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Jeudi 20 novembre 2014

ItalyThe CAP reform in Italy and its impact on dairyand beef farms profitability

Kees de Roest, Claudio Montanari, Alberto MenghiResearch Center Animal Production ‐ CRPA

Italie

The dairy and beef chain ►Number of dairy and beef farms, milk and beef production►Geographical distribution 

Impact of the new CAP►Option chosen for the new CAP and changes with before• Coupled and decoupled premia• Second pillar resources• Role of PDO cheeses

Development after 2015 

Contents of the presentation

Italie

Number of farms and dairy cowsDairy cows per herd size

Almost 50,000 dairy farms1.5 million dairy cows11.3 million ton milk

cow s 1 - <10 cow scow s 10 - <50 cow scow s 50 - <100cow s 100 - <500cow s >=500 cow s

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Milk production and PDO cheeses

2009 2010 2011 2012 2013Milk deliveries ('000 t) 11,144 11,238 11,458 11,502 11,306Self sufficiency rate (%) 67.7 67.2 67.2 69.1 70.3

PDO cheeses ('000 t) 449 464 491 496 483

% of national milkdeliveries 49.3 50.7 54.1 54 52.5

Italie The beef sector in Italy (2013)

Total cattle population= 5.74 milion heads

Suckler cows herd = 380,000 heads 

Beef production = 855,000 tonnes (3rd producer in EU)/2,73 mil heads 

Self‐sufficiency rate (production/consumption)=59%

Consumption = 20.8 kg per inhabitant  

Italie Geographical distribution of beef cattle (male and female from 1 

to 2 years)

Veneto 32%

Piemonte 20%

Lombardia 18%

Emilia Romagna 5%

Italie Geographical distribution of suckler cows (380,000 

heads)

Italie Italian beef supply balance sheet

.000 tonnes 2009 2010 2011 2012 2013 Var13/08

Consumption 1,392 1,393 1,292 1,237 1,136 ‐17.1%

Self sufficiency 60.3% 60.4% 58.2% 59.0% 58.1% ‐4.7%

Source: elaborated by CRPA on Ismea and Istat data

Italie France is the main supplier of feeder cattle for Italy (75% of 

livestock import)

Source: BDN data

Italie Reform of the CAP 1st pillar: the implementation in Italy

1. Adoption of partial convergence model for the basic payment, that will avoid a flat-rate payment at national level, gradual reduction of basic payment until 2020

2. Payment for greening calculared as % of basic payment

3. Payment for young farmers financed with 1% of the ceiling.

4. Coupled payment financed with 11% of the ceiling (dairy; beef, sheep, olive oil, protein crops, sugar beet, rice, durum wheat, processing tomatoes).

5. No other voluntary components will be introduced.

Italie The new national ceilings for direct payments (2015‐2020)

Italie How is basic payment calculated according to the model of 

partial convergence? 

The initial amount of the basic payments will dipend on the direct payments received by farmers in 2014.

The value per hectare will be reduced by a coefficient:Basic payment ceiling 2015/Direct payments ceiling

2014=2,263 mln €/ 3,953 mln € = 57%

Italie How is basic payment calculated according to the model of 

partial convergence? (2)

Example:Single farm payment received in 2014= 1,800

€/hectareInitial value of basic payment= 1,800*57%= 1,026

€/hectare

The basic payment wil not be reduced more than 30% of the initial value

Italie The new coupled payments and the sectors involved

Resources for beef sector resources will rise from 51,5 to 107 mln € compared to current situation:

‐ payment for suckler cows will increase by around 25% due to the more selective eligibility criteria (registration in breeds herdbooks)

‐ but in finishing farms coupled payment are likely to remain unchanged because more cattle will be elegible under the new art. 52   

Italie Change of CAP premia for dairy farmers

• Substitution of decoupled premia historically coupledto milk quota with basic payment and greening

• Substitution of premium coupled per kg of milk (max €1.5 per 100kg) for milk quality (art.68) with premium per calf born (art. 38) (€ 56 per calf born)

Italie Change of CAP premia for dairy farmers

Milk production (kg) 793,087 Number of dairy cows 88Family income (€) 73,570 Annual Working Units 3

2014 2015Decoupled premium (€/100kg) 2.80 22,206  18,875 Base + greeningArt.68 (€/100 kg) 1.10 8,724  4,928 Art. 38% of family income 42 32

Italie Possible development after 2015

• No significant increase of national milk production because of environmental constraints and high landprices

• Further concentration of milk production in large to very large farms (over 500 dairy cows) 

• Decline of small to medium sized dairy farms (lack of successors)

• Use of regulation of supply by PDO Consortia(Interbranch organisations) following Reg. 261/2012

Italie The current role of direct payments for specialised beef finishing 

farms (medium size of 450 heads)

Source: CRPA extimate

Italie How coupled payments for beef farms will change

Italie How decoupled payments per hectare will change after 2014

Italie Profitability, net and gross of decoupled payments

Italie Second pillar measures in the 20 RDPs

• Operational Groups for Innovation (EIP) 

• Investment premia

• Reduction of GHG emissions

• Animal welfare

Italie Conclusions beef sector

• Severe cut of the decoupled payments for intensive beef farms, although mitigated by the model of partial convergence and by greening granted as % of basic payment 

• Specialized finishing farms will still receive amounts above the national average, but will suffer a reduction in the order of 48% compared to the current amount of the single farm payment 

• The reduction of the support might speed up phenomena of abandoning or conversion, 

• Currently to the finishing farms are directed 27.5 mil. € for coupled payments (art. 68 Reg 73/2009). Despite the increase of the ceiling from 2015, the amount per head is expected to increase only slightly because 63% more cattle head are eligible under art.38 Reg. 1307/2013