The new CAP (Common Agricultural Policy): Goals, activities and benefits

The Common Agricultural Policy (CAP) was first created in 1962 by the six founding countries of the EU and is its longest-running policy. Essentially, it is a set of laws established by the EU that constitute a common, unified agricultural policy, aiming at:

  • providing safe food at affordable prices to EU citizens;
  • ensuring the fair standard of living of farmers;
  • conserving natural resources and protect the environment.

The CAP is a dynamic policy which, through successive reforms, has adapted to the new challenges facing European agricultural production. The EU created and implements the CAP to address various issues such as:

  • food security for all European citizens;
  • global market fluctuations and price volatility;
  • maintaining thriving rural areas across the EU;
  • more sustainable and rational use of natural resources;
  • limiting climate change.

Following the three-year dialogue between the Council of Ministers, the European Commission and the European Parliament, an agreement was reached on the CAP for the period 2023-2027 at the end of June 2021. This new CAP aims to support and strengthen a sustainable and competitive agricultural sector, which will can make a significant contribution to the European Green Deal.

According to the European Parliament, €386.6 billion will be allocated to the new CAP between 2021 and 2027, an amount that represents 31.95% of the EU’s long-term budget.

The CAP in action

the new operating model of the CAP for the period 2023-2027 focuses, among other things, on maximizing its contribution to protecting the environment and tackling climate change by setting ambitious environmental and climate targets, as well as promoting innovation, knowledge and of new technologies (digitalization) in agricultural production. The new CAP aims at an intelligent and sustainable agriculture, the strengthening of care for the environment and the climate and the strengthening of the socio-economic fabric of rural areas.

For the four-year period 2023-2027, the CAP is structured around ten key objectives, which will form the basis on which EU countries will draw up their individual strategic plans. These goals are:

  • ensuring a fair income for farmers;
  • increasing competitiveness;
  • the balance of power in the food chain;
  • action on climate change;
  • environmental protection;
  • the preservation of landscapes and biodiversity;
  • the encouragement of generational renewal;
  • the stimulation of rural areas;
  • the protection of food safety and quality;
  • the modernization of the agricultural sector by promoting and disseminating knowledge, innovation and
  • digitalisation, in agriculture and rural areas, and encouraging their adoption.


Goals and objectives

The new CAP was designed to be fairer, greener, more animal-friendly and more flexible than ever before. From January 2023, when it comes into effect, greater ambitions for the environment and climate, aligned with the goals of the European Green Deal, are to be implemented.

The new CAP will also ensure a fairer distribution of support, especially towards small and medium-sized family farms and young farmers.

Fairer for everyone

  • For the first time, the CAP will include social conditionality, meaning that its beneficiaries will have to respect elements of European social and labor law in order to receive CAP funds.
  • Redistribution of income support will be mandatory. Member States will redistribute at least 10% in favor of smaller farms and must describe in their strategic plan how they intend to do this. In fact, support to small farms will be strengthened with the possibility of replacing individual direct payments by a single allowance for small farmers.
  • A new mandatory minimum level of support for young farmers will be set in Member States’ budgets for income support in the context of CAP, reaching 3% for young farmers (up to 40 years of age). This could include income support, investment aid or start-up aid for young farmers.


Greener and more sustainable

The new CAP will support the transition to more sustainable agricultural production with increased ambitions for climate, environment and animal welfare. It also introduces new “tools”, which, combined with the new way of working, will allow more efficient and targeted performance in the above areas. Specifically:

  • Coherence with the European Green Deal: The new CAP will fully integrate EU environmental and climate legislation. CAP plans will contribute to the objectives of the Farm to Fork Strategy and the Biodiversity Strategy, while updating to take into account changes in climate and environmental legislation from the European Green Deal.
  • Provision of conditional support: the minimum requirements that CAP beneficiaries have to comply with in order to receive support are now more ambitious. For example, in each agricultural holding at least 3% of arable land will be reserved for biodiversity and non-productive elements, with the possibility of receiving support through ecological programs to reach a percentage of 7%. Furthermore, all wetlands and peatlands will be protected.
  • The offer of ecological programs will be mandatory for member states. This new instrument will reward farmers for implementing climate and environment-friendly practices (organic farming, agroecology, integrated plant protection, etc.), as well as for improvements in animal welfare. Member States must allocate at least 25% of their budget for income support to ecological programs, totaling €48 billion from the direct aid budget.
  • At least 35% of rural development funds will be allocated to commitments that promote environmental, climate and animal welfare practices.
  • The CAP budget should make a significant contribution to the Union’s overall climate spending. For a realistic and fair calculation, the Commission will propose by 2025 a new, differentiated approach, which will go beyond existing methods.


More flexible

The new CAP introduces a new way of working, based on which each country will be free to choose the specific interventions it considers most effective for the fulfillment of its goals and following the assessment of its own needs. Thus, Greece will draw up its own strategic plan, in which it will determine how it will direct resources to specific actions and specify how these actions will contribute to the achievement of EU objectives. This plan will be submitted to the EU for evaluation and approval before its implementation. Following approval, an annual performance report will be submitted to demonstrate progress towards the objectives set.

The main objective of the new CAP is to strengthen the position of farmers in a competitive agri-food sector. The new CAP maintains a general market orientation, with EU farms operating in line with market signals while taking advantage of non-EU opportunities arising from trade. In addition, it strengthens the position of farmers in the food chain by expanding their possibilities to join forces through, among other things, certain exemptions from competition law. At the same time, a new agricultural reserve will be established to finance market support measures in times of crisis, with an annual budget of at least €450 million.

What is an “active farmer”;

The new legislation includes a mandatory but flexible definition of an active farmer:

  • Minimum level of agricultural activity. This will be based on objective and unbiased criteria such as income test (eg comparing agricultural income with income from other economic activities), labor input, corporate object and registration;
  • List of ineligible economic activities. EU countries can draw up a list of economic activities that may not receive direct support from the CAP;
  • Multi-active and part-time farmers. EU countries should ensure that multi-taskers (farmers who also carry out other professional activities) and part-time farmers are not excluded from support;
  • Reduction of administrative burden. EU countries can assume that farmers receiving direct payments of up to €5,000 are considered active farmers.


The pillars of CAP

The CAP covers three different areas: direct payments, market measures and rural development, and is based on two pillars. Analytically:

Direct Aids – First pillar

Direct payments are granted directly to farmers, providing them with a safety net. The CAP guarantees EU citizens a reliable supply of high-quality food, as well as a healthy environment. Direct aid ensures that:

  • Farmers receive income support as long as they look after their farm and meet environmental standards, as well as food safety and animal welfare standards;
  • EU member states maintain agricultural activities, adapted to their climatic and geographical conditions,
    producers respond to market signals to produce the goods that consumers demand, thus ensuring the maximum possible profit;
  • Farmers who do not comply with certain requirements in the areas of public health, animal and plant health, the environment and animal welfare may receive less or no support.

Market measures – First pillar

In order to compensate for price volatility in EU agricultural markets, certain rules have been put in place. The common organization of agricultural markets (CMO) includes:

  • the use of the rules for the common market of goods and services, the creation of specific policy instruments to improve the functioning of rural markets,
  • the establishment of intervention parameters in agricultural markets and the provision of sectoral support,
  • the establishment of marketing rules for agricultural products and the operation of producer organizations and inter-professional organizations
  • issues related to international trade and competition rules.

Το οικονομικό περιβάλλον θα συνεχίσει να είναι αβέβαιο και απρόβλεπτο. Τα σημερινά και τα μελλοντικά προβλήματα είναι πολλά. Παρόλα αυτά, η ΚΟΑ διευκολύνει την ομαλή λειτουργία της ενιαίας αγοράς, ενώ, με δυο λόγια, εξασφαλίζει πολυμορφία, διαθεσιμότητα, προσιτές τιμές και ασφάλεια των αγροτικών προϊόντων της.

Rural development – Second pillar

EU measures for rural development contribute to:

  • the modernization of agricultural holdings, promoting the utilization of technology and innovation;
  • boosting rural areas, for example through investment in connectivity and basic services;
  • strengthening the competitiveness of the agricultural sector;
  • in protecting the environment and mitigating climate change;
  • in improving the vitality of rural communities;
  • ensuring the renewal of generations in the agricultural sector.

Predominantly rural areas make up half of Europe and are home to around 20% of the EU’s population. Also, most of them are among the least favored regions of the EU, with GDP per capita significantly below the European average.

EU measures facilitate the modernization of agricultural holdings while encouraging the diversification of activities in rural areas. To this end, the EU’s rural development policy has set three general objectives:

  • Strengthening the competitiveness of agriculture;
  • Sustainable management of natural resources and climate action;
  • Balanced territorial development of rural areas.

Rural development policy is a very important means of supporting the sustainable development of rural areas and agriculture, including organic agriculture, in the EU.