Understanding the Common Agricultural Policy’s new direction
This is the first installment of the Topic of the Month on the new Common Agricultural Policy
Toward a Fairer and Better Targeted Income Support for Farmers
The reform of the Common Agricultural Policy (CAP) for the 2028–2034 cycle arrives at a moment when European agriculture is undergoing profound transitions. Farmers are affected by volatile markets, higher input costs, more frequent climate-related shocks, and increasing societal expectations about sustainability[1]. Against this background, the way Europe supports farm incomes is more than a budgetary exercise: it is a test of policy vision, distributional fairness, and long-term strategic alignment.
The European Commission’s factsheets[2] offer concise yet substantial preview of how CAP will evolve. A major shift in how the EU conceives of fairness and effectiveness within the CAP will aim not only to stabilize farm income, but to ensure that public resources reach those who genuinely rely on agriculture, who face structural vulnerabilities, and whose resilience is essential for the long-term health of the sector[3].
One of the most important changes is the introduction of the Degressive Area-Based Income Support (DABIS). This new instrument simplifies the existing landscape of direct payments[4] by integrating the basic income support, the redistributive payment, and the young farmers’ top-up into a single, more coherent structure. By doing so, it removes some of the fragmentation of the previous framework and lays the foundation for a more transparent and targeted approach.
The DABIS is based on three conceptual ideas. First, income support must reach active farmers. Second, it must be fairer and more comparable across the EU. Third, it should reflect the real conditions and needs of different types of farms.
Under the new system, Member States will be able to tailor the mix of area-based payments, lump sums, and top-ups in ways that reflect their regional specificities. The inspiring principle is that a modernised CAP cannot function with a one-size-fits-all model. The diversity of farming systems across Europe—mountain farms, mixed crop-livestock holdings, specialised livestock operations, family farms, large arable farms—requires an equally diverse set of tools. DABIS preserves uniformity where it matters (transparent rules, clear objectives) and enables differentiation where it is most effective.
A striking feature of the reform is the explicit prioritisation of certain groups of farmers to reflect genuine structural challenges documented across the EU. The emphasis on active farmers responds to long-standing concerns that subsidies have flowed to landowners with little or no agricultural activity[5]. By 2032, pensioners will no longer be eligible for these area-based payments, helping redirect resources to those who rely on farming as their main source of livelihood.
Young and new farmers also receive much greater attention. With the average age of farm managers nearing 60 and fewer than 12% of farms managed by people under 40, generational renewal has become a strategic priority. The new CAP offers both stronger financial incentives and a more integrated “starter pack” designed to facilitate access to land, investment, and the development of viable business models. Member States are encouraged to double their support for young farmers, signalling a shift from marginal encouragement to systemic support.
Equally noteworthy is the recognition of women farmers[6]. While women make up nearly one-third of the overall labour force in agriculture, they represent only about one-quarter of farm managers. The new framework acknowledges this imbalance and allows Member States to offer targeted payments or lump sums to reduce barriers for female farmers. This new scheme is expected to unlock an underutilised source of leadership, innovation, and stability in rural areas.
Small and family farms—often the backbone of rural communities—stand to benefit from simplified support through a dedicated small farm scheme. Rather than navigating multiple layers of direct payments, smaller farms may opt for a single annual payment of up to €3,000. This reduces administrative burdens while ensuring that public support remains accessible to farms with limited capacity to manage complex procedures.
The reform also pays attention to mixed farms, which combine crops and livestock and often face unique financial and logistical challenges. Member States will be able to design payment structures that reflect the specific cost patterns and environmental services provided by these more diverse systems. Likewise, farms operating in areas with natural constraints—mountain regions, remote territories, and environmentally fragile zones—will continue to receive dedicated support to ensure that agriculture remains viable in these essential landscapes.
Degressivity and capping
Perhaps the most politically significant innovation is the introduction of mandatory degressivity and capping. This mechanism acknowledges that large farms benefit from economies of scale and therefore do not require the same level of per-hectare support as smaller ones. The new rules introduce a gradual reduction in payments above defined thresholds and establish a hard cap at €100,000 per farm.
The structure is expected to work as follows: no reduction up to €20,000; a 35% reduction between €20,000 and €50,000; 50% reduction between €50,000 and €75,000; 75% reduction above €75,000; Absolute capping at €100,000. This recalibration should not penalise productivity or discourage large farms from investing. Crucially, it applies only to DABIS. Other forms of support—agri-environmental schemes, coupled payments, investment grants, support for young farmers, or climate-related interventions—remain untouched. The aim is to avoid cutting support and rather ensure that the basic income layer serves its intended purpose.
Equally significant is the requirement that funds generated through degressivity and capping must be reinvested into agriculture. Member States might channel these resources in several ways, spanning from enhancement of agri-environmental payments to improvements of biodiversity incentives, strengthening support for small farms, encouraging innovation and diversification, and supporting farms in vulnerable regions. This circular redistribution mechanism should facilitate the creation of a more balanced system while preserving flexibility for Member States to adapt it to national or regional priorities.
The reform also promotes greater fairness between countries. The new framework narrows the range of average per-hectare support, establishing a floor of €130/ha and a ceiling of €240/ha. This reduces long-standing disparities in direct payments across the Union, strengthening cohesion while preserving differentiation. Convergence has always been politically delicate, and the Commission’s proposal aims to bring Member States closer together without undermining national autonomy.
Beyond DABIS, the CAP’s architecture supports a more interconnected policy environment. Coupled income support will remain available to sectors facing economic or environmental pressures, including protein crops, mixed farms, and regions at risk of land abandonment. Support for areas with natural constraints continues to play a central role in sustaining rural territories that contribute to landscape preservation and biodiversity.
Agri-environmental and climate actions also gain renewed importance. Farmers who adopt more sustainable practices will be eligible for financial incentives, and those undergoing significant transitions may access lump-sum support of up to €200,000. This recognises that environmental improvements often require upfront investment, behavioural change, or temporary income losses. The transition payment is therefore not only an incentive but a buffer against risk.
What emerges from the factsheet is a coherent vision: targeting, fairness, simplicity, and environmental ambition are not separate objectives but interconnected pillars. Income support is not being reduced; it is being redirected. The reform does not attempt to homogenise European agriculture but to ensure that a stable, predictable support framework can coexist with a more nuanced understanding of where public money is most valuable.
Yet the success of this model will ultimately depend on the choices of Member States. The reform offers the architecture, but the design of the National and Regional Partnership Plans[7]—their targeting logic, eligibility conditions, and administrative arrangements—will determine whether this vision materialises. Member States will need to balance fairness with feasibility, flexibility with consistency, and national priorities with shared EU objectives.
In many ways, the reform reflects broader EU regulatory trends: a move toward performance orientation, data-driven targeting, and the linking of financial flows with measurable societal benefits. Agriculture, like energy, digital markets, or transport, is being asked to adapt to a world where public spending must demonstrate public value.
The CAP has always been a cornerstone of European integration. With the 2028–2034 reform, it takes another step toward becoming a policy that not only supports farmers, but also strengthens communities, protects landscapes, and ensures that the agricultural sector can thrive in a changing world. The challenge ahead will be to translate this ambitious framework into effective, coherent, and equitable outcomes on the ground.
[1] Readers interested in reading more may refer to the following publications:
Kornher, L., Balezentis, T., & Santeramo, F. G. (2024). EU food price inflation amid global market turbulences during the COVID‐19 pandemic and the Russia–Ukraine War. Applied Economic Perspectives and Policy, 46(4), 1563-1584.
Mustafa, Z., Vitali, G., Huffaker, R., & Canavari, M. (2024). A systematic review on price volatility in agriculture. Journal of Economic Surveys, 38(1), 268-294.
Guo, K., Li, Y., Zhang, Y., Ji, Q., & Zhao, W. (2023). How are climate risk shocks connected to agricultural markets?. Journal of Commodity Markets, 32, 100367.
[2] Documents available here: https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/cap-post-2027-next-eu-budget_en#national-and-regional-partnership-plans
[3] The distribution of income support is a highly debated topic. Interested reader may delve on the topic reading the following publications:
Marino, M., Rocchi, B., & Severini, S. (2024). Assessing the farm–nonfarm households’ income gap along the income distribution in the European Union. JCMS: Journal of Common Market Studies, 62(2), 318-340.
Kortleve, A. J., Mogollón, J. M., Harwatt, H., & Behrens, P. (2024). Over 80% of the European Union’s Common Agricultural Policy supports emissions-intensive animal products. Nature food, 5(4), 288-292.
Chatellier, V., & Guyomard, H. (2023). Supporting European farmers’ incomes through Common Agricultural Policy direct aids: facts and questions. Review of Agricultural, Food and Environmental Studies, 104(1), 87-99.
[4] Readers interested in learning more on the current distribution of direct payments may refer to the following documents of the European Commission:
Europea Commission (2024). Direct payments to agricultural producers. Available at: https://agriculture.ec.europa.eu/document/download/f00e2954-94a3-405f-86ec-feb69751e0ab_en?filename=direct-aid-report-2022_en.pdf&prefLang=ga
Europea Commission (2024). Summery Report on the implementation of direct payments [except greening]. Available at: https://agriculture.ec.europa.eu/document/download/8707d160-1fed-45b1-aba8-bc9a6eca9846_en?filename=summary-report-implementation-direct-payements-claim-2022_en.pdf
[5] On the eligibility for direct payments of the current CAP, readers may refer to the following publication:
European Commission (2023). Eligibility for direct payments of the Common Agricultural Policy 2023-2027, Available at: https://agriculture.ec.europa.eu/document/download/66f112fe-8281-4366-a377-9e86d6e9bb71_en?filename=direct-payments-eligibility-conditions_en.pdf
[6] The new strategy helps solving gender gaps that have been evident in agriculture and several other sectors. Interested readers may refer o the following publications:
Shortall, S., & Marangudakis, V. (2022). Is agriculture an occupation or a sector? Gender inequalities in a European context. Sociologia Ruralis, 62(4), 746-762.
Fertő, I., & Bojnec, Š. (2024). Empowering women in sustainable agriculture. Scientific Reports, 14(1), 7110.
[7] Interested readers may refer to the following document: https://commission.europa.eu/document/download/3fb8dd83-268e-4e18-b446-cf8963719e0b_en?filename=MFF_National_Regional_Partnership_06.08.pdf
