Annex III of the CAP Strategic Plans Regulation (EU) 2021/2115 sets out the conditionality rules that farmers seeking CAP payments should follow. Under the climate and environment heading, and with the intention to protect the quantity and quality of biodiversity, GAEC standard 8 required a minimum share of the agricultural area devoted to non-productive areas and features, with a derogation for holdings where more than 75% of the area is used for permanent grassland or for the production of grasses or other herbaceous forage, or for the cultivation of crops under water. Holdings with an arable area less than 10 hectares were also exempt, as were certain holdings in areas of natural constraints in Member States with more than 50% of their total land surface area covered by forests.
Specifically, this obligation could be fulfilled in several ways:
- Minimum share of at least 4% of arable land at farm level devoted to non-productive areas and features, including land lying fallow.
- Where a farmer commits to devote at least 7% of his/her arable land to non-productive areas or features, including land lying fallow, under an enhanced eco-scheme, the share to be attributed to compliance with this GAEC standard shall be limited to 3%.
- Minimum share of at least 7% of arable land at farm level if this includes also catch crops or nitrogen fixing crops, cultivated without the use of plant protection products, of which 3% shall be land lying fallow or non-productive features. Member States should use the weighting factor of 0.3 for catch crops.
In addition, under GAEC 8 farmers are also obliged to retain existing landscape features on their holdings, as well as prevented from cutting hedges and trees during the bird breeding and rearing season. As an option, Member States could add measures to avoid invasive plant species. These obligations were carried over from the previous GAEC 7 under the cross-compliance regime in the previous CAP.
In the Simplification Regulation (EU) 2024/1468 which came into force in May 2024 following the various farm protests in the spring of this year, the obligation to devote a share of arable land to non-productive areas and features in GAEC standard 8 was removed. The obligation to retain landscape features and the ban on cutting hedges and trees during the bird breeding and rearing season were maintained. This measure followed several temporary derogations from GAEC 8 made available to Member States in 2022, 2023 and 2024.
In this post, I examine the different arguments made at different times for the derogations from and eventual removal of the non-productive areas provision in GAEC 8. I ask what we can learn from this for the future of biodiversity and nature protection on agricultural land in future. As noted, GAEC 8 remains but in much attenuated form. Simply as a form of shorthand in this post, I will use the term ‘dismantling’ of GAEC 8 to refer to the removal of the requirement to keep a minimum share of non-productive land on arable farms, recognising that the requirement to retain existing landscape features and not to cut hedges and trees during the bird breeding and rearing season remain.
Negotiating GAEC 8 in the 2021 CAP reform
The 2021 CAP reform, launched under Commissioner for Agriculture Phil Hogan in 2018, was intended to, and did, result in greater environmental ambition (see our paper published in Land Use Policy for discussion). This was due to three main changes. First, the measures financed by the greening payment introduced in the 2013 CAP reform were integrated into the conditionality requirements for receipt of CAP payments and their environmental ambition was somewhat strengthened. Second, at least 25% of a Member State’s direct payments envelope under CAP Pillar 1 had to be allocated to eco-schemes. Third, the share of CAP Pillar 2 rural development funding ring-fenced for agri-environment-climate commitments was increased from 30% to 35% with some changes in coverage.
In the 2021 CAP reform, the requirement under greening to establish Ecological Focus Areas (EFAs) on arable land was transformed into GAEC 8 under conditionality. Under greening, holdings with more than 15 ha of arable land were required to have a minimum of 5% of their arable area as EFA. There was the possibility to increase this share to 7% following an evaluation in 2017 but the Commission decided against making this proposal. Member States had the option to designate several types of land use as EFA, including land lying fallow, terraces and landscape features, buffer strips and agro-forestry, as well as areas with catch crops and nitrogen-fixing crops. The different land uses were subject to weighting factors. For land lying fallow, Commission Delegated Regulation (EU) No 639/2014 required an absence of agricultural production, and prohibited the use of plant protection products, on land lying fallow qualifying as an EFA.
The EFA requirement was integrated into GAEC 8 as the obligation to maintain a minimum share of the arable area devoted to non-productive areas and features. In several respects, this was a more demanding obligation for arable farmers. The threshold for exemption from the obligation was lowered from 15 ha of arable land to 10 ha. Under EFAs, the minimum share of the arable area to be designated as EFA was 5% but farmers had the flexibility to decide how to fulfil this requirement from among the options chosen by their Member State. Under GAEC 8, there was now a mandatory minimum share of 4% of the arable area that had to be met through land lying fallow or non-productive features. If farmers wished to make use of options such as catch crops or nitrogen-fixing crops, then the overall minimum share was raised to 7%, but a minimum of 3% had still to be allocated to non-productive features including fallow land. Thus, arable farmers were required to make a greater contribution to biodiversity under GAEC 8 than under EFAs.
At the same time, the compensation they received through direct payments was significantly reduced, partly because the overall CAP Pillar 1 budget for direct payments was slightly reduced (for France, for example, the direct payments envelope was €7,285 million annually for the calendar years 2020-2026 compared to €7,437 million in 2019) but also because a significant share of those direct payments was now top-sliced for eco-schemes and the redistributive payment, among other purposes. This will become an important part of our story later in the telling.
The 2022 derogation
The initial calls for dismantling EFAs, the precursor to GAEC 8, emerged in the wake of the Russian invasion of Ukraine in February 2022. Due to the blockade of Ukrainian ports, an immediate consequence was a sharp spike in wheat, coarse grain and sunflower oil prices. The curtailment of supplies and higher prices had immediate consequences for low-income developing countries dependent on food imports, and also contributed to exaggerated concerns about the implications for food security in Europe. Following an informal AGRIFISH Council meeting held by video conference on 2 March 2022, the French Minister for Agriculture Julien Denormandie, the then Council President, noted that “The terrible events taking place in Ukraine cast a tragic light on the need for us to strengthen our food sovereignty so as to ensure food security in times of crisis, both within the European Union and around the world”. It was decided that Union agricultural production potential should be increased. The decision was made to allow production on fallow land declared as Ecological Focus Area (EFA) to be used for production (Commission Implementing Regulation (EU) 2022/484).
The 2022 derogation gave Member States the flexibility to allow land designated as fallow land for the purpose of EFA to be used to produce food or feed including with the use of plant protection products for the purpose of contributing to additional supply. Ultimately, around 40% of the total land laying fallow declared to fulfil the EFA obligation (771000 hectares out of 1.95 million hectares) was used for production in 2022.
The 2023 derogation
The call to extend the 2022 derogation into 2023 was initially made at the July 18 2022 meeting of the AGRIFISH Council. The context changed as the new CAP came into effect on 1 January 2023, so any derogation would now affect GAEC 8 and not EFAs as in 2022. Euractiv reporting by Natasha Foote noted that virtually all Member States had called for flexibility in implementing the environmental requirements of the new CAP in 2023. The Commission responded almost immediately on 22 July 2022 proposing that Member States could avail of a temporary short-term derogation from rules on crop rotation and maintenance of non-productive features on arable land, noting that this followed the request from the Council. The justification was global food security concerns, in particular the impact of the war in Ukraine on global wheat markets. The food security implications of the war had been spelled out in an earlier Commission Communication ‘Safeguarding food security and reinforcing the resilience of food systems’ published in March 2022. The Commission proposed to limit the use of fallow land to food crops, excluding the planting of crops which are typically used for feeding animals (maize and soya). Farmers would also have to respect the original requirements if they received support under interventions where the commitments included or built upon these baseline requirements. These changes were introduced in Commission Implementing Regulation (EU) 2022/1317.
The 2024 derogation
Already in June 2023 Latvia, supported by the Czech, Estonian, Finnish, Hungarian, Lithuanian and Polish delegations in the AGRIFISH Council, called for further derogations from the environmental GAEC standards in 2024, justified by the severe drought affecting farmers. The request included a further derogation from GAEC 8, allowing crop cultivation for food production and permitting the use of plant protection products on land lying fallow allocated to meet the requirement of minimum share of agricultural area devoted to non-productive areas or features under GAEC 8. Initial responses from Commission officials appeared rather sceptical of extending the derogation. There was also a legal barrier in that Article 148 of the CAP Strategic Plans Regulation makes clear that Commission implementing regulations that derogate from the provisions of the CAP Strategic Plans Regulation can only remain in force for a 12 month period to address a specific problem. If the specific problem persists for longer, then the Commission may propose a permanent solution by submitting an appropriate legislative proposal. A further derogation could not be approved by the comitology process alone.
However, at the AGRIFISH Council meeting in November 2023, a French proposal to extend the derogation on fallow land to allow ‘partial application’ of GAE 8 was supported by 11 countries. The essence of the proposal was that the 7% rate of elements favourable to biodiversity required by GAEC 8 would be retained, but farmers would be allowed to achieve this rate solely by growing catch crops or nitrogen-fixing crops without using plant protection products (without being required to have a minimum share of set-aside land or non-productive elements). Because this option was an alternative to the renewal of the previous derogations, France argued it did not call into question compliance with the provisions of Article 148 of the CAP Strategic Plans Regulation. Hugo Struna for Euractiv reported that Commissioner Wojciechowski was notably sceptical about the proposal, noting that markets had returned to pre-war levels and worrying that increased production could in fact lead to lower prices.
Still, in January 2024, the Commission proposed that EU farmers growing nitrogen fixing crops (such as lentils, peas, or favas) and/or catch crops on 7% of their arable land would be considered as meeting the requirement to keep land fallow or unproductive on 4% of their arable land, provided the crops were grown without plant protection products. The requirement was subsequently reduced to 4% of their arable land following discussions with Member States (Commission Implementing Regulation (EU) 2024/587). The measure was justified by the significant fall in the value of cereals production. “In such conditions, the obligation to set arable land aside may have a significant short-term negative impact on the revenue of certain farmers”, according to the Commission’s press release, and put at risk the viability of their activities. It was up to Member States whether to make use of this flexibility or not. If they did, eco-schemes and agri-environment payments could be adjusted to the new baseline, which could allow arable farmers to receive an additional payment for measures previously deemed obligatory as part of conditionality. The Commission’s change of heart may not have been unrelated to the growing number of farm protests that had gathered pace since the previous November (see Finger et al., 2024).
The Simplification Regulation
But this was not the end of the story. The ink was hardly dry on the 2024 derogation (which came into effect on 14 February 2024) before the Commission submitted a set of options for simplification on 22 February 2024 “to help reduce the administrative burden weighing on farmers’ shoulders”. This noted the change in the partial application of GAEC 8 already agreed, and proposed in addition to change the rules on GAEC standard 1 related to the maintenance of permanent grassland. It hinted that, “should the basic Regulations be changed in the mid-term, GAEC 8 on land lying fallow, GAEC 7 on crop rotation and GAEC 6 on soil cover could be reviewed to further reduce burden for farmers”. In the non-paper submitted to the AGRIFISH Council held on 26 February, it was more explicit that it was reviewing GAEC 8 “so that the burden of this standard could be reduced while maintaining its benefits for biodiversity”.
With farmers’ tractor protests blocking roads and manure being sprayed around the Berlaymont buildings, the Commission made a legislative proposal on 15 March 2024 aimed “for well-targeted adjustments of the CAP Strategic Plans Regulations to address certain difficulties in their implementation.” The adjustments were focused on changes that are beneficial for farmers in reducing their administrative burden. As regards GAEC 8, the Commission proposed “to remove from GAEC standard 8 the obligation to devote a minimum share of arable land to non-productive areas (fallow land) or features (hedges, trees…), while keeping the protection of existing landscape features. Instead, Member States are required to establish an eco-scheme offering support to farmers for keeping a share of arable land in non-productive state or to create new landscape features. This would ensure that farmers are specifically rewarded for these non-productive areas and features that are beneficial for biodiversity on farmland and more generally for rural areas”.
This text makes clear that the rationale for dismantling GAEC 8 was not to reduce the administrative burden (the requirement to maintain a minimum share of non-productive features on arable land is probably among the easier GAEC standards to monitor) but rather to shift the burden of economic responsibility for measures intended to protect biodiversity. This is made clear in the recitals of Regulation (EU) 2024/1468 (the Simplification Regulation) which are worth quoting in full.
(8) … In the context of the challenges and uncertainties arising from the concurrence of adverse events and economic uncertainties, experience has shown a need to adjust the balance between the different policy tools contributing to the protection and enhancement of biodiversity to give more flexibility to farmers to contribute to achieving that objective depending on the specific situation of their holdings and to provide enhanced financial compensation for such contribution.
(9) More specifically, as the obligation to devote a share of arable land to non-productive areas and features is currently provided for under the first requirement of GAEC standard 8, … farmers applying for direct payments and interventions referred to in Articles 70, 71 and 72 of [the CAP Strategic Plans] Regulation need to respect that requirement without any compensation of the costs incurred or income foregone. This may in certain cases entail a substantial financial burden for the farmers and beneficiaries concerned, in particular considering that no crop or animal production is possible on the arable land dedicated to non-productive areas or features under GAEC standard 8. Considering the burden and consequences for certain farmers and the exceptional range of difficulties and uncertainties they are facing, the need to have non-productive areas and features on arable land would be better addressed through a tool providing for more flexibility and, more importantly, offering an incentive compensating for at least part of the costs incurred and income foregone linked to such non-productive areas and features. Accordingly, Article 31 of Regulation (EU) 2021/2115 should be amended to ensure that Member States provide support for eco-schemes covering, on arable land, practices for the maintenance of non-productive areas, such as land lying fallow, and for the establishment of new landscape features.
The Simplification Regulation removes any requirement for farmers to maintain a minimum share of the agricultural area devoted to non-productive areas and features. This change takes effect already for claim year 2024 and thus effectively revokes the 2024 derogation introduced in February. Instead, Member States are required, in an additional paragraph inserted in Article 31 dealing with eco-schemes in the CAP Strategic Plans Regulation, to “establish and provide support for one or more schemes covering, on arable land, practices for the maintenance of non-productive areas, such as land lying fallow, and for the establishment of new landscape features. Those schemes shall be voluntary for active farmers and groups of active farmers”. They are required to amend their CAP Strategic Plans to introduce this measure reflecting the changes made to GAEC 8.
Strategic Dialogue recommendations
The Commission’s logic around the dismantling of GAEC 8 in the Simplification Regulation has been subsequently endorsed in the report of the Strategic Dialogue on the Future of Agriculture. It is also reflected in the adopted Nature Restoration Law. The key point is that, when it comes to addressing biodiversity (and potentially other environmental harms), actions by farmers should be voluntary and induced by financial incentives rather than by regulatory measures.
This approach is not limited to biodiversity but extended to all conditionality standards in the Strategic Dialogue report. The strategic approach recommended by the Dialogue is to completely separate instruments intended for socio-economic support from instruments intended to promote climate action and environmental protection. As the report explains in the section on ‘Preparing a Common Agricultural Policy fit for purpose’:
“To drive and strengthen the transition, socioeconomic and environmental objectives should be pursued using specific instruments within the CAP. The current structure of rules and administration, by linking socio-economic instruments to the realization of environmental and social requirements, has created complexity (implementation of practices, reporting), lack of adaptability (calendar deadlines, climate events) and weakened the function of income support for farmers, which is, as a consequence, not fulfilled in an efficient way.”
This clear critique of conditionality is consistent with another recommendation of the Dialogue that income support should be more targeted. Currently, more than 90% of the EU’s utilised agricultural area receives direct payments and is thus covered by conditionality. This share would presumably fall drastically under a more targeted approach and thus conditionality would lose its relevance for potentially more than half of agricultural land (depending on the extent of targeting).
Instead, the Dialogue recommends that environmental obligations should be ensured “through a clear enforcement of existing legislation in the areas of environment, climate action, animal welfare and labor standards for workers …, complemented by incentivizing ecosystem and animal welfare services under the CAP environmental objectives”. As the GAEC standards build upon and go beyond the existing Statutory Minimum Requirements resulting from existing legislation, the report should be read as recommending that in future these standards should be incentivised by ecosystem and animal welfare payments rather than be part of the direct payments system. For example, in discussing payments for ecosystem services, the report notes that “These schemes will cover costs incurred and income foregone and incentives when going beyond basic EU law requirements”. The difference is that, in the current CAP, payments can be made only for management commitments that “go beyond the relevant statutory management requirements and GAEC standards established under Chapter 1, Section 2.”
Several implications follow from this approach. The first is the budgetary implications. The Strategic Dialogue report envisages that the money saved from eliminating non-degressive area-based payments and greater targeting can be reallocated to “a substantial annual increase of this share [of the CAP national budgets for measures on environmental outcome] throughout the following two CAP periods to enable more farmers to implement the new above-mentioned schemes to achieve the needed transition”. But if, in future, farmers will be paid from the environmental budget for measures they currently implement as part of conditionality associated with area-based payments, then a slice of that additional environmental budget will go to simply maintaining the environmental status quo. The amount of new resources made available for more ambitious measures will thus be curtailed.
A second implication of the Strategic Dialogue report is that it confirms the approach taken in the Simplification Regulation where farming is deemed not to make any contribution to biodiversity loss, and therefore farmers are not obliged to contribute to making good that loss. Instead, society is urged to take on the obligation of persuading farmers to change their practices (reducing use of chemical pesticides, reducing use of monocultures, introducing greater diversity in cropping patterns, introducing new landscape features, etc.) through the provision of sufficient financial incentives and “a package of voluntary measures approved by the EU Commission”.
This is consistent with the approach taken by Commission President von der Leyen in her Political Guidelines for the next political cycle when she emphasised the need to “reward farmers working with nature, preserving our biodiversity and natural ecosystems and helping to decarbonise our economy on the way to net-zero by 2050” (bolding in original). Many people will agree that farmers should be compensated for measures that enhance biodiversity on their farms, but it is a major step to propose that all measures to prevent further biodiversity loss and to help biodiversity to recover should be based on voluntary actions by farmers building on the existing legislative baseline. This is especially the case when there is evidence that restoring ecosystems can also be of benefit to farmers through improving agricultural productivity and resilience.
The Nature Restoration Law
This approach based on voluntary action by farmers supported by adequate financial incentives is also at the heart of the Nature Restoration Law which is now part of the existing legislative baseline. This Law had a very contentious passage through both the European Parliament and the Council. In the Parliament the EPP called for rejection of the proposal. The first reading text was only narrowly agreed when several EPP MEPs voted against their political group. In the Council, an earlier agreement to support the compromise proposal following the inter-institutional agreement was suddenly challenged when Hungary changed sides at a Council meeting in March 2024. The Environment Council finally approved the Law in June 2024 but only after the Austrian Environment Minister defied her coalition government’s stated position and voted in favour and with unexpected support from Slovakia (this IEEP brief details the tortuous negotiating history).
The final version of the Law differed in several respects to the Commission’s original proposal, but contains the following targets:
- Article 1. Measures should be put in place to restore at least 20% of the EU’s land and sea areas by 2030 as a Union target and for all ecosystems in need of restoration by 2050.
- Articles 4 and 5. EU countries must put in place measures to restore to good condition at least 30% of habitats in poor condition by 2030, 60% by 2040, and 90% by 2050. Member states should give priority to Natura 2000 areas until 2030. Flexibilities may apply.
- Article 10. EU countries must reverse the decline in the population of pollinators by 2030. Thereafter, they should achieve an increasing trend up to satisfactory levels.
- Article 11. For agricultural ecosystems, enhanced biodiversity by achieving an increasing trend in at least two out of three indicators (grassland butterfly index, stock of organic carbon in cropland mineral soils, share of agricultural land with high-diversity landscape features) until satisfactory levels – measured every six years after 2030 – are reached, while specific improvements in the common farmland bird index – measured in 2030, 2040 and 2050 – are also required.
- Article 11. EU countries must restore at least 30% of drained peatlands in agricultural useby 2030 (of which as least a quarter should be rewetted), 40% by 2040 and 50% by 2050 (both of which require rewetting by at least one-third). These rewetting targets were softened compared to the original Commissions proposal.
- Article 13. EU-wide target of planting 3 billion trees by 2030.
The next step is for Member States to prepare and submit National Restoration Plans (Article 14) quantifying the areas to be restored and describing the restoration measures planned to meet the restoration targets.
These legal obligations apply to Member States that are responsible for achieving these targets. Participation in restoration measures will be voluntary for individual landowners. The legislation is explicit on this in relation to rewetting (Article 11) but also in relation to other targets it will be up to governments to make participation an attractive option.
The success of the voluntary approach will depend in part on the scale of financial resources made available. The Nature Restoration Law mandates the Commission to prepare by August 2025 a report on available financial resources at the EU level for its implementation and propose new measures to address the financing gap, such as the establishment of dedicated funding. The Strategic Dialogue also called for the establishment of a well-resourced nature restoration fund (outside of the CAP) to support farmers and other land managers to restore and manage natural habitats at the landscape level.
There can be legitimate scepticism whether sufficient resources will be available at Union level in the next MFF to fund the scale of transformation required to restore biodiversity. One additional source of funding can be Member States themselves, given that they have the legal responsibility to meet the relevant targets. But also here, in the context where many Member States face real public finance constraints, it can be difficult to see additional resources emerge. The Irish Climate Change Advisory Council last week released the biodiversity chapter of its 2024 Annual Review in which it described funding and action on biodiversity conservation and restoration in Ireland as “totally inadequate”.
Another additional source of funding that has been mooted by President von der Leyen in recent speeches (here and here) is the notion of nature credits which would be financed by the private sector. Specifically, the Mission Letter for the proposed Commissioner for Environment, Water Resilience and a Competitive Circular Economy Jessika Roswall would require her “to prioritise the design of incentives for nature positive actions and private investment. You will lead the work on nature credits in close cooperation with Member States, international partners and organisations”. This work is still obviously at a very early stage.
Although the legislation clearly establishes milestones and obligations for Member States at each step of the process in implementing the Nature Restoration Law, a major lacuna is that it does not provide enforcement measures in case of non-compliance. Moreover, Climate Action Network (CAN) Europe has noted that the final version excluded the ‘access to justice’ article, not providing to the public an avenue to directly challenge any illegalities of the national restoration plans and or failures to act. There is thus no guarantee that voluntary action alone is going to achieve the transformation required to reverse the ongoing loss of biodiversity.
Conclusions
In this post, I have traced the history of the dismantling of GAEC 8 agreed in the 2021 CAP reform. The initial step was to allow production on fallow land declared for EFAs in 2022, justified by the need to increase EU agricultural production potential in the wake of the market disruptions caused by Russia’s invasion of Ukraine. The derogation was extended to GAEC 8 in 2023 although fallow land could only be used to produce food crops, again justified by global food security concerns. A partial application of GAEC 8 was introduced for 2024 which allowed the 4% obligation for a minimum share of non-productive features to be met also by growing catch crops or nitrogen-fixing crops, provided they are grown without the use of plant protection products, this time justified by the need to alleviate the income pressure on cereal farmers. This was subsequently overtaken by the provisions of the Simplification Regulation which simply removed the obligation for arable farmers to maintain a minimum share of non-productive land in 2024 and subsequent years, instead obliging Member States to amend their Strategic Plans to introduce an eco-scheme that would pay farmers to adopt this practice. The justification this time was to alleviate the financial burden on arable farmers of adopting this practice and instead to offer an incentive to farmers to voluntarily adopt this measure.
We see this same emphasis on compensating and rewarding farmers for environmental action reflected in von der Leyen’s Political Guidelines for the next political cycle (as discussed in this previous post), in the recommendations of the Strategic Dialogue, and in the Nature Restoration Law. It is also present in much of the language around a Just Transition to a more sustainable food system, with its implicit if unrealistic promise that no one is going to lose out or be made worse off due to this transition. Whether voluntary action will achieve the results that are needed is moot, particularly if the necessary funding fails to materialise. It may be useful to have a more open discussion around the extent to which we expect farming activities to align with societal values and expectations as part of their social licence to farm. Do we expect farmers to make an economic contribution to resolving the environmental issues that result from farming activity?
This post was written by Alan Matthews.
O artigo foi publicado originalmente em CAP Reform.
