From 1 January 2005, 10 Member States will introduce the fundamental reform of the Common Agricultural Policy (CAP) agreed in June 2003. The reform completely changes the way the EU supports its farm sector, offering EU farmers the freedom to produce what the market wants. In future, most subsidies will be paid independently from the volume of production. These new "single farm payments" will be closely linked to the respect of environmental, food safety and animal welfare standards. Severing the link between subsidies and production will make EU farmers more competitive and market orientated, while providing the necessary income stability. More money will be available to farmers for environmental, quality or animal welfare programmes by reducing direct payments for bigger farms. The changes will give consumers what they want, offer taxpayers more transparency and contribute towards more market-orientated world farm trade.

Commenting on the entry into force of the reformed CAP, Mariann Fisher Boel, Commissioner for Agriculture and Rural Development said: “The CAP at the beginning of 2005 is nothing like its popular caricature. The reform will allow Europe’s farmers to become true entrepreneurs. Our rural areas will be offered a sustainable future, a chance to diversify and to contribute to making Europe more competitive. The reform will allow us to play to our strengths, producing world-renowned foods of the highest quality. And it sends out a strong signal to the world, boosting the chances of a successful outcome to world trade talks.”

The key elements of the new, reformed CAP in a nutshell:

• a single farm payment or single payment scheme (SPS) for EU farmers, independent from production; limited coupled elements may be maintained to prevent abandonment of production,
• this payment will be linked to the respect of environmental, food safety, animal and plant health and animal welfare standards, as well as the requirement to keep all farmland in good agricultural and environmental condition ("cross-compliance"),
• a strengthened rural development policy with more EU money, new measures to promote the environment, quality and animal welfare and to help farmers to meet EU production standards starting in 2005,
• a reduction in direct payments ("modulation") for bigger farms to finance the new rural development policy,
• a “financial discipline” mechanism to prevent spending exceeding the ceiling.

The SPS applies to the main market sectors, including cereals, meat and milk. The tobacco, olive oil and cotton sector will be added to the system in 2006.

Member States had the possibility to apply the SPS between 2005 and 2007. 10 Member States decided to start on 1 January 2005. These MS are: Austria, Belgium, Denmark, Germany, Ireland, Italy, Luxembourg, Portugal, Sweden and the United Kingdom. The five other “old” MS (Finland, France, Greece, the Netherlands and Spain) will apply the SPS in 2006 while the two “new” MS who opted for the SPS, Malta and Slovenia, will start in 2007.

In the 8 other new Member States the “Single Area Payment Scheme” (SAPS) applies. This means that uniform per-hectare entitlements are granted within any one region from regional financial envelopes. These new MS will apply the SPS from 2009 at the latest.

Further information on the reform is available on the internet at: http://europa.eu.int/comm/agriculture/capreform/index_en.htm