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Farmers in the European Union receive support in the form of direct payments, provided that they comply with the rules on the health and welfare of humans, animals, plants and the environment. This measure regulates the economic situation of agriculture and protects farmers from the volatility of market prices or the loss of agricultural production due to adverse weather conditions, while, at the same time, it contributes to the effective provision of public goods.

At the EU level,  direct payments represent on average 30% of agricultural income. They provide farmers with a steady income and thus help to maintain agricultural production throughout the EU.  They ensure the long-term survival of farmers and mitigate the negative consequences of price fluctuations or crop failures. At the same time, direct payments are rewards to farmers for their non-market-linked activities that, however, are essential for European society. 30% of direct payments are allocated for green direct payments, namely, for practices that preserve biodiversity and the quality of soil and the environment in general. They include crop diversification, maintaining environmentally sensitive permanent grassland and ensuring ecological focus areas (e.g. fallow land) on farms.

Farmers receive direct payments only on condition that they comply with the standards of environmental protection, of food security, of animal and plant health, of animal welfare, and that they take care of the good condition of arable land in general. This is called cross-compliance. Farmers who do not comply with these rules are refused such payments or can even be penalised.

Types of direct payments

The direct payment system consists of different schemes or payments which farmers are entitled to if they fulfil the required conditions. Direct payments are granted to farmers in the form of basic income support payments based on the number of hectares of farmed land, but the amount of support received does not depend on the yield of agricultural products. This is the so-called basic payment that is topped up by a number of other income support payments targeting specific issues or specific types of farmers: greening payments, young farmers’ payments, payments for areas with natural constraints and payments coupled to production. However, these payments may be replaced by a fixed support if in 2015 the farmer joined the small farmers scheme that has introduced certain simplifications.

A budget of EUR 814.5 million is available to Slovenia for direct payments under the Common Agricultural Policy for the period 2015 to 2020.

The future of the common agricultural policy and direct payments

Even in the next period of the Common Agricultural Policy, direct payments will remain its essential part, as in order to have a smart and resilient agricultural sector, farmers’ incomes need to be supported. The future measures and resources for the Common Agricultural Policy are still under discussion. According to the European Commission’s proposal, the funds for direct payments allocated to Slovenia have been reduced. Another aim of the new CAP is to promote a fairer distribution of direct payments, so the European Commission proposes to gradually reduce direct payments above EUR 60,000 and to cap the payments above EUR 100,000 by taking labour costs fully into account. By doing so, priority would be given to small and family farms that constitute the majority of the EU's farming sector. This reform also proposes convergence of income support across Member States, as there are currently large differences in payments per ha of land (EUR 550 to EUR 200). An important focus will also be on environmental protection as a climate and environmental scheme is being introduced.