The European Commission today proposed to extend the energy crop premium introduced by the 2003 Common Agricultural Policy reform to the eight Member States which currently do not benefit from it. This would involve increasing the maximum area which can benefit from the aid to 2 million hectares from 1.5 million at present. In a further push to encourage the production of feedstocks for renewable energy production, the Commission also proposed allowing the Member States to grant national aid of up to 50 percent of the costs of establishing multiannual crops on areas on which an application for the energy crop aid has been made. In the interests of simplifying the management of the CAP, the Commission has also proposed to allow eight Member States which joined the EU in 2004 to continue operating the Single Area Payment Scheme for a further two years until 2010. The countries affected are the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, and Slovakia.

“We need to do all we can to encourage the production of the raw materials for biofuels,” said Mariann Fischer Boel, Commissioner for Agriculture and Rural Development. “The energy crop scheme has had a good start. Now it’s only fair that we give farmers in all Member States the chance to benefit from this support. Extending the SAPS scheme also makes sense because it has proved a very simple and efficient method of supporting farmers in eight of the 10 countries which joined the EU in 2004. I am looking very closely at all possible ways of adding simplicity to the running of the CAP.”

Report on the energy crop scheme

• The proposals accompany the first report on the operation of the energy crops scheme. The €45/hectare aid for energy crops was applied for the first time in 2004 to provide an incentive for farmers to grow the raw materials for biofuels. The area for which the direct payment for energy crops was claimed was between 1.2 and 1.3 million hectares in 2006, close to the limit of 1.5 m ha..
• The data on the development of bioethanol and biodiesel production as well as recently constructed capacities show a dramatic increase in the demand for energy crops within the next few years.
• The aid for energy crops is an incentive for farmers to produce crops for energy purposes rather than for food. Currently, 8 of the 10 "new Member States" (the Czech Republic, Estonia, Cyprus, Latvia, Lithuania, Hungary, Poland, and Slovakia) which apply the SAPS are excluded from this aid for energy crops, while Malta and Slovenia may receive this aid up to the "phasing-in" level only.
• The review of the energy crops scheme has shown that it is appropriate to extend the aid for energy crops to all Member States as from 2007 and under the same conditions. Therefore the maximum guaranteed area should be increased proportionally.
• The data available on biofuel consumption and national indicative targets for the EU–25 show that many new Member States have adopted national measures (e.g. exemptions from excise duty) to support the production and use of biofuels. These data show that new Member States are making significant efforts to comply with the Biofuels Initiative.
• To strengthen the role of multiannual energy crops, the Member States should be entitled to grant national aid up to 50 % of the costs associated with establishing multiannual crops for the areas which have been subject to an application for the aid for energy crops

Background on biofuels:

In February, the Commission adopted an ambitious EU Strategy for Biofuels. Increased use of biofuels will bring numerous benefits, by reducing Europe’s dependence on fossil fuel imports, reducing greenhouse gas emissions, providing new outlets for farmers and opening up new economic possibilities in several developing countries.

Proposals to improve functioning of direct payments to farmers:

Todays’ proposal includes also improvements to certain rules governing direct payments, notably:

• the possibility for the new Member States using SAPS to continue to use this simple way of granting income support to the farmers until the end of the year 2010, instead of 2008; from the start of 2009, farmers in the countries opting to continue this simplified direct aid scheme would have, as in other Member States, to comply under ‘cross-compliance’ with the statutory requirements in the areas of environment, public, animal and plant health and animal welfare to receive full payments under direct payment schemes and certain rural development measures;
• the simplification of the eligibility rules under the single payment scheme for land with olive trees;
• the clarification that the phasing-in of direct payments in the new Member States does not apply to all the direct payments related to the sugar

Source:
http://europa.eu/rapid/pressReleasesAction.do?reference=IP/06/1243&type=HTML&aged=0&language=EN&guiLanguage=en