This preference was particularly important for the Eastern member states as they had less efficient bureaucracies and more generally struggled to find the administrative capacity necessary to implement the CAP. The Eastern Europe bloc therefore focused most of its political capital on pushing for a system that would redistribute direct payments while opposing a hard upper limit on those payments . The issue of limits on direct income payments was particularly contentious. This time, the new member states were involved, offering potential allies to both sides of the battle. The agricultural ministers of the Czech Republic, Romania, and Slovakia joined Germany, Italy, and the UK in signing a position paper that pledged to reject any agreement that included a cap on direct income payments . The paper argued that a cap on income payments contradicted CAP rules by discriminating against a set of farmers, in this case large farmers. It further argued that this policy would lead farms to split up or fail to merge. Preventing merges and compelling farms to split apart would reduce efficiency and result in more money being spent “administering the collateral costs of capping” income payments rather than supporting agriculture and advancing environmental goals . Though they were not signatories to the position paper, the Netherlands and Sweden also opposed capping. There were also new member states on the other side of the table. The main member states in favor of capping were Bulgaria, Poland, Austria, and the Baltic states. Bulgaria predicted that, unless capping was implemented, 4% of its farmers would receive 80% of the country’s direct payments. The situation in Poland was not as skewed,30l plant pots but there were still some farmers who received far more than others. Poland supported the plan because it viewed it as a way through which the vast disparities in payment levels between the member states could be addressed.

The Baltic states received among the lowest amount of direct payment per hectare, and thus also supported a payment limit. As very few Austrian farmers would be affected by capping, it was not costly for Austria to support the initiative. Finally, the French tacitly supported a payment cap , but did not wish to expend political capital on this soft preference against the far more vociferous “contra capping coalition” . One point of unity among all key actors was opposition to greening proposals36. COPACOGECA37 , the EU-wide farmer lobby, was particularly critical of the greening component that required farmers to set aside 7% of their land for ecological purposes. COPACOGECA warned that “it would imperil food security, require farmers to find ways of increasing production on remaining land, and damage the ability of farmers to respond to market signals”. Within the Council of Ministers, the general consensus was that the proposals were complex enough to lead to more red tape and bureaucracy and yet insufficient to actually meet the major environmental challenges at hand. The member states as a whole also expressed concern to the Commission that the proposals were too rigid and needed to be made more flexible, so they could be adapted to the circumstances and needs of each member state . Some also argued that the proportion of Pillar I committed to greening was too high at 30%. Here though, there was less consensus, and some thought that environmental matters should be left to Pillar 2, which concerns rural development, while Pillar 1 retained its focus on production and incomes. With respect to greening, the member states shared three goals or preferences: to increase flexibility in order to allow member states to tailor the policies to their own circumstances; to minimize the extent to which the measures would increase bureaucratic and administrative requirements; and to ensure that the greening measures not conflict with or impede production objectives . A first hurdle to tackle in reaching a final agreement was the greening proposals, all of which were widely condemned by the member states.

Beyond their overall negative reactions to the greening proposals, member states were concerned about how to make these policies work in their particular national contexts. As a result, the Commission relented and gave extensive concessions and exemptions in order to forge an agreement. The mandatory Ecological Focus Area was reduced from 7% to 5% of land. This reduction was made even though it was generally believed that most farmers already met EFA standards for 3.5% of their land. Thus they would only need to bring another 1.5% of their land into compliance to meet the new requirement. In addition, changes to rules on compliance and exceptions for certain groups of farmers resulted in 48% of arable land and 88% of arable goods farmers being exempted from the EFA requirement . For those roughly 12% of farmers who would be subjected to the EFA requirement, there was a long list of possible ways to meet this requirement38, some of which permitted the continued use of land and even fertilizers, essentially entirely undermining the idea behind requiring farmers to maintain ecological focus areas in the first place. Similar exemptions were achieved for permanent grassland measures. Concerning crop diversity, the initial proposal stipulated that farmers with more than 3 hectares of arable crops would be required to maintain three or more different crops simultaneously, with the largest crop not to exceed 70% of land and the smallest to represent at least 5% of the land. The proposal was revised, such that the rules applied only to farms over 10 hectares instead of 3 hectares. These farms are required to grow two crops, while those over 30 hectares must grow three, with the main crop not exceeding 75% of land . While this change to the minimum threshold for the holding size may seem like a minor change, it actually served to drastically reduce the number of farmers who were required to comply with this policy. As of 2013, two-thirds of farms in the EU consisted of 5 or less hectares of eligible land and one-fifth of member states reported an average holding size of under 10 hectares . Another point of contention in the proposal was the method and process for achieving both internal and external convergence. The Western member states were amenable to external convergence, as they admitted that an unequal CAP would be politically unsustainable in the long term. Despite this admission, there remained divisions between the old and new member states about how convergence should take place.

The new Eastern and Central European member states preferred rapid convergence while the older and predominately Western European member states preferred that the transition take place gradually. A compromise was reached between the old and new member states with the former accepting eventual convergence and the latter a gradual transition period that would not be complete until after 2020, projected to be in 2028. The Commission was able to forge an agreement, with both camps agreeing to some changes in how the policy would operate. While the new member states agreed to less redistribution at a slower rate than originally proposed, the older member states agreed to transition away from the payment schemes,30 litre pots available only to older member states, that were the source of the growing inequality. In addition, the older member states were afforded “hardship payments” to help farmers adjust to the changes in their income. Under the design of the external convergence program, only €738 million out of a total direct payment budget of €42.8 billion would be redistributed over the period 2014-2020 . As a point of comparison, €4.5 billion would have been needed if the plan had been to bring current payment levels up to parity immediately. The overall period of adjustment for external convergence would be gradual, beginning in 2014. Initially, farmers who previously received their payments based on a historical calculation would receive 50% of the new payment under that calculation while the other 50% would come via the new fixed payment per hectare system . Member states will have some discretion in how this shift takes place, with the expectation that the shift be gradual, and the requirement that by 2019, 100% of the payment be awarded according to the new model . Due to broad member state concerns about the effects of internal convergence, the Commission again relented, resulting in a process that would be slower and less abrupt for farmers. Under this compromise, the target for internal convergence was set at 60% for the “minimum level of average regional payment given to the individual beneficiary” . In addition, in a concession to France, member states were permitted to top up these payments in a sort of reverse degressivity. This position was defended on the grounds that, if production levels were to be maintained, as was the intention, then income supports should not be redirected from more productive to less productive farmers. Capping, in the form of a hard upper limit, once again went nowhere.

The central problem was that the Commission was the only major actor in favor of the proposal. Among the member states, there was a coalition that was staunchly opposed, with the rest of the member states not having a stake in the matter and thus deciding to stay out of the conflict rather than antagonize other member states for whom the issue mattered a great deal. In order to move the negotiations forward, the Commission completely dropped its proposal to place a cap on direct income payments. Degressivity, the other of the Commission’s main proposals seeking to manage payment thresholds, was included in the final agreement by way of a strategic concession by the Commission. Specifically, a final agreement on the issue of degressivity was facilitated by Germany’s acceptance of degressivity of 5% on all payments over €150,000. In exchange for this concession, the Commission allowed member states an additional way to meet the degressivity requirement. Member states were permitted to choose between 5% degressivity for all payments above €150,000, after employee and related costs were subtracted, or to apply a redistributive payment, accounting for at least 5% of the national envelope . Essentially, instead of subjecting individual farmers who earned over €150,000 to this 5% reduction, member states could choose to take 5% of their total national allotment of direct payments and redistribute it amongst their farming community. The final agreement ultimately watered down every element of the Commission’s proposal. For some proposals like external and internal convergence, the process was delayed. Others, like greening, involved the lowering of standards or weakening of requirements. Still others, like a cap on total payments, were defeated outright. The following table presents the initial proposal and final agreement side by side, and summarizes the main points of difference.Of the three central issue areas, nothing from the Commission’s initial proposal remained intact. The greening initiatives and the plan for achieving external convergence were both heavily revised.Regarding direct income payments, while the proposal to transition member states to a single formula for calculating direct payments survived, the plan for addressing the payment disparity between old and new member states was implemented more gradually, with a likely completion date of 2029 instead of 2020. The amount of degressivity was reduced to 5% for any farmer earning over €150,000 instead of a graduated system that would have seen up to 70% garnishment of payments for the largest earners. The overall package of reform for the direct payment system is the only element of the reform that had a clear link to disruptive politics: enlargement. The disruptive politics of enlargement created an opening for the Commission to implement actual change in how this system operated. As with past reforms, lessons from welfare state retrenchment can help explain this outcome. Specifically, the reform of this system serves as a good example of engaging in “vice into virtue” style retrenchment. Reformers were able to achieve policy retrenchment, particularly in area of payments to the largest, richest farmers, by working to correct an existing program that was functioning both unequally. Rather than attempting to adopt an entirely new program that directly attacked the most generous of direct payments, reformers instead focused on fixing an existing program. As a result, policymakers were able to achieve some retrenchment in the realm of direct payments.