 43.8 billion) (76.3%), and EUR 11.9 billion (USD 12.9 billion) (22.8%) under Pillar 2. Pillar 1 also funds market support measures, representing 6.3% of the overall agriculture and rural development budget in 2023 (Table 11.5).

Table 11.5. EU expenditure on agriculture by source and use, 2023

		Budget (EUR million)	Share in CAP expenditures
Pillar 1	Decoupled direct payments	32 011	61.0%
	Coupled direct payments	4 729	9.0%
	Interventions in agricultural markets	3 292	6.3%
Pillar 2	Rural Development - EU funding	11 990	22.8%
Pillar 1 and 2	Other expenditures	475	0.9%
	Total	52 497	100.0%

Note: Estimated funding. Numbers may not add up to 100 due to rounding. Other expenditures include administrative expenditures, clearance of accounts, technical assistance and completion of previous programmes.

Source: OECD calculations based on European Commission, EUR-Lex budget 2024.

Agri-environmental sustainability

In 2023 and early 2024 there were important policy developments regarding some of the regulations that underpin the Farm-to-Fork and Biodiversity Strategies:

• Two legal proposals were adopted on 5 July 2023 on plant reproductive material and forest reproductive material (EC, 2023[14]), with the aim of aligning current legislation with the objectives of the European Green Deal and to provide farmers with high-quality seeds that guarantee stable and sustainable yields. As part of the same package, a proposal on New Genomic Techniques was also presented (EC, 2023[15]), to steer developments towards contribution to sustainability goals in a wide range of plant species, especially for the agri-food system and to create an enabling environment for research and innovation, especially for SMEs.

• On 27 March 2024 the European Commission withdrew the proposal for a new Regulation on the Sustainable Use of Plant Protection Products. The proposal, which included legally binding targets at EU level (with effort sharing between Member States) to reduce by 50% the use and the risk of chemical pesticides as well as the use of the most hazardous pesticides by 2030, was withdrawn since no agreement was foreseeable, in view of the rejection of the proposal by the European Parliament and the lack of progress of the discussions in the European Council (EC, 2024[16]). The Sustainable Use of Pesticides Directive (2009/128/EC) will remain in force.

• One of the Farm to Fork’s flagship initiatives is a proposal for a legislative Framework for Sustainable Food Systems. The objective of this horizontal framework law is to establish new foundations for future food policies by introducing sustainability objectives and principles on the basis of an integrated food system approach. Although this legislative framework was expected to be adopted by the end of 2023, this was not the case, and the proposal was not mentioned in the European Commission work programme for 2024.

In April 2024 the European Parliament approved a review of the CAP Regulations – the so-called “simplification package” – that, following the approval of the European Council, will further modify some environmental rules. The approved changes, which will be in force until the end of the current CAP 2023-27, aim to reduce the burden on farmers and provide more flexibility for Member States regarding some conditionality standards, also with the objective of avoid overlapping with existing standards. Member States may adjust the reference ratio of permanent grassland to agricultural area (GAEC 1) and will be allowed to exempt certain crops, soil types and farming systems in the application of several standards (namely GAEC 5, 6, 7 and 9). While these exemptions must be limited in area and are permitted only to address specific problems, Member States may introduce derogations to the adoption of farming practices (e.g. tillage) against soil degradation (GAEC 5) and on the minimum soil cover in sensitive periods (GAEC 6). Member States may also be able to allow farmers to carry out crop diversification instead of crop rotation (GAEC 7) and to establish an incentivisation scheme as part of the eco-schemes proposed to farmers instead of keeping land fallow or keeping unproductive features on 4% of their arable land (GAEC 8). Ploughing to restore permanent grassland in Natura 2000 sites could be allowed in case it is damaged due to predators (GAEC 9) and temporary derogations are also allowed if weather makes compliance with standards impossible. Small farms (up to 10 ha) will be exempt from conditionality controls and from the application of administrative penalties for non-compliance with conditionality requirements.

Rural Development

The implementation of the Rural Pact and an EU Rural Action Plan has proceeded in 2023, through several key events and publications.16 Relevant publications are “The cost of non-rurality - preparing for a better urban-rural balance in EU funding” (Núñez Ferrer et al., 2023[17]), which highlights the importance of achieving a balanced urban-rural policy and the report by the High-Level Group on the Future of Cohesion Policy, entitled “Forging a sustainable future together” (EC, 2024[18]), which acknowledges that Cohesion is far too important to be left to Cohesion Policy alone” and that “Cohesion Policy exists amidst a broad spectrum of other EU policies [including] established policies such as the Common Agricultural Policy.”

On 27 March 2024 the European Commission adopted its report on the implementation of the EU’s rural vision. The document, entitled “The long-term vision for the EU’s rural areas: key achievements and ways forward” (EC, 2024[19]), takes stock of the actions that have been carried out since the publication of the Commission Communication in June 2021. It provides an overview of new indicators and latest data on rural areas, offering first insights into the progress achieved so far and reflections on future directions, including on the proposals for EU policies for the post-2027 programming period.

Monitoring and evaluation of the CAP

The performance monitoring and evaluation framework (PMEF) of the CAP 2023-27 is regulated by the Reg. EU 2021/2115. In 2023 and early 2024, further guidance was provided by the European Commission to EU Member States on how to plan and report CAP output and results indicators and a report was released on 19 February 2024 on the evaluation criteria (EC, 2024[20]). Under the PMEF, the European Commission must carry out an interim evaluation of the CAP by 2026.

In order to support the implementation of the new CSPs, the European Commission launched the EU CAP Network, a forum through which Member States’ organisations, administrations, researchers, entrepreneurs and practitioners can share knowledge and information (e.g. via peer-to-peer learning and good practices) about agriculture and rural policy (Box 11.1).

Box 11.1. The EU CAP Network

The EU CAP Network brings together stakeholders from the European Network for Rural Development and EIP-AGRI with the overall objective of driving and steering all aspects of the implementation of the CAP by:

• involving people interested in agriculture, forestry and rural areas across the European Union

• providing opportunities for European peer-to-peer networking and exchange

• sharing information, including good practices and funding opportunities

• improving skills

• encouraging the exchange of knowledge

• supporting the uptake of innovations in agriculture

• strengthening AKIS approaches.

The Network supports the design and implementation of CSPs, innovation and knowledge exchange, including EIP-AGRI, and evaluation and monitoring of the CAP. It has dedicated thematic work on CAP implementation, innovation and evaluation, as well as trending topics.

Recent publications from the Network of relevance to implementation of the CSPs cover topics such as the ante evaluations of CAP post 2020 (EC, 2023[21]), on the design and implementation of eco-schemes (EC, 2023[22]), and on how to enhance the biodiversity on farmland through high-diversity landscape features (EC, 2023[23]).

On 29 July 2023, the European Commission released a study that evaluated the contribution of the European Network for Rural Development (ENRD) and National Rural Networks (NRNs) in implementing EU Rural Development Policy (ADE S.A., CCRI and OIR, 2023[24]). The study analysed the effectiveness of these networks in supporting 118 Rural Development Programmes during the 2014‑20 period.

Policies to mitigate emissions from agriculture

To meet the legally binding goals of a 55% net reduction in GHG emissions by 2030 (compared to 1990) and achieving climate neutrality in Europe by 2050, two legislative developments were enacted in April 2023. The Council adopted legislation focusing on climate targets until 2030, notably amending the EU Regulation 2018/842 on mandatory annual reductions in greenhouse gas emissions by the Member States in the period 2021-30. This results in updated goals for EU Member States of reducing greenhouse gas emissions from sectors outside the EU Emissions Trading System (ETS), such as agriculture, waste and land use.

The Council also adopted the revision of the EU Regulation (EU) 2018/841 relating to the inclusion of GHG emissions and their absorption due to LULUCF in the climate and energy policy framework until 2030, which establishes rules for accounting for emissions and removals from LULUCF activities, including agricultural practices such as managed cropland, grassland and wetland. To enhance the LULUCF sector’s role in climate action, the proposed amendments shift the focus from balancing emissions and removals to increasing removals. The goal is to reverse the recent decline in the sector’s carbon sink capacity, targeting removals of 310 MtCO₂eq by 2030 (EP, 2023[25]).

In February 2024, the European Parliament and the Council reached a provisional agreement on the Carbon removals and carbon farming (CRCF) Regulation, which establishes the first EU-wide voluntary framework to certify carbon absorption, farming, and storage in European products. Defining quality criteria and outlining monitoring and reporting processes, the regulation aims to encourage investments in innovative carbon removal technologies and sustainable carbon farming solutions, as well as to combat greenwashing (EC, n.d.[26]). In April 2024, the Council approved revisions to the Industrial Emissions Directive (IED), extending clean air and water compliance requirements to a larger number of pig and poultry farms.

Climate change mitigation measures implemented in EU Member States during the 2023-24 period are embedded into their CAP strategic plans 2023-27, notably through rural development interventions and newly established eco-schemes. Several supported actions are a continuation of the measures of the CAP 2014-22, while a few are substantially new. To reduce GHG emissions and enhance carbon sequestration, EU Member States overall support farming practices such as liming, cultivation of catch crops, maintenance of grassland, organic production and agroecology, among others. Additional climate change mitigation policies were enacted outside the CAP, as described in the “Country snapshots” section below.

Domestic policy responses to Russia’s war of aggression against Ukraine

The war in Ukraine and other disruptions kept prices of food and inputs high through 2023. Most interventions put in place in 2022 were extended in some way in 2023. At the EU level, new CAP flexibilities, exceptional measures and direct support to farmers were introduced, allowing each Member State to choose which measures to implement, based on their own specific circumstances.

The Commission adopted successive exceptional and temporary derogations of the application of conditionality measures aimed at enlarging the European Union’s production capacity. Most Member States made use of the 2023 derogations granted by the European Commission related to the obligation to rotate crops and set aside non-production areas (GAEC 7 and GAEC 8 under CAP 2014-22). Similarly, most of them made use of the 2024 derogation permitting the fulfilment of GAEC 8 under CAP 2023-27 by ensuring at least 4% nitrogen-fixing plants or catch crops without using pesticides, where the mandatory set-aside of 4% of arable land thus no longer applied.

Following the 2022 decision allocating a fund of EUR 500 million (USD 526 million) to Member States to provide their farmers with temporary exceptional aid to counter threats of market disturbance resulting from the war in Ukraine (EC, 2022[27]), further exceptional measures financed from the agricultural reserve of the CAP were introduced to alleviate effects of the war on certain European farmers. The surge in cereals and oilseeds imports from Ukraine to neighbouring EU Member States, via EU-Ukraine Solidarity Lanes, adversely affected local farmers. In response, EUR 56 million to aid was offered in 2023 to affected farmers in Bulgaria, Poland, and Romania, with the possibility to double the allowance with national funds (EC, 2023[28]). A second exceptional measure was implemented in June 2023, providing EUR 100 million to support farmers producing specific cereals and oilseeds in Bulgaria, Hungary, Poland, Romania, and Slovakia, with the option for additional national assistance of up to 200% (EC, 2023[29]).

Agricultural product prices sharply declined in mid-2023 in a context of high input costs, food price inflation, and decreased consumer demand, leading to a third exceptional measure, implemented in July 2023, to address challenges in the animal, fruit and vegetable, wine, cereals, and oilseeds sectors. This emergency support aimed to assist farmers in the 22 Member States not covered by previous measures, with a total fund of EUR 330 million and an additional national support of up to 200%. Member States prioritised support for the hardest-hit sectors and could provide extra aid for wine distillation beyond national programme allocations (EC, 2023[30]). In its rationale and design, this exceptional measure also aimed to address the impacts of adverse weather events, such as the drought of spring 2023, particularly acute in the south-western Member States, and related losses incurred by farmers.

In parallel, in the context of the general increase of input costs required for wine production, such as costs for energy and bottles, a new exceptional measure was adopted in June 2023 to address potential market imbalances in the sector. This measure allows Member States to redirect financial resources for specific circumstances, including support for crisis distillation of wine (EC, 2023[31]). EUR 44 million was spent on this measure as of October 2023.

The Commission also amended the Temporary Crisis and Transition Framework (TCTF) in November 2023, allowing Member States to use state aid flexibilities to mitigate the economic impact of the war in Ukraine. The amendment includes a limited prolongation of the provisions enabling Member States to continue to grant limited amounts of aid, together with a proportionate increase in the aid ceilings – including for the agricultural sector – and aid to compensate for high energy prices, effective at that time until 30 June 2024. Other sections of the framework remain unchanged, with some being phased out by 31 December 2023 and others remaining in effect until the end of 2025.

Strategic dialogue on the future of EU agriculture

A Strategic Dialogue on the future of agriculture in the European Union was launched in January 2024. This Strategic Dialogue is a forum to shape a shared vision for the future of the EU’s farming and food system, aiming to address both challenges and opportunities, such as a fair standard of living for farmers and rural communities, supporting agriculture within the planet’s boundaries, exploiting the potential of knowledge and technological innovation. The first meeting took place on 25 January 2024 and the second plenary meeting on 11-12 March 2024. The findings and recommendations of the final report on the Strategic Dialogue – expected by late summer 2024 – will be discussed in European Parliament and with the Member States, to help inform the development of future EU agricultural policy.

Trade policy developments in 2023-24

Trade Agreements

The European Union–New Zealand Free Trade Agreement, signed in July 2023, was ratified in November 2023 by the European Union to enter into force on 1 May 2024. This deal reflects the EU’s new trade approach, integrating sustainable development with a dedicated chapter on sustainable food systems. Once in effect, European farmers stand to benefit from improved access to the New Zealand market, with tariffs eliminated on key EU exports such as pork, wine, chocolate, and confectionery. The agreement allows for the protection of geographical indications of EU wine and spirits and traditional products, and also protects sensitive agricultural sectors through tariff rate quotas, such as some dairy products, beef and mutton, ethanol and corn.

The European Union and the United Kingdom reached a principle political agreement known as the Windsor Framework for Northern Ireland in February 2023. Arrangements address customs, agri-food matters, medicinal products, VAT, and excise duties, while also considering perspectives and issues pertinent to Northern Ireland’s local communities. Efforts are being made in the sanitary and phytosanitary domain to ensure that residents of Northern Ireland have access to the same food products as those in Great Britain, with streamlined transportation and reduced inspection requirements. Controls will be reduced once food labelling assurances are fully operational.

In 2023, the European Union reinforced its trade ties with Asia through various initiatives, including signing a digital partnership agreement with Singapore, strengthening strategic relations with India through a Trade and Technology Council, and engaging in the 10^th EU-China High Level Economic and Trade Dialogue to discuss economic, financial, trade, and investment co-operation.

Trade policy responses to Russia’s war of aggression in Ukraine

In response to Russia’s full-scale invasion of Ukraine, the European Union implemented autonomous trade measures (ATMs) in June 2022, allowing duty-free access for all Ukrainian products to the European Union, including agricultural products previously subject to tariffs or tariff rate quotas. These measures were extended in June 2023. In early 2024, the Commission proposed to renew the suspension for another year with additional safeguards. While aimed at providing support to Ukraine, the proposal also seeks to reinforce the protection of sensitive agricultural products by strengthening the safeguards included in the 2023 regulation.17 Unlike the 2023 regulation, this new proposal, to be adopted by the Council in May 2024 and enter into force in June 2024, aims at addressing the impact on individual Member States rather than the entire EU market. A new automatic safeguard will also be added for certain sensitive products, such as poultry, eggs, sugar, oats, maize, groats, and honey.

The Commission assessed the impact of certain agricultural exports from Ukraine on the EU market, with a focus on five Member States, namely Bulgaria, Hungary, Poland, and Slovakia – where import restrictions on a range of agricultural products were introduced or announced in April 2023 in response to increased imports from Ukraine (OECD, 2023[32]) – as well as Romania. Temporary co-ordination measures were introduced in May 2023 through a Co-ordination Platform involving these countries, the European Commission and Ukraine. The European Union imposed restrictions on Ukrainian grain imports to neighbouring EU countries while allowing for the transit of agricultural products to other countries. These measures helped alleviate tensions, ensuring smooth export flows of Ukrainian products to third countries. The restrictions expired in September 2023, and Ukraine agreed to implement strategies to prevent grain supply surges and maintain market balance in neighbouring states (EC, 2023[33]).

Following the lifted restrictions on Ukrainian agricultural products, Poland, Hungary, and Slovakia imposed unilateral import bans that expanded the list of prohibited items, which led Ukraine to initiate a WTO dispute against the three countries. Meanwhile, Romania and Bulgaria agreed on a new mechanism that allows Ukraine to resume exports of four groups of crops that were banned since May 2023, and requires both Ukrainian and their own farmers to obtain specific licences. Between October and December 2023, only pre-authorised economic operators were allowed to import wheat, maize, rapeseed and sunflower from Ukraine into Romania. Since November 2023, Bulgaria requires licences for the import of these four commodities from Ukraine.

Country snapshots

Following this introduction, this section comprises 27 country snapshots, one for each EU Member State, which include an overview of the country’s CSP 2023-2718 with some information on its implementation in 2023 and early 2024, followed by a concise description of other national policy developments.

Overview of the CAP Strategic plans

The CAP 2023-27 offers more flexible implementation by Member States. Member States were allowed to modify the budget allocation between the direct payments and rural development by transferring the allocated amounts in either direction within predefined limits.19 Eleven Member States (Belgium-Flanders, Czechia, Denmark, France, Germany, Greece, Italy, Latvia, the Netherlands, Romania and Slovakia) chose to transfer funds from direct payments to rural development, while six Member States (Croatia, Luxembourg, Hungary, Malta, Poland and Portugal) decided to transfer funds in the opposite direction.20

Member States must reserve at least 10% of their annual financial allocation to direct payments for the Complementary redistributive income support for sustainability (CRISS) to ensure redistribution of direct payments from larger to smaller or medium-sized holdings. Only Denmark and Malta did not include the CRISS by way of derogation. Member States may also address the need for redistribution of income support through other instruments and interventions (e.g. capping and degressivity, payment to small farmers). The majority of CSPs do not apply degressivity or capping (17 Member States), while four Member States apply both (Belgium, Ireland, Slovakia, and Spain). Four countries apply only capping (Austria, Bulgaria, Latvia and Lithuania) and two countries apply only degressivity (Portugal and Slovenia). Only five Member States (Malta, Bulgaria, Czechia, Latvia, and Portugal) apply the simplified payment for small farmers (PSF). All Member States except the Netherlands planned Coupled Income Support (CIS) to redistribute direct payments to specific sectors: an estimated 2.1 million farms are expected to benefit from this type of support, equivalent to 21% of EU farms (EC, 2023[34]).

Eco-schemes are a new tool to support environmental and climate goals. While participation in eco-schemes is voluntary for farmers, Member States were obliged to include one or more eco-schemes in their CSPs and they were also required to allocate a minimum of 25% of direct payment funding for these new measures, although this share can be lower if more than 30% of the EAFRD is allocated to certain interventions addressing environment and climate objectives (usually called “rebate”) (EU CAP Network, 2023[35]). Ten Member States took advantage of the “rebate” possibility to allocate less than 25% of their direct payments to eco-schemes (Austria, Cyprus, Denmark, Finland, Germany, Malta Hungary, Slovenia, Spain, and Sweden).

While most Member States designed several eco-schemes, four countries (France, Hungary, Ireland, and the Netherlands) adopted only one multi-dimensional eco-scheme that includes a package of options, and two countries (the Netherlands and Hungary) put forward points-based eco-schemes, with a scoring or weighting of the different practices according to their expected positive environmental impact (EU CAP Network, 2023[35]). Although eco-schemes mostly include annual commitments, seven CSPs (Belgium-Flanders, Denmark, Finland, Italy, Lithuania, Malta, and Slovenia) include eco-schemes with multi-annual commitments.

All Member States have allocated funds for sectoral interventions, even though there is some variability regarding the financial allocation and the supported sectors. While interventions in the fruit and vegetables sector are mandatory for Member States with recognised producer organisations along with interventions in the apiculture and wine sectors, the CAP legislative framework allows them to extend sectoral interventions to “other” sectors within the limit of 3-5% of national direct payments allocation in view of attaining specific objectives (EC, 2023[9]). Six Member States (Bulgaria, Czechia, France, Latvia, Italy, and Slovakia) used the opportunity to plan support for “other” sectors.

Other key national policy developments

EU Member States have developed national policies and measures in various priority areas in 2023 and early 2024. In response to the ongoing crises, including the economic consequences of the war in Ukraine, rising input prices and multiple market disruptions, most EU countries have implemented emergency support measures. In addition to the exceptional measures planned at EU level, EU countries have also granted regulatory flexibilities, tax concessions, investment assistance and financial measures to help farmers and agri-food businesses cope with the financial consequences of the crisis. Consumer policies aimed at facilitating access to basic food were also strengthened.

Other emergency measures triggered by the effects of natural disasters were granted in the form of economic damage compensation for losses due to adverse climatic events, such as drought, forest fires, storms, floods, frost and freezing. Efforts have also been made to step up prevention of the risks associated with African swine fever on pig farms.

Various Member States enacted climate change mitigation policies outside the CAP. Austria and Czechia launched new funds for on-farm energy self-sufficiency investments and biomethane production, respectively. France regulated solar panel use on farms. Sweden initiated peat forest rewetting contracts. Luxembourg introduced measures for livestock reduction and rapid manure incorporation and implemented an authorisation system for herd expansion. Germany launched the Federal Action Plan on Nature-based Solutions for Climate and Biodiversity. Slovenia started to prepare its first Climate Report on the state of agriculture. Romania published its long-term strategy for reducing GHG emissions aiming at reaching carbon neutrality by 2050, with explicit incorporation of the agriculture and LULUCF sectors.

Austria

CAP Strategic Plan 2023-27

Main objectives: Ensure the sustainable competitiveness and resilience of farms; secure food security; strengthen natural resources and climate protection; improve vitality and quality of life in rural areas.

Implementation in 2023-24: Significant changes in the structure of area-based payments include a reduction of basic payment levels, a new redistribution premium through additional payments for the first 40 ha, increased per-animal payments for alpine farming. Together with the agri-environmental programme ÖPUL, four eco-schemes are implemented to promote green cover, extensive grazing and erosion reduction. Within ÖPUL, key whole-farm schemes to enhance biodiversity, crop diversification, grassland preservation and capacity building focus on environmentally friendly and biodiversity-promoting management and on organic farming. Biodiversity-relevant areas increased by 44% in 2023. A greater focus also has been given to strengthening the Agricultural Knowledge and Innovation System.

Table 11.6. Overview of Austria’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 8 650 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: Yes Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 49% EU funding for environmental and climate objectives: 58% Additional national financing: EUR 211 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Limits for the simplified taxation of farms were increased, implying that this simplified taxation (and lower effective tax bills) will benefit a larger group of farms.

• A strategic process was launched (from November 2023 to May 2024) in order to develop a strategic view (“VISION 28+”) on how Austrian agriculture should develop in future, and what actions are required to reach this vision.

• The Stimulus Programme for Agriculture (Impulsprogramm Landwirtschaft) is implemented from 2024. The programme increases nationally co-funded agri-environmental payments and payments for disadvantaged areas, and raises the support limits for the investment support.

• The new Veterinary Medicines Act (TAMG) implements two related EU regulations from 2019. Among others, this law adds further restrictions on the supply and use of antibiotics in animal husbandry and introduces limits and target values for the on-farm use of antibiotics. The use of antibiotics for yield improvements or under poor husbandry conditions is now banned.

Belgium

CAP Strategic Plans 2023-27

Main objectives. Flanders: Ensure income security; raise carbon sequestration, reduce GHG emissions and adapt to climate change; improve water and soil quality. Wallonia: Build the economic resilience of farmers; ensure environmental and climate transition; support young farmers, innovation and digitalisation.

Implementation in 2023-24: Both regions amended conditionality and eco-schemes specifications. Coupled support for the livestock sector has been adjusted to more sustainable production, for instance by introducing a penalty for high stocking densities in Wallonia or by applying entry and subsidy conditions in Flanders, such as local feed production or sustainable grassland management in beef production.

Table 11.7. Overview of Flanders’ and Wallonia’s CSPs as initially approved

Main features - Flanders	Budget distribution - Flanders
Budget: EUR 1 975 million Transfer between pillars: 10% in 2023, 11% in 2024 and 2025 and 12% in 2026 of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: Yes Degressivity: Yes Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 57% EU funding for environmental and climate objectives: 54% Additional national financing: EUR 255 million
Main features - Wallonia	Budget distribution - Wallonia
Budget: EUR 1 856 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: Yes Degressivity: Yes Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 37% EU funding for environmental and climate objectives: 56% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In response to Russia’s war of aggression against Ukraine, Flanders granted EUR 1.8 million to apple growers, organic livestock and goat’s milk and Wallonia EUR 2.1 million to apple growers.

• The Flemish Government has invested EUR 200 million in compensating pig farmers for the reduction or complete closure of their production capacity.

Bulgaria

CAP Strategic Plan 2023-27

Main objectives: Support viable farm income and enhance competitiveness; improve the living and working conditions in rural areas; respond to the needs of young and small farmers; support sustainable farming practices; promote investments that target the protection of natural resources and the climate.

Implementation in 2023-24: More than 60 000 farmers submitted applications for support. Following the 2023 campaign, adjustments to the CSP were proposed, notably changes of certain GAEC standards to respond to farmers’ troubles in complying with them, as well as the increase in the budget and allowances for the eco-scheme that encourages green manure to reduce pesticides use. Other eco-schemes promoting organic farming, crop rotation, extensive grassland and ecological areas are being implemented.

Table 11.8. Overview of Bulgaria’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 7 726 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: Yes Degressivity: No Simplified payment for small farmers: Yes Sectoral interventions: Apiculture, fruit and vegetables, milk and milk products, wine
Pillar 2 Share of EU financing (average): 40% EU funding for environmental and climate objectives: 39% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• BGN 63 million (EUR 32 million) was allocated for national measures to compensate producers for rising prices of energy, animal feed, plant protection products, fuels and fertilisers. An additional BGN 20 million (EUR 10 million) was earmarked to compensate farmers for losses from adverse climatic events, including before the insurance period. Moreover, BGN 16 million (EUR 8 million) was provided to cover irrigation water costs.

• Responding to ongoing crises, the Emergency support to cereals and oilseed sectors worth BGN 53 million (EUR 27 million) was approved for EU funding, allowing for national co-financing.

• In August 2023, the Advisory Council on Land Relations launched a new programme for sustainable water management.

• Since November 2023, import licenses are requested for sunflower, wheat, maize, and rapeseed originating from Ukraine.

Croatia

CAP Strategic Plan 2023-27

Main objectives: Promote sustainable and economically viable farms and the processing sector; improve living and working conditions in rural areas; support the protection of natural resources, biodiversity, and the climate; focus on young and small farmers; foster of higher standards of animal welfare.

Implementation in 2023-24: Calls for Pillar 2 applications were launched for seven interventions that promote renewable energy use, agricultural production investments, infrastructure development, insurance uptake, participation in quality schemes, LEADER approach, and knowledge transfer. Sector-specific interventions included support for beekeeping and a call for wine sector investments. Amendments to the CSP were carried out, introducing a new eco-scheme focusing on application of organic fertilisers in permanent plantations and adjusting interventions to streamline project implementation and broaden their scope.

Table 11.9. Overview of Croatia’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 3 687 million Transfer between pillars: 2% of initial budget from Rural Development to Direct Payments
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 80% EU funding for environmental and climate objectives: 37% Additional national financing: EUR 36 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Several measures have been implemented to stabilise agricultural production in response to ongoing disruptions in world and EU markets. These include programmes to compensate for increased production costs, mitigate the impact of natural disasters, provide support to the pig farming sector affected by African swine fever, and offer state support to extremely sensitive agricultural sectors in 2023.

• A legislative framework was established to initiate the consolidation of agricultural land, and public tenders were announced. EUR 40 million was allocated for the consolidation and arrangement of fragmented parcels of agricultural land until 2026, which will allow for a better disposal of farmers’ land to increase agricultural productivity and investment in infrastructure. Consolidation involves reducing the number of land plots per owner or user while increasing the size of individual plots.

• With the expiry of moratorium maintaining restrictions on the sale of agricultural land to legal and natural persons from the European Union by 30 June 2023, legal entities and citizens of EU Member States can now purchase agricultural land under the same conditions as Croatian citizens.

Cyprus

CAP Strategic Plan 2023-27

Main objectives: Renew the agricultural potential of Cyprus; attract younger generations to agriculture; maintain social cohesion and promote a sustainable rural development; protect the environment in which farmers operate.

Implementation in 2023-24: The Single Application for direct payments under the new CAP 2023-27 was characterised by broad participation, with more than 30 000 applications submitted. Amendments to the CSP, approved by the European Commission in December 2023, are mostly related to agri-environmental interventions, including on GAEC standards and eco-schemes, as well as payment rates for animal welfare and conservation of traditional breeds interventions.

Table 11.10. Overview of Cyprus’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 450 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 60% EU funding for environmental and climate objectives: 56% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• A state aid for the prevention of damage and the restauration of the production capacity affected by wildfires was proclaimed in 2024. Its purpose is the construction of fencing to protect crops from wild animals and the payment of compensation in case of damage to crops.

• Cyprus announced the Financial Support Plan for Associations, Breeders’ Associations/Breeding Organisations (Breeding Societies) regarding the creation and maintenance of pedigree records of animals (goats, sheep, cows, pigs, Cypriot horses and Cypriot donkeys), with a total budget of EUR 180 000.

Czechia

CAP Strategic Plan 2023-27

Main objectives: Ensure the competitiveness and resilience of farms; improve the protection of natural resources and climate; improve the redistribution of funds to small and medium-sized farms; strengthen the position of organic farming.

Implementation in 2023-24: The redistributive payment targeting small and medium-sized farmers in the form of additional support for the first 150 ha, which accounts for 23% of the direct payments’ envelope, was the subject of 24 286 applications in 2023, worth CZK 4.6 billion (EUR 0.189 billion). Three additional “non-project” rural development (RD) measures were introduced in 2023 to support growing catch crops, bolstering defence capacity in pig breeding through vaccination, and implementing agroforestry practices, while a new one, restricting the use of pesticides in protection zones of water sources on arable land, will start applying in 2024. Two additional “project” RD measures were also introduced to promote advisory services and support technologies decreasing GHG emissions.

Table 11.11. Overview of Czechia’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 7 955 million Transfer between pillars: 3% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified Payment for small farmers: Yes - Sectoral interventions: Apiculture, fruit and vegetables, eggs, wine
Pillar 2 - Share of EU financing (average): 37% - EU funding for environmental and climate objectives: 54% - Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Exceptional aid was directed to sectors affected by high energy, feed and fertiliser prices. Fruit, vegetables, hops growers and dairy farmers received a national subsidy worth CZK 80 million (EUR 3.2 million) in 2023, complemented by EU funding worth CZK 163 million (EUR 6.5 million).

• The government proposed a consolidation package aimed at restoring public finances, impacting the agricultural sector significantly. Key measures include the introduction of two VAT rates, adjustments in property tax rates with provisions for agricultural land, and changes in various taxes such as those on alcohol and tobacco. Substantial savings, totalling CZK 10.4 billion (EUR 413 million) are planned in agricultural spending, affecting various subsidies and agricultural marketing.

• The recently launched National Quality Policy 2023-30 focuses in part on the quality and sustainability of national food production, supporting producers with subsidies for competitiveness and sustainability, through modernisation and innovation of production processes and products.

Denmark

CAP Strategic Plan 2023-27

Main objectives: Promote sustainable development of farming, food, and rural areas; ensure food security through a competitive agri-food sector; foster continued modernisation and digitalisation of agriculture.

Implementation in 2023-24: While basic income and coupled income support schemes were fully utilised, eco-schemes were much less so (between 17% and 88% of planned budgets in 2023). Uptake for young farmer aid was higher than planned, but results for water and climate project investments were mixed, with some areas surpassing planned budget (peatlands rewetting) and others falling short (wetlands). Not all Pillar 2 interventions have been opened to applications and many payments are still pending. In order to strengthen CAP implementation and address challenges identified during the first operational year, substantial changes were made to GAECs, the definition of young farmer, and eco-schemes.

Table 11.12. Overview of Denmark’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 4 848 million Transfer between pillars: 6% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 88% EU funding for environmental and climate objectives: 66% Additional national financing: EUR 116 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In response to challenging weather conditions, Denmark introduced various measures to support livestock producers, such as temporary permissions for mowing after-crop areas, dispensations to reduce forage proportions for ruminants, and waivers from supplemental feeding bans.

• Denmark opted not to make use of the EU derogations from certain CAP requirements aimed at promoting food security following Russia’s full-scale invasion of Ukraine. It also chose not to add a national top-up to the EU crisis reserve funds allocated to the country. The DKK 47.3 million (EUR 6.3 million) fund was distributed evenly across farmers based on the eligible agricultural area.

• In 2023, the government released a series of strategic initiatives for the sector with regard to: addressing methane emissions from cattle digestion through research projects and public-private forums; tackling methane and nitrous oxide emissions from manure management with research projects and legal adjustments; introducing a national action plan for plant-based foods; promoting green proteins to reduce environmental impact and provide alternative income opportunities; outlining initiatives to double organic area, consumption and export of organic products by 2030.

Estonia

CAP Strategic Plan 2023-27

Main objectives: Foster the development of a smart, competitive, resilient, and diversified agricultural sector; ensure long-term food security; respond to the economic, environmental, and social challenges of the sector.

Implementation in 2023-24: From 2023, instead of the previous 8 direct payments, there are now 14 interventions, including 5 new eco-schemes. Coupled support continued, but with a larger budget and complemented sectors. The uptake of some eco-schemes has been lower than expected, possibly due to flexibility in applying GAEC standards, allowing activities on farmland otherwise prohibited. Only the eco-scheme for organic farming exceeded its budget. The first CSP amendments, approved by the EC, were mostly related to technical corrections, GAEC standards, investment support, financial instruments, advisory support, and young farmer’s support.

Table 11.13. Overview of Estonia’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 1 614 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture
Pillar 2 Share of EU financing (average): 68% EU funding for environmental and climate objectives: 40% Additional national financing: EUR 6 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Various emergency support measures were implemented to address crises in agriculture and food sector (in total EUR 13.5 million).

• The National Circular Bioeconomy Roadmap was adopted in 2023. To place greater emphasis on circular bioeconomy and support its development, investment measures for the valorisation of bioresources and for increasing the production and uptake of biomethane were developed.

• In 2023, the Rural Knowledge Centre (METK) was established. Its tasks cover research, monitoring, plant breeding, providing advisory and innovation services in the field of agriculture and rural economy and the co-ordination of knowledge transfer (AKIS).

• To achieve the objectives of sustainable agriculture, an integrated GHG and air pollutant assessment forecasting model for livestock and fertilisers, and a tool and guide for assessing the carbon footprint of agricultural holdings at enterprise and product level were developed.

Finland

CAP Strategic Plan 2023-27

Main objectives: Ensure food security; promote farm competitiveness; increase environmental and climate ambition; foster vibrant rural areas; respond to the sector’s economic, environmental, and social challenges.

Implementation in 2023-24: During 2023 three eco-schemes have been successfully implemented in Finland. These schemes include: (i) plant cover in winter season (1 825 000 ha), (ii) natural management fields (89 000 ha), and (iii) green fertiliser grassland (11 700 ha). As regards other parts of the CSP, payments for improving animal welfare cover approximately 860 000 LSU. Also, payments for farm advisory services have been successfully implemented and about 11 000 advisory actions were paid for farmers in 2023.

Table 11.14. Overview of Finland’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 6 657 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 43% EU funding for environmental and climate objectives: 58% Additional national financing: EUR 1 765 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Avian influenza was detected in wild birds and on 72 fur farms, but it did not spread to poultry farms. Following the outbreak of African swine fever in wild boar in Sweden, preventive measures were intensified, including the revision of national legislation and contingency planning to meet the requirements of the new EU legislation and the update of the 2015 report of the Wild Boar Task Force. The working group on Salmonella risk management in the pig sector completed its work and the preparation of the Animal Disease Fund will continue in 2024.

• At the beginning of 2023, a new one-off temporary cost support for agriculture and aquaculture was finalised and implemented due to the crisis-ridden cost situation in agriculture. However, the prices of fertiliser raw materials and energy fell significantly during 2023 from the historically elevated levels at the end of 2022, so the support was paid out less than expected (EUR 30 million).

France

CAP Strategic Plan 2023-27

Main objectives: Ensure food security; enhance the sector’s sustainable competitiveness and added value; increase the farms’ resilience and limit the use of inputs; promote farm diversification, preservation of permanent grasslands, plant protein production, agroecology and organic farming.

Implementation in 2023-24: A key amendment to the CSP was the extension of the operational programmes (OPs) run by producer organisations to sectors other than fruit and vegetables. These OPs, financed by EUR 33 million, are now possible for the plant protein, horticulture, dried fodder, Label Rouge veal, rice, and rabbit sectors.

Table 11.15. Overview of France’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 49 742 million Transfer between pillars: 8% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, olive oil and tables olive, rice, live trees and other plants, bulbs, roots and the like, cut flowers and ornamental foliage, dried fodder, beef and veal, wine
Pillar 2 Share of EU financing (average): 70% EU funding for environmental and climate objectives: 41% Additional national financing: EUR 1 778 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• The Finance Bill (PLF) for 2024 provides EUR 7.6 billion in commitment authorisations (AE) and EUR 7 billion in payment credits (CP), a historic increase of 27% in AE and 17% in CP. These additional resources, which further increase the 2023 budget, aim at accelerating the ecological transition towards a more resilient and sustainable sector, while remaining competitive.

• The 2023 Hedgerow pact, which is part of the ecological plan France Nation Verte, includes 25 actions to support the plantation of 50 000 km of new hedgerow by 2030 and will be allocated additional EUR 110 million in 2024. The plan includes a method for local authorities to develop locally adapted hedgerows, an observatory to monitor the project, and specific regulations.

• The 2023 harvest loss insurance and risk management reform, supported by the CSP, reduces the threshold for subsidised insurance to 20% of harvest losses. It implements responses based on risk layers: exceptional risks receive a guaranteed national solidarity indemnity, medium risks use subsidised (up to 70%) multi-risk climate insurance, and low risks are managed by farmers.

Germany

CAP Strategic Plan 2023-27

Main objectives: Ensure sustainable competitiveness and resilience of farms; improve the protection of biodiversity, natural resources and the climate; boost the quality of life in rural areas through investments, knowledge transfer and innovation; focus on a strategy that considers regional specific features.

Implementation in 2023-24: Challenges in the implementation of the CSP include the administrative burden and lower than expected utilisation of eco-schemes. For 2024, simplifications and premium increases were realised to make the eco-schemes more attractive to farmers. New eco-schemes and an increased budget are under discussion.

Table 11.16. Overview of Germany’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 34 169 million Transfer between pillars: 12% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, hops, wine
Pillar 2 Share of EU financing (average): 68% EU funding for environmental and climate objectives: 59% Additional national financing: EUR 2 110 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Germany increased its support for organic agriculture, including support for research projects targeting enhanced biodiversity and for advisory services for away-from-home catering companies on the labelling regarding the use of organic food and ingredients.

• The new Farm Opportunities Programme (Chancenprogramm Höfe) supports domestic protein production and farmers switching from animal husbandry to production or processing of innovative and climate friendly protein food. New funding was allocated to the Protein Plant Strategy.

• To promote the transformation of livestock systems, support for more animal-friendly farming systems, e.g. investments in design, equipment of stables or individual keeping areas and costs related to going beyond mandatory animal welfare standards, is complemented by new mandatory state labelling with information on husbandry systems, and tightened restrictions for animal transportation.

• New initiatives were launched to foster the digitalisation of agriculture, e.g. interoperative secure data exchange systems along the agricultural value chain, the promotion of Artificial Intelligence (AI) use and experimental fields for digitalisation and AI in agriculture.

Greece

CAP Strategic Plan 2023-27

Main objectives: Develop a more resilient, green and digital agriculture; improve competitiveness by promoting innovation, young entrepreneurship and fair income for farmers; reduce the environmental footprint of agriculture; foster the sustainable development of rural areas.

Implementation in 2023-24: Direct payments have been implemented in 2023 for coupled payments, eco-schemes and other decoupled payments, as well as some sectoral (beekeeping) and rural development payments (natural or other area-specific constraints interventions). The CSP was amended on 28 February 2024 on conditionality rules, budget, milestone and target values, also with a new rural development intervention on “Voluntary insurance premium subsidy” (EU funding of EUR 200 million).

Table 11.17. Overview of Greece’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 13 293 million Transfer between pillars: 10% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, olive oil and tables olive, wine
Pillar 2 Share of EU financing (average): 82% EU funding for environmental and climate objectives: 41% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Several crises marked the country and have triggered notable state aid interventions. The effects of Russia’s war of aggression against Ukraine led to temporary support of EUR 152 million to the agricultural sector (livestock farmers, apple and chestnuts producers, among others). In addition, the exceptional damages generated by two storms in September 2023 required an exceptional disaster support of EUR 150 million, which is more than six times the average expenditure for disaster payments in the period 2020-22.

• To foster climate adaptation and resilience of the sector, land irrigation improvement projects were initiated or implemented during 2023, in the context of the National Climate Law, the River Basin Management Plans and the Flood Risk Management Plans, based on EU and national funds, including additional financing under the National Recovery and Resilience Plan.

• The budget under the new Small Loan Fund for Agricultural Entrepreneurship, established in 2022, was increased in 2023 from EUR 21.5 million to EUR 61.5 million to facilitate access to financing for agricultural holdings.

Hungary

CAP Strategic Plan 2023-27

Main objectives: Enhance the competitiveness and productivity of agriculture and food industry; make agricultural production a profitable and socially recognised activity; diversify the rural economy; increase life quality in rural areas; improve environmental conditions and contribute to natural resources renewal.

Implementation in 2023-24: A large number of applications were received for the new eco-scheme, corresponding to 4 million ha (75% of the total agricultural land). Although most Pillar 2 payments were still financed from the previous RDP, first calls under the CSP were published for forestry-related schemes and agri-food investments. Based on the results of the year 2023, over 400 CSP amendments were discussed with the European Commission, and a revised version was approved on 8 February 2024.

Table 11.18. Overview of Hungary ‘s CSPs as initially approved

Main features	Budget distribution
Budget: EUR 9 977 million Transfer between pillars: 23% of initial budget from Rural Development to Direct Payments
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 50% EU funding for environmental and climate objectives: 71% Additional national financing: EUR 4 530 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Amendments to the 2007 Act on the Protection of Agricultural Land entered into effect on 1 July 2023 and 1 January 2024. These introduced more stringent legislation for the protection of irrigated arable land, increased levels of financial contributions for land use (for non-agricultural purposes), fines for land protection, and new land acquisition provisions to support installation of new farmers.

• Exceptional support measures were introduced to ensure farmers’ financial liquidity in response to the consequences of the 2022 drought, Russia’s war of aggression against Ukraine and the energy crisis. These included locked interest rates to reduce the cost of credit, a moratorium on loan repayment, and preferential credit schemes.

• Several consumer support measures were extended to alleviate the extra burden on family budgets caused by a significant increase in food prices due to inflation. A price cap, initially introduced in 2022, was extended to two additional basic foodstuffs, and retail outlets with higher revenues were requested to run mandatory promotions from June 2023. An online price monitoring system was also introduced in July 2023 to monitor prices applied by large retailers over 62 product categories (and 78 products in 2024).

Ireland

CAP Strategic Plan 2023-27

Main objectives: Promote sustainable development of the farming and food sector, including by supporting viable farm incomes and enhanced competitiveness; strengthening the socio-economic conditions in rural areas; and contributing to achieving environmental and climate targets.

Implementation in 2023-24: Payments totalling EUR 1.2 billion were delivered under the new CAP in 2023. Approximately 122 000 applications were received for the single Irish eco-scheme (around 97% of BISS applicants). Applications to the Agri-Climate Rural Environment Scheme exceeded the 50 000 maximum participants; Organic Farming Scheme funding increased 54% on 2022 to EUR 57 million; and payments of EUR 19 million were made to 17 000 farmers under the new Sheep Improvement Scheme.

Table 11.19. Overview of Ireland’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 9 832 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: Yes Degressivity: Yes Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetable
Pillar 2 Share of EU financing (average): 40% EU funding for environmental and climate objectives: 67% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• The most recent Climate Action Plans have been published for 2023 and 2024. These set out the policy framework and actions toward Agriculture reducing its emissions by 25% from the 2018 baseline by 2030, from 23 to 17.25 MtCO2eq (AR5).

• The 2023 Unharvested Crop Support Scheme supported farmers with unharvested cereal crops at a rate of EUR 1 000/ha up to 20 ha, with a minimum of 2 ha for eligibility, with a budget of EUR 7.15 million.

• A National Fertiliser Database on trade in fertiliser and lime came into effect in 2023, with over 90 000 farmers registered.

• Grant funding for agri-food research of EUR 24.2 million was awarded under the 2023 Thematic Research Call, of which EUR 8.2 million was allocated to projects focusing on climate and environmental sustainability and a further EUR 1.7 million awarded to sustainable animal and plant production projects. These projects can contribute to delivering on many of the commitments in Food Vision 2030, Ireland’s stakeholder-led strategy for the agri-food sector.

Italy

CAP Strategic Plan 2023-27

Main objectives: Enhance the competitiveness and sustainability of the country’s diversified agriculture and supply chains; provide an adequate income for farmers; reduce the impact of agriculture on the environment.

Implementation in 2023-24: Several amendments to the CSP were approved in 2023, mainly with a view to adapting it to regional needs in the context of rural development, where the regions will continue to play a key role. Other changes regarded some derogations and simplification of eco-schemes and the simplification of conditionality requirements.

Table 11.20. Overview of Italy’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 36 327 million Transfer between pillars: 3% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, olive oil and tables olive, wine, potatoes
Pillar 2 Share of EU financing (average): 45% EU funding for environmental and climate objectives: 39% Additional national financing: EUR 346 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In December 2023, the European Council approved the revision of Italy’s National Recovery and Resilience Plan. Financial resources for agriculture doubled in favour of Supply chain contracts (EUR 2 billion) and the Agrisolar Park (EUR 850 million).

• Italy approved the National Action Plan for Organic Farming on 20 December 2023 with the objective of reaching the target of 25% of the Utilised Agricultural Area under organic farming by 2027. The plan promotes consumption of organic products and supports the development of bio‑districts, organic canteens, research and innovation, as well as training activities for operators.

• On 7 August 2023 Italy adopted the National Biodiversity Strategy 2030, which establishes the objectives of protecting and safeguarding biodiversity to be achieved by 2030 and includes specific targets, among others, on ecological focus areas in agricultural land and for organic farming.

• Italy extended until 2023 the exemption from IRPEF (the personal income tax) for landowners and for agricultural income related to land declared by farmers and professional agricultural entrepreneurs, which was already in place during the 2017-22 period.

Latvia

CAP Strategic Plan 2023-27

Main objectives: Correspond to the EU general objectives to foster a smart, competitive, resilient and diversified agricultural sector ensuring long-term food security, to support and strengthen environmental protection, including biodiversity and climate action, and to strengthen the socio-economic fabric of rural areas. Include increasing the competitiveness of farms; promoting knowledge-based entrepreneurial capacity; contributing to the achievement of environmental and climate objectives.

Implementation in 2023-24: No significant changes were observed compared to 2022 in both the number of applicants and in the area applied for the basic payment. New Direct Payments interventions implemented in 2023 included the schemes for the climate, the environment and animal welfare. New Rural Development measures implemented in 2023 included non-productive investments, agri-environment and climate measures such as the Green Belts (buffer strips) and co-operation in short supply chains. The CSP was amended in 2023 but without affecting the objectives, indicators or financial perspective set out in the plan.

Table 11.21. Overview of Latvia’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 2 467 million Transfer between pillars: 5% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: Yes Degressivity: No Simplified payment for small farmers: Yes Sectoral interventions: Apiculture, fruit and vegetables, cereals, beef and veal, milk and milk products, pig meat
Pillar 2 Share of EU financing (average): 87% EU funding for environmental and climate objectives: 44% Additional national co-financing: EUR 152 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In 2023, 37% of the national support to the farming sector, corresponding to EUR 3.3 million, was granted for livestock breeding and genetic improvement. Most of this support (EUR 2 million) went to the dairy sector.

• In December 2023 and January 2024, EUR 6.8 million of EU emergency support was granted to the fruit and berry sector to cover the economic losses incurred by farms due to frost and freeze damage in spring 2023, and to the dairy and beef cattle, sheep, goat, and horse sectors to partially cover the costs of purchasing fodder.

Lithuania

CAP Strategic Plan 2023-27

Main objectives: Ensure the sustainable development of the agriculture and food sectors by increasing added value and competitiveness of the sector; increase the viability of small and medium-sized farms; promote sustainable production methods, while also ensuring adaptation to climate change and nature conservation; enhance innovation of the agriculture sector and increase the attractiveness of rural areas.

Implementation in 2023-24: Several calls were launched in 2023, including for the following interventions: investments in bio-economy businesses (EUR 10 million), sustainable investments in agricultural holdings (EUR 10 million), investments in agricultural holdings (EUR 50 million), development of small and medium-sized farms (EUR 9 million), development of very small farms (EUR 3 million), establishment of young farmers (EUR 15 million).

Table 11.22. Overview of Lithuania’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 4 183 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: Yes Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetable, wine
Pillar 2 Share of EU financing (average): 77% EU funding for environmental and climate objectives: 40% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Lithuania is developing FarmGHG, an online tool that will be used to calculate the farm-level CO₂ emissions and absorptions for certification and trading purposes. The system is currently being used to increase farmers’ understanding of the links between their farming practices and emissions.

• To help farmers and companies to overcome financial difficulties related to increased energy and other essential resource costs, preferential loans totalling EUR 53 million were made available. A total of 658 farmers and companies utilised these loans under this temporary measure.

• Individual guarantees were provided in the first half of 2023 for loans intended for investment and working capital to mitigate adverse economic consequences of Russia’s war of aggression against Ukraine and enhance access to financial services.

Luxembourg

CAP Strategic Plan 2023-27

Main objectives: Provide fairer income for agricultural producers; strengthen the competitiveness of agricultural and agri-food businesses; ensure generational renewal in farms; further develop organic farming; reduce pesticides, greenhouse gas and ammonia emissions and promote carbon sequestration.

Implementation in 2023-24: The redefinition of active farmer and its age limit potentially leading older farmers to retire is expected to ease access of young farmers to land. A higher-than-planned participation in eco-schemes led to a shortfall in EU budget that was covered by national funds. Flexible measures incentivising reduced pesticide use and cover cropping had more success than measures encouraging not to produce, such as non-productive areas and strips. Year 2023 showed a higher uptake of agri-environmental schemes, such as nitrogen fertilisation reduction, grazing and new measures to maintain or reduce livestock.

Table 11.23. Overview of Luxembourg’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 465 million Transfer between pillars: 1% of initial budget from Rural Development to Direct Payments
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: Yes Sectoral interventions: Apiculture
Pillar 2 Share of EU financing (average): 20% EU funding for environmental and climate objectives: 75% Additional national co-financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• The national focus on reducing GHG and ammonia emissions in the light of EU emissions reduction targets led to the introduction of new measures supporting the reduction of livestock numbers and encouraging rapid manure incorporation, while strengthening the environmental protection conditions of existing programmes. In addition, a new agricultural law has introduced an authorisation system for herd expansions.

• EUR 1.4 million was approved for emergency financial assistance to all agricultural sectors impacted by specific problems affecting the economic viability of agricultural producers, targeting those facing exceptionally high production costs and those impacted by high electricity prices.

• Approved in April 2023 and in force since January 2024, the sale to the general public of certain herbicides, insecticides, antislugs and fungicides have been banned. The new measures announced are part of the national action plan to reduce the use of plant protection products.

Malta

CAP Strategic Plan 2023-27

Main objectives: Pursue environmental and climate objectives; provide fair income for farmers and workers; improve rural conditions and infrastructure. introduce new technologies and extend digitalisation also in connection with farm resilience.

Implementation in 2023-24: In November 2023, Malta set up the national CAP Network to bring together, engage and increase the involvement of all relevant stakeholders in the CSP’s implementation, as well as to ensure an efficient exchange of information, good practices, experiences, and ideas as well as enhancing communication flows between the various stakeholders.

Table 11.24. Overview of Malta’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 160 million Transfer between pillars: 21% of initial budget from Rural Development to Direct Payments
Pillar 1 Direct payments: Capping: No Degressivity: No Payment for small farmers: Yes Sectoral interventions: Apiculture
Pillar 2 Share of EU financing (average): 65% EU funding for environmental and climate objectives: 48% Additional national financing: EUR 3 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• The first national Action Plan for Organic Food was published in September 2023 and covers the years 2023 to 2030. The plan addresses the needs of the agricultural sector to move towards organic production and achieve Malta’s target of having 5% of its utilisable agricultural area under organic certification by 2030.

• Malta adopted a new regulatory framework for olive growers and olive processors for the cultivation and registration of olives and the production of olive oil. The new regulations separate the registration of olive groves and the monitoring of olive oil production from the certification, labelling, bottling and quality standards of olive oil, and compliance with the required marketing standards.

Netherlands

CAP Strategic Plan 2023-27

Main objectives: Support farmers that contribute to the transition to sustainable agriculture; ensure food security and fair farm income.

Implementation in 2023-24: About 80% of BISS participants have signed up to the single Dutch eco‑scheme in 2023, corresponding to more than 35 500 farmers. Due to this high uptake, additional national funding (around EUR 50 million) was granted to this intervention. Amendments to the eco-scheme adopted in 2023 include the addition of precision spraying, precision fertilisation, and fertigation among the supported farming practices. Additional adjustments include the possibility for farmers to add the “grazing” and “protein crops” eco-activities in the eco-scheme application for 2024.

Table 11.25. Overview of the Netherlands’ CSP as initially approved

Main features	Budget distribution
Budget: EUR 4 899 million Transfer between pillars: 21% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 72% EU funding for environmental and climate objectives: 47% Additional national co-financing: EUR 434 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• On 2 May 2023 the European Commission authorised two Dutch aid schemes worth EUR 1.47 billion linked to the “National Cattle Cessation Scheme” (LBV and LBV plus). Such schemes support the permanent and irreversible cessation of specific cattle operations in order to reduce nitrogen deposits in “Natura 2000” areas. Farmers who take part in the EUR 500 million LBV scheme will be directly compensated for 100% of the losses incurred by the closure of their dairy cattle, pig and poultry breeding sites. The EUR 975 million LBV plus scheme will only be open to “peak-load emitting breeding sites” that emit a high level of nitrogen per year, fixed as a minimum level.

• The Netherlands has introduced a structural investment fund dedicated to sustainable agriculture. This revolving fund, amounting to EUR 130 million, will offer loans with favorable terms for investments in sustainable agriculture. These investments must be supported by a business plan that addresses multiple sustainability goals and should be co-financed through additional sources.

Poland

CAP Strategic Plan 2023-27

Main objectives: Support the sustainable development of farms and the processing sector; support the protection of water, soil, air, and biodiversity; improve the living and working conditions in rural areas; promote the production and use of sustainable energy.

Implementation in 2023-24: In 2023 calls for applications were launched for more than half of the 82 types of interventions under the CSP 2023-27. Amendments to the plan approved by the European Commission in 2023 include: the introduction of the payments for small farmers (PSF) in the amount of EUR 225/ha (USD 243/ha) (max. EUR 1 125/farm or USD 1 216/farm) and lowering the entry threshold (from 0.5 LU/ha to 0.3 LU/ha) within an additional payment for organic farms with sustainable plant-animal production (livestock density between 0,3 LU/ha and 1,5 LU/ha of UAA in the farm.

Table 11.26. Overview of Poland’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 24 978 million Transfer between pillars: 29% of initial budget from Rural Development to Direct Payments
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 60% EU funding for environmental and climate objectives: 43% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In response the high prices of mineral fertilisers, Poland adopted a state aid totalling PLN 4.7 billion (equivalent to EUR 1 billion or USD 1.1 billion) to support agricultural producers who had purchased specific types of fertilisers in the period from 16 May 2022 to 15 May 2023. The amount of support for eligible farmers was calculated based on the size of the sown area.

• Subsidies were introduced to support agricultural producers at the risk of losing financial liquidity due to the impact of war in Ukraine on the Polish market. About PLN 2.8 billion (EUR 0.6 billion or USD 0.7 billion) was allocated to subsidise the interest on bank loans with rates above 2%, granted until mid-2024 for up to 60 months. Moreover, state aid of around PLN 5 billion (EUR 1.1 billion or USD 1.2 billion) was approved for several sectors, including wheat, maize, oilseeds, and pig meat.

• On 1 July 2023, the Act on the Agricultural Protection Fund took effect. This law enables agricultural producers to seek compensation for income losses resulting from purchaser bankruptcy.

Portugal

CAP Strategic Plan 2023-27

Main objectives: Support innovative and sustainable agricultural and forestry production; ensure sustainable food security.

Implementation in 2023-24: The Ministry of Agriculture and Food made payments of EUR 1.4 billion in 2023. On 2 February 2024, the European Commission approved Portugal’s first amendment to the plan, including on EAFRD budget, financial ceilings, and additional national financing. Additional funding will be available for eco-schemes on organic and integrated farming, due to their high uptake.

Table 11.27. Overview of Portugal’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 6 620 million Transfer between pillars: 16% of initial budget from Rural Development to Direct Payments
Pillar 1 Direct payments: Capping: No Degressivity: Yes Simplified payment for small farmers: Yes Sectoral interventions: Apiculture, fruit and vegetable, wine
Pillar 2 Share of EU financing (average): 80% EU funding for environmental and climate objectives: 47% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In May 2023, the EC approved an exceptional EUR 180 million support package for agricultural production as part of the “Pact for the Stabilisation and Reduction of Food Prices”. The programme includes EUR 140 million to compensate for the increase in costs of inputs, EUR 32 million to support tax fuel exemption and EUR 7 million for energy costs.

• The Agri-Food Price Observatory was launched in September 2023. This online tool monitors the costs and price of a food basket, at the various stages of production and up to the point of sale and is aimed at reinforcing information and transparency throughout the entire agri-food chain. The Observatory will provide monthly updated information on the prices of a basket of 26 food products (for example, eggs, fruit, olive oil or dairy products), from production to consumption.

• In January 2024, support to mitigate effects of droughts was approved. EUR 28.9 million will be provided for various sectors. The payments were distributed as follows: for the cattle sector – EUR 16.4 million; sheep sector – EUR 9.4 million; pig meat sector – EUR 0.3 million; beekeeping – EUR 1.3 million; winter cereals – EUR 1.5 million.

Romania

CAP Strategic Plan 2023-27

Main objectives: Promote a smart, resilient, and diversified agricultural sector; strengthen market orientation and increasing the competitiveness of the agri-food sector; ensure coherent socio-economic development of rural areas.

Implementation in 2023-24: 760 000 applications were received until June 2023, covering almost 10 million ha of agricultural area (out of about 3.5 million farmers and 13.5 million ha). The European Commission approved the CSP’s amendments in December 2023. The new version includes improved conditions for accessing direct payments, a new definition of the active farmer and a new intervention that will support cattle through coupled support.

Table 11.28. Overview of Romania’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 15 611 million Transfer between pillars: 3% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: No; Degressivity: No; Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 85% EU funding for environmental and climate objectives: 41% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In June 2023 a state aid scheme was approved for the INVESTALIM programme over the period 2023-26, with a budget of around EUR 600 million (EUR 148 million per year), which aims to support the development of food processing (including general services to processing and marketing as well as loans to processors).

• In November 2023 Romania approved a long-term strategy for reducing GHG emissions, which aims to make the country carbon neutral by 2050. The strategy includes scenarios, options, costs and benefits of the measures to be implemented in agriculture and in land use, land-use change and forestry sector (LULUCF), but it does not include a specific target for agriculture.

• From October to December 2023 only pre-authorised economic operators were allowed to import wheat, maize, rapeseed, sunflower seed, sugar and flour from Ukraine. The certificate of authorisation was delivered by the national sanitary and phytosanitary agency, following an approval delivered by a committee composed by the Ministry of Agriculture and Rural Development, Customs authority, Ministry of Economy, and the national sanitary and phytosanitary agency.

Slovak Republic

CAP Strategic Plan 2023-27

Main objectives: Ensure the sustainable competitiveness and resilience of farms; provide fairer income for agricultural producers; improve the quality of life in rural areas through investments, knowledge transfer and innovation; ensuring the sustainable management of natural resources, and climate action.

Implementation in 2023-24: The uptake rate of whole-farm eco-scheme was about 52.2% of all eligible farms (85.6% in terms of agricultural land), while the eco-scheme on animal welfare was applied to more than 250 000 animals. The Slovak Republic permitted an exception from compliance with the GAEC 7 on crop rotation rules in the frameworks of conditionality. The CSP’s amendment approved by the European Commission in 2023 includes an updated definition of active farmer, now including income from forestry and income related to nature and landscape protection. Sector-specific interventions were implemented to increase participation of farmers in producer organizations for the dairy, pig meat, and potato sectors.

Table 11.29. Overview of Slovak Republic’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 4 097 million Transfer between pillars: 1% of initial budget from Direct payments to Rural Development
Pillar 1 Direct payments: Capping: Yes Degressivity: Yes Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, dairy, pig meat, sheep meat and goat meat, potatoes, wine
Pillar 2 Share of EU financing (average): 63% EU funding for environmental and climate objectives: 47% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• In response to the economic losses caused by increased imports of low-priced grains from Ukraine, the EU Agricultural Reserve has allocated EUR 5.24 million to compensate affected producers, as specified by Commission Implementing Regulation No. 2023/1343. Additionally, in line with this regulation, the Slovak Republic Government has opted to enhance this support by up to 200%.

• In the context of climate change mitigation, funds were allocated to foster education related to mitigation and adaptation (EUR 2 million). Other funds were directed to support investments in renewable energy sources in agricultural enterprises (EUR 8 million).

• The Slovak Republic’s land consolidation project, aimed at accelerating the settlement of property rights, reached 12% of total cadastral territories in 2023.

Slovenia

CAP Strategic Plan 2023-27

Main objectives: Ensure food security and sustainable food production; improve the competitiveness and resilience of farms; environment protection, sustainable management of natural resources and climate change mitigation and adaptation; create vibrant rural communities.

Implementation in 2023-24: Two amendments to the plan were approved by the European Commission. Key changes involved the measures on the establishment of young farmers, the payments for organic farming and Natura 2000 payments. In 2023 most of the activities aimed at establishing a management and control system for the CSP implementation, including setting the Managing authority and the Monitoring committee of the plan.

Table 11.30. Overview of Slovenia’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 1 769 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: No Degressivity: Yes Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 48% EU funding for environmental and climate objectives: 59% Additional national financing: No

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Several exceptional financial aids (totalling EUR 6.4 million) were granted to agricultural holdings affected by the consequences of the rising energy costs and input prices and inflation, while farmers negatively affected by the severe drought of 2022 received EUR 24.3 million of national aids.

• In 2023, Slovenia was hit by a catastrophic flood, one of the worst natural disasters in the country’s history. Numerous legal acts were adopted to deal with the consequences of the floods, but most of aids will be granted in 2024. In 2023 only a small percentage of the planned expenditure was made, corresponding to EUR 3.7 million.

• The co-financing rate for all insurance premiums (field crops and permanent crops, animal diseases, etc.) increased to 60% in 2023, compared to 55% in 2021 and 2022.

Spain

CAP Strategic Plan 2023-27

Main objectives: Provide a fair support to all farmers by taking into account regional specificities; promote an economic, social and environmentally sustainable development of farming, food and rural areas; ensure food security and health through a competitive agri-food sector; modernise and consolidate rural areas.

Implementation in 2023-24: Support requests submitted in 2023 covered over 22.2 million ha, or 90% of the utilised agricultural area, a similar share than in previous years. Three-quarters of the 622 604 farmers applying for aid have committed to implementing eco-schemes, representing 87% of the total area declared. Technical adjustments were made to the CSP to facilitate its regional implementation by the Autonomous Communities, including budget reallocations between measures and modifications to co-financing rates. These changes led to an increase of EUR 10.1 million in the Pillar 2 budget reserved for environmental and climate-related objectives.

Table 11.31. Overview of Spain’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 33 969 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: Yes Degressivity: Yes Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables, wine
Pillar 2 Share of EU financing (average): 65% EU funding for environmental and climate objectives: 48% Additional national financing: EUR 498 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• Additional support was granted to respond to the crisis and reduce the economic impact of Russia’s war of aggression against Ukraine on the agricultural sector, situation aggravated by drought conditions. Additional national aid was approved for the livestock sectors (EUR 355 million), beekeeping (EUR 5 million) and other agricultural sectors (EUR 277 million).

• In the context of these emergency measures, in 2023 the budget of the Ministry of Agriculture, Fisheries and Food for subsidising agriculture insurance reached EUR 358.2 million, the highest in the history of the Spanish agricultural insurance system.

• On water management, new agreements in 2023 will mobilise EUR 745 million of additional investments for irrigation modernisation and efficiency. The first session of the National Irrigation Board, in charge of promoting co-operation, consultation, analysis, and information exchange on matters related to irrigation, was held in December 2023. The second will be held in mid-2024.

Sweden

CAP Strategic Plan 2023-27

Main objectives: Increase the productivity, viability, and competitiveness of the agricultural sector; seek increased ambition in environmental and climate standards; increase food production.

Implementation in 2023-24: Sweden did not make any major changes to the CSP since its implementation. Three eco-schemes were adopted: one on catch crops, intermediate crops and spring tillage aiming at increasing carbon storage and nutrient retention, one on precision farming and one on organic farming.

Table 11.32. Overview of Sweden’s CSP as initially approved

Main features	Budget distribution
Budget: EUR 6 020 million Transfer between pillars: No
Pillar 1 Direct payments: Capping: No Degressivity: No Simplified payment for small farmers: No Sectoral interventions: Apiculture, fruit and vegetables
Pillar 2 Share of EU financing (average): 40% EU funding for environmental and climate objectives: 62% Additional national financing: EUR 553 million

Note: Data relate to the initially approved planned budget for the entire duration of the CAP 2023-27, published by DG-AGRI on 19 April 2023. Total budget and budget distribution include transfers between pillars and national co-financing, but do not include additional national financing.

Source: Overview of EU countries’ CAP Strategic Plans interventions (EC, 2023[5]; EC, 2024[36]; EC, 2023[34]).

Other key policy developments in 2023-24

• With the aim of compensating agriculture and forestry for increased costs of various inputs and declining competitiveness, in 2023 a tax reduction was applied to diesel used in professional agriculture, forestry and aquaculture activities.

• A national knowledge hub (kunskapsnav) for animal production was established in 2023 to bridge the knowledge gap between research and practice, by compiling and disseminating knowledge, strengthening collaboration between AKIS (Agricultural Knowledge and Innovation Systems) actors, and improving integration of advisors within AKIS.

• In 2023 the national climate action plan (regeringens klimathandlingsplan) was adopted. The plan contains about 70 proposals, including for agriculture. For agriculture, the main focus is increased productivity. It is stated that national policies must not impede competitiveness or result in emission leakage. The government offers funding of further R&D for methods and try-outs. It is also planned to look over how to make investments in climate measures in agriculture more effective.

• Contracts between the government and landowners to rewet peat forest land (återvätningsavtal) were established and will be valid for 50 years. The rewetting of peatland is expected to halt the CO₂ emissions caused by the drainage. The initiative is based on voluntary participation by landowners.

Policy context

Key economic and agricultural statistics

The European Union is the largest economic region covered in this report, accounting for 18% of the economic activity of all countries covered herein. Although the contribution of agriculture to both GDP and employment has declined since 2000, the share of agriculture in the region’s exports has increased over the same period (Table 11.33). More than 40% of the region’s landmass is dedicated to agriculture, of which nearly 60% is dedicated to arable land use. Crops (including cereals, oilseeds, fresh fruit and vegetables, and plants and flowers) predominate in agricultural output, accounting for 59% of total production, although large differences exist across Member States. Livestock products – including dairy, beef and veal, pig meat, sheep meat, poultry and eggs – account for the remainder.

Table 11.33. European Union: Contextual indicators

	European Union		International comparison
	2000* (EU15)	2022 (EU27)*	2000*	2022*
Economic context			Share in total of all countries
GDP (billion USD in PPPs)	9 933	24 455	24.8%	17.9%
Population (million)	378	447	8.8%	8.5%
Land area (thousand km2)	3 124	3 997	3.8%	4.9%
Agricultural area (AA) (thousand ha)	140 380	162 908	4.1%	5.6%
			All countries1
Population density (inhabitants/km2)	114	106	52	64
GDP per capita (USD in PPPs)	26 302	54 483	9 363	25 965
Trade as % of GDP	10.9	18.0	12.3	16.6
Agriculture in the economy			All countries1
Agriculture in GDP (%)	2.2	1.7	2.9	3.8
Agriculture share in employment (%)	4.3	3.7	-	-
Agro-food exports (% of total exports)	7.1	8.7	6.4	8.0
Agro-food imports (% of total imports)	7.4	5.5	5.8	6.9
Characteristics of the agricultural sector			All countries1
Crop in total agricultural production (%)	54	59	-	-
Livestock in total agricultural production (%)	46	41	-	-
Share of arable land in AA (%)	52	64	32	34

Note: *or closest available year.

1. Average of all countries covered in this report.

Sources: OECD statistical databases; International Labour Organization (ILO); UN Comtrade; World Bank, WDI; FAO database and national data.

After the strong rebound in 2021, real GDP growth in the region has remained positive (Figure 11.5). The unemployment rate has declined steadily since 2013, falling from a high of 11% in 2013 to 6% in 2023. A sharp rise in inflation under the pressure of energy, food and other commodity prices hit the European Union economy in 2021-22. Geographical proximity to war and dependence on imports of fossil fuels make the European Union one of the most exposed economies in this respect.

The European Union has been the world’s largest agro-food exporter since 2013 and also remains one of the largest importers (Figure 11.6). The region is a net food exporter, with agro-food products accounting for 8.7% of all EU exports and 5.5% of all EU imports. The region’s agro-food exports are overwhelmingly composed of processed goods for final consumption (60%), while imports are more evenly distributed among the four categories shown in Figure 11.6, with primary goods for industry accounting for the largest share of imports (30%).

The European Union’s overall agri-food trade is broadly diversified across numerous trade partners, with a trend toward greater diversification since 2012. At the same time, for certain products – such as spirits, wine and pig meat on the export side, and oilseeds and maize on the import side – the European Union still relies heavily on key partners, which poses a risk of market instability if trade is disrupted (EC, 2023[37]).

There has been significant growth in the value of trade under the EU’s trade agreements, which in 2022 surpassed EUR 2 trillion for the first time. Agri-food exports to preferential partners grew by 17.5% between 2021 and 2022, outpacing overall export growth and driven by cereals and dairy products The EU’s network of 42 trade agreements with 74 partners, covering 44% of all EU trade, is seen as a key contributor to sustaining trade and investment in the face of geopolitical challenges such as Russia’s war of aggression against Ukraine (EC, 2023[37]).

In February 2024, the Joint Research Centre (JRC) published a study entitled “Cumulative economic impact of upcoming trade agreements on EU agriculture - 2024 update”, which quantifies the effects of trade agreements recently concluded or in negotiation on key EU agricultural commodities. Comparing conservative and ambitious trade liberalisation scenarios with a baseline for 2032, the study projects an EU agro-food export growth of 27% to 38%. Despite potential negative impacts on beef, wine, processed food, dairy, and sheep meat, the overall benefits of the agreements are expected to surpass these losses, highlighting the need for diversified export markets and import sources (JRC, 2024[38]).

At 0.76%, agricultural output growth in the European Union over the period 2012-21 was significantly below the world average of 1.89% (Figure 11.7). Total Factor Productivity (TFP) growth – which was above the world average over the period at 1.35% on average – was sufficient to more than offset the impact of reduced primary factor input use, including labour, land, livestock and machinery, on agricultural output.

Moderate TFP growth has been achieved in the sector along with a reduction of certain environmental pressures, as illustrated through various environmental indicators (Table 11.34). From 2000 to 2022, the region’s nitrogen balance fell by 36%, the phosphorous balance declined by nearly 80%, while the share of agriculture in water abstractions fell by 14 percentage points. At the same time, although the European Union has achieved reductions in these indicators, the region’s nitrogen balance is more than 50% higher than the OECD average, with some Member States experiencing nitrogen surpluses more than three times above the EU average. While the region achieved improvements in most environmental indicators, agriculture’s GHG emissions as a proportion of total European Union GHG emissions increased over the period, from 8.8% in 2000 to 10.9% in 2022.

Table 11.34. European Union: Productivity and environmental indicators

	European Union		International comparison
	1991-2000	2012-2021	1991-2000	2012-2021
			World
TFP annual growth rate (%)	1.1%	1.3%	1.7%	1.1%
			OECD average
Environmental indicators	2000 (EU15)*	2022 (EU27)*	2000*	2022*
Nitrogen balance, kg/ha	68.4	44.0	32.1	28.2
Phosphorus balance, kg/ha	7.3	1.5	3.3	2.3
Agriculture share of total energy use (%)	2.0	2.8	1.7	2.0
Agriculture share of GHG emissions (%)	8.8	10.9	8.7	10.1
Share of irrigated land in AA (%)	..	..	-	-
Share of agriculture in water abstractions (%)1	41.7	27.5	47.0	49.5
Water stress indicator	..	..	8.7	..

Note: * or closest available year. EU27 for TFP annual growth rate:1993-2002.

1. Due to the data availability, the EU15 aggregate does not include Austria, Germany, Ireland, Italy and the United Kingdom; while the EU27 aggregate does not include Austria, Finland, Hungary, Ireland, Italy and Portugal.

Sources: USDA Economic Research Service, Agricultural Productivity database; OECD statistical databases; FAO database and national data.

Historical trends in agricultural policies

The Common Agricultural Policy (CAP) has been the European Union’s agricultural policy framework since its institution in 1962, although the mix of policy instruments has evolved substantially over time (Table 11.35). The Treaty of Rome that established in 1957 the European Economic Community defined common policies on agriculture and trade (OECD, 2011[39]; European Parliament, 2021[40]). Agriculture made up a much larger share of Europe’s economy at the time, and the income gap between urban and rural households was increasing. Moreover, the region was a net food importer with concerns about securing adequate food supplies during the Cold War (Grant, 2020[41]). In this context, the Treaty of Rome laid down five main objectives for the CAP:

1. To increase agricultural productivity by promoting technical progress and ensuring the optimum use of the factors of production, in particular labour

2. To ensure a fair standard of living for farmers

3. To stabilise markets

4. To assure the availability of supplies

5. To ensure reasonable prices for consumers.

CAP measures targeting these objectives were financed from the European Agricultural Guidance and Guarantee Fund (EAGGF), split into separate Guidance and Guarantee sections. Different rules governed the two: the Guidance section financed operations related to structural policy and development of rural areas, while the Guarantee section funded expenditures on market and price policies (European Parliament, 2021[42]).

For more than three decades until the 1990s, support prices under the CAP were high compared to world market prices, with an unlimited buying guarantee. As a result, European farmers produced increasing surpluses and the cost of managing stocks and subsidising exports grew accordingly. In response, by the 1980s the European Union introduced quantitative production restrictions in the form of quotas on milk production.

The CAP’s first major reform occurred in 1992, in conjunction with negotiations on the General Agreement on Tariffs and Trade (GATT) and following the result from the US-EU soya GATT panel. The MacSharry Reform brought a major shift in the delivery of the CAP. Instead of supporting production (through market intervention and export subsidies), the regime shifted the bulk of support to supporting producer incomes directly through area and headage payments, aiming to close the gap between supply and demand and reduce overall expenditures (European Parliament, 2021[43]). This wide-ranging reform reduced cereal intervention prices, introduced compensatory payments per hectare for cereals or per head for livestock, and introduced a mandatory set-aside scheme to take land out of production. In conjunction with the reform of budgetary support measures through the MacSharry package, market price support (MPS) also declined thanks to EU commitments under the 1995 Uruguay Round Agreement on Agriculture. Namely, bound tariffs were gradually reduced, and variable import levies were replaced with ad valorem or specific tariffs and tariff rate quotas (OECD, 2011[39]).

Subsequent reforms built on the foundation of the MacSharry Reform, reducing distortive support to the agricultural sector or changing how support is delivered. The Agenda 2000 reform focused on aligning EU and world prices, offsetting the reduction of price support with increased direct aid to producers under the now called Pillar 1 (European Parliament, 2021[43]). In addition, the Rural Development Regulation was introduced as Pillar 2 of the CAP. Finally, this package instituted two types of environmental cross-compliance conditions: an optional measure linked to the direct payment in Pillar 1, and the so-called “Good Farming Practice” requirements for the agri-environmental schemes in Pillar 2.

The 2003 Fischler Reform21 further developed and consolidated these measures, decoupling most support from production through the introduction of the single payment scheme (SPS) (European Parliament, 2021[43]). Furthermore, in this reform cross-compliance became obligatory and was extended to include not only environmental issues but also public, animal and plant health and animal welfare issues. Cross-compliance rules were enforced through a set of Statutory Management Requirements (SMR) and “Minimum Requirements for Good Agricultural and Environmental Condition” (GAEC). This package also introduced modulation, allowing Member States to transfer funds between the two pillars to reinforce rural development objectives. The reform also prioritised financial discipline, freezing the budget of Pillar 1 (covering the SPS and market measures) and imposing annual compulsory ceilings. This coincided with the splitting of the CAP budget into the European Agricultural Guarantee Fund (EAGF) to finance Pillar 1 and the European Agricultural Fund for Rural Development (EAFRD) to finance Pillar 2 from 2007. Additionally, this round of reform introduced the single common market organisation (CMO) in 2007, which codified the regulation mechanisms of the existing CMOs. Reform programmes for specific commodities (cotton, hops, olive oil, tobacco, sugar, fruits and vegetables, and wine) were introduced from 2003 to 2008, with the aim of reducing distortive payments, restoring market-based incentives and aligning them with the SPS (OECD, 2011[39]). Through the different rounds of CAP reform, as result of budgetary payments replacing MPS, but also as result of the additional Member States joining the European Union, the absolute budget figure for the CAP more than doubled from 1990 to 2010.

Measures taken under the 2009 Health Check sought to continue the direction of the 2003 reform. Namely, decoupling of aid continued and nearly all payments (with the exception of suckler cow, sheep and goat premia) were included into the decoupled direct payments scheme - SPS. It also further reduced market intervention for a number of products, abolished set-aside and introduced phase-out of milk quotas. Additional flexibility for direct payments was introduced as well (OECD, 2011[39]). The Health Check also resulted in changes to both SMR and GAEC of cross-compliance, with the addition of two water management standards.

The 2013 Reform set out a more global, integrated approach to agricultural support for the programming period 2014-20, undertaken through four lines of action (European Parliament, 2021[43]): (1) converting decoupled aid into a multifunctional support system with aid directed toward specific objectives; (2) consolidating the two CAP pillars, with mostly decoupled direct aid and market measures funded through Pillar 1, and rural development funded through Pillar 2, which continued to be co-financed by the Member State; (3) consolidating CMO tools into safety nets in case of market disruption or price crisis, and ending other supply control measures, namely the sugar and milk quotas; (4) a more integrated, targeted and territorial approach to Pillar 2 through rural development plans, simplifying the range of available instruments to focus on certain core objectives.

During the negotiations of the new CAP post-2020, a political agreement between the European Parliament and the EU Member States in the Council was reached on transitional rules for the CAP for 2021-22 on 27 November 2020. These transitional rules were based on the principle of continuity of the 2014-20 CAP rules, while also including new elements to ensure a smooth transition.

In January 2023, the European Commission and the European Union Member countries began to implement the new CAP 2023-27. Although with a similar annual budget as the transitional period, the new CAP entails a new delivery model, in which Member States play a critical role in designing and implementing their CAP Strategic Plans (CSPs), which include both Pillar 1 and Pillar 2 measures.

While CAP budget has remained relatively stable in nominal terms since 2010, CAP expenditures as a share of the total EU budget declined sharply, from 65.5% in 1981 to 23.5% in 2022. The share of CAP expenditure on the total EU budget was 34.9% in 2020. The stronger decreases in 2021 and 2022 are linked to additional overall EU expenditure for the Next Generation EU funds (EC, 2024[44])

Table 11.35. European Union: Agricultural policy trends

Years	Main Milestones	Key Policy Features
pre-1992	Coupled support phase: CAP financed by the European Agricultural Guidance and Guarantee Fund (EAGGF), European Economic Community with 12 members1	Support prices greater than world prices Unlimited buying guarantee Production quotas for certain products, including dairy and sugar
1992-1999	MacSharry Reform: CAP, EU Expansion 1995 (Austria, Finland, Sweden), Uruguay Round Agreement on Agriculture	Shift from product support through prices to producer support through income-supporting measures, with the reduction in intervention prices compensated by increased direct aid per hectare or livestock headage payments Establishment of set-aside payments to encourage land retirement Tariffication of border measures and gradual reductions in bound tariffs
2000-2002	Agenda 2000 CAP Reform: CAP divided into Pillar 1 and Pillar 2 (Rural Development)	Further reduction of EU market support prices in closer alignment with world prices, partly offset by direct aid to producers in the form of increased area or headage payments First introduction of environmental cross-compliance Introduction of Rural Development Regulation as a second pillar of the CAP
2003-2008	Fischler Reform: CAP Pillars 1 (financed by EAGF) and 2 (financed by the European Agricultural Fund for Rural Development EAFRD), EU Expansion 2004 (Malta, Cyprus, Estonia, Latvia, Lithuania, Poland, Czechia, the Slovak Republic, Slovenia, Hungary) and 2007 (Bulgaria and Romania)	Decoupling much of CAP support from volume of production, with fixed single farm payment (SPS) introduced based on historical references Cross-compliance for environmental and public health objectives compulsory for receiving full payments. Introduction of Statutory Management Requirements (SMR) and “Minimum Requirements for Good Agricultural and Environmental Condition” (GAEC) Single common market organisation (CMO) introduced Reform programmes initiated for cotton, hops, olive oil, tobacco, sugar, fruit and vegetable and wine regimes
2009-2013	Health Check: CAP Pillars 1 and 2	Further reduction of EU market intervention for certain products Phasing out of milk quotas initiated Abolition of set-aside Integration of nearly all payments into SPS New cross-compliance requirements introduced
2013-2020	2013 Reform: CAP Pillars 1 and 2, EU Expansion 2013 (Croatia) and Contraction 2020 (United Kingdom)	Decoupled aid converted to multifunctional support (including basic payment, greening payment, small farmer payment, etc.) Consolidation of two pillars of CAP, with direct payments and market measures under Pillar 1 Consolidation of CMO tools, abolition of supply control measures (including ending milk and sugar quota schemes) External and internal convergence, with payment envelopes gradually adjusted to move toward a uniform minimum per hectare payment
2021-2022	Transitional rules	Continuity of the 2014-2020 CAP rules, while also including new elements to ensure a smooth transition
2023-2027	CAP 2023-27 Introduction of new delivery model and CAP Strategic Plans	The new delivery model requires Member States to programme both CAP Pillar 1 and Pillar 2 expenditures within the context of their CAP Strategic Plans. Enhanced conditionality and eco-schemes were introduced.

1. When the Maastricht Treaty establishing the EU was signed in 1992, Belgium, Denmark, France, Germany, Ireland, Italy, Greece, Luxembourg, the Netherlands, Portugal, Spain and the United Kingdom were part of the Union.

Source: European Parliament (2021[43]) and OECD (2011[39]).

Total support to the agricultural sector as percentage of agricultural gross value-added in the European Union largely comes from budgetary allocations. Market price support declined significantly from 1986 through the 2000s but has remained mostly unchanged since around 2010. The most substantial change to PSE composition began in the mid-2000s after the Fischler reform decoupled most payments to farmers from production (Figure 11.8).

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[6] European Parliament (2023), The Common organisation of the markets (CMO) regulation, https://www.europarl.europa.eu/factsheets/en/sheet/293655/the-common-organisation-of-the-markets-cmo-regulation (accessed on 19 April 2024).

[42] European Parliament (2021), Financing of the CAP, European Parliament, https://www.europarl.europa.eu/factsheets/en/sheet/106/financing-of-the-cap.

[43] European Parliament (2021), The Common Agricultural Policy - Instruments and Reforms, https://www.europarl.europa.eu/factsheets/en/sheet/107/the-common-agricultural-policy-instruments-and-reforms.

[40] European Parliament (2021), The Common Agricultural Policy (CAP) and the Treaty, European Parliament, https://www.europarl.europa.eu/factsheets/en/sheet/103/the-common-agricultural-policy-cap-and-the-treaty.

[41] Grant, W. (2020), “The Common Agricultural Policy: An Overview”, EuropeNow 37, https://www.europenowjournal.org/2020/11/09/the-common-agricultural-policy-an-overview/.

[38] JRC (2024), Cumulative economic impact of future trade agreements on EU agriculture, https://publications.jrc.ec.europa.eu/repository/handle/JRC135540.

[17] Núñez Ferrer, J. et al. (2023), The cost of non-rurality - preparing for a better urban-rural balance in EU funding, https://doi.org/10.2863/969318.

[32] OECD (2023), Agricultural Policy Monitoring and Evaluation 2023: Adapting Agriculture to Climate Change, OECD Publishing, Paris, https://doi.org/10.1787/b14de474-en.

[2] OECD (2023), Policies for the Future of Farming and Food in the European Union, OECD Agriculture and Food Policy Reviews, OECD Publishing, Paris, https://doi.org/10.1787/32810cf6-en.

[1] OECD (2017), Evaluation of Agricultural Policy Reforms in the European Union: The Common Agricultural Policy 2014-20, OECD Publishing, Paris, https://doi.org/10.1787/9789264278783-en.

[39] OECD (2011), Evaluation of Agricultural Policy Reforms in the European Union, OECD Publishing, Paris, https://doi.org/10.1787/9789264112124-en.

[11] Van Oost, I. (2021), Common Agricultural Policy Post-2020: in the CAP networks and in Horizon Europe, http://www.innoseta.eu/wp-content/uploads/2021/06/2.-DG-Agri-Inge-Van-Oost.pdf (accessed on 6 August 2022).

Notes

← 1.  The OECD Producer Support Estimate database calculates support for the European Union as a whole, without reflecting possible cross-country variations between individual Member States.

← 2.  Sectoral support for apiculture is the only intervention co-financed by Member states under Pillar 1.

← 3.  Co-financing rates vary by measure and by Member State, within rules established at EU level.

← 4.  Rules on support for CSPs are established by EU Regulation 2021/2115, which also sets the rules on the Performance Monitoring and Evaluation Framework (PMEF), which applies for the CAP from 2023 until 2027.

← 5.  SAPS, a more simplified alternative to BPS, offered a uniform decoupled per hectare payment rate and was applied by all Member States that joined the European Union since 2004 except Slovenia, Malta, and Croatia, which decided to implement the BPS instead.

← 6.  CAP support to young farmers generally involves combining CIS-YF with Pillar 2 interventions. Overall EU countries must dedicate an amount corresponding to at least 3% of their direct payments budget to support young farmers.

← 7.  Coupled support aims to address difficulties in sectors, types of production or specific types of farming that are important for socio-economic or environmental reasons. Among the sectors that CAP strategic plans can target, protein crops can be counted without any specific justification, as this could contribute to reducing the EU’s dependency on imports in the sector and the use of nitrogen fertilisers.

← 8.  While under the CAP 2014-22 the reduction of the basic payments (BPS and SAPS) by at least 5% for the part of the amount exceeding EUR 150 000 (USD 158 000) was mandatory, with the new CAP this “degressivity” became voluntary and thresholds were modified.

← 9.  Through the CMO/Amending Regulation (EU) 2021/2017, provisions concerning aid schemes set out in Part II, Title I, Chapter II, Sections 2 to 6, of Regulation (EU) No 1308/2013 on the common organisation of agricultural markets have been deleted, as all types of intervention in the sectors concerned are now set out in Title III, Chapter III (Types of intervention in certain sectors) of Regulation (EU) 2021/2115 on the CAP strategic plans.

← 10.  Regulation (EU) 2021/2115 allows Member States to increase their co-financing rate from the minimum obligatory 50% up to 70% to further enhance their budget. Three Member States (Bulgaria, Italy and Luxembourg) have chosen to do so, while the others continue with the obligatory minimum co-financing rate of 50%.

← 11.  If the average market price in an EU country or in a region of an EU country drops below EUR 2 224 (USD 2 339) per tonne over a representative period, the European Commission may use public intervention to support beef prices (EC, n.d.[46]).

← 12.  Rules that farmers are expected to comply also include statutory management requirements (SMRs), which apply to all farmers whether or not they receive support under the CAP.

← 13.  For the discussion of impacts of decoupling on productivity please refer to Antón and Sauer (2021[47]) and OECD (2023[2]).

← 14.  The European Commission’s communication in 2021 “Towards stronger, connected, resilient and prosperous rural areas” (EC, 2021[45]) set out a long-term vision for the EU’s rural areas up to 2040. It identifies areas of action towards stronger, connected, resilient and prosperous rural areas and communities. A Rural Pact and an EU Rural Action Plan with tangible flagships and new tools were envisaged to help achieve the goals of this vision.

← 15.  For discussion of the challenges faced by the CAP reforms in achieving significant environmental impacts, refer to OECD (2023[2]).

← 16.  The European Commission’s communication in 2021 “Towards stronger, connected, resilient and prosperous rural areas” (EC, 2021[45]) set out a long-term vision for the EU’s rural areas up to 2040. It identifies areas of action towards stronger, connected, resilient and prosperous rural areas and communities. A Rural Pact and an EU Rural Action Plan with tangible flagships and new tools were envisaged to help achieve the goals of this vision.

← 17.  Regulation (EU) 2023/1077 of 31 May 2023.

← 18.  The data and information on the CSPs of EU Member States included in the country snapshots are based on two main sources: (i) “Overview of EU countries’ CAP Strategic Plans interventions” (EC, 2023[5]), which includes the planned budget from the initially approved CAP Strategic Plans of the Member States, and (ii) the study “Mapping and analysis of CAP strategic plans - Assessment of joint efforts for 2023-2027” (EC, 2023[34]), which offers a first assessment of the strategic decisions made by Member States.

← 19.  Member States may choose to transfer up to 25% of the corresponding allocations between the two funds. This percentage may be increased by up to 15%-points for transfers from Direct Payments to Rural Development provided that the corresponding increase is used to finance EAFRD interventions linked to specific environmental and climate-related objectives and up to 2%-points provided that the corresponding increase is used for the installation of young farmers under EAFRD.

← 20.  Budgetary data reported in the figures of the country snapshots do not include these transfers between pillars.

← 21.  Also referred to as the June 2003 reform or the 2003 “Luxembourg” reform.