Agricultural financing

CAP aids were created by the European Union in 1962 to help the agricultural sector, which had been depleted by the war. Today, among its objectives, is to guarantee a reasonable standard of living for farmers, improve the productivity of the agricultural sector (and the supply of food to the population) and, in addition, seek to protect the environment (and natural resources).

Direct CAP payments are intended to supplement the income of farmers through payments that are made based on the number of cultivated hectares, although they are also usually supplemented with other payments based on a number of factors, such as the type of crop, the agricultural practices used, the conditions of the activity and the farmer's age. In addition to a certain amount per hectare (which is on average €226 per eligible hectare), farmers can receive, where applicable, a green payment (for environmentally friendly agricultural practices), a subsidy for young farmers or a complementary subsidy for farming in areas with difficult conditions, among others.

The beneficiaries of CAP aids are those who meet the requirements established for obtaining it, such as being a farmer, having land that is being exploited economically, and assuming the risk of the activity that is carried out.

To access the CAP grants, you must have a minimum surface area, established at:

• For a non-irrigated plot of land: 1 hectare
• For an irrigated plot of land: 0.5 hectares.

In order to apply for CAP aid in the form of direct payments, applicants must prove they are farming on land within the European Union and that their holdings are suitable for agricultural activity, meaning they contain arable land or permanent crops and pasture. They also have to respect a series of standards (not doing so can lead to a reduction in CAP aid).

On the one hand, they must comply with the Statutory Management Requirements (SMR), which include standards on environmental, animal and plant health or on public health and, on the other hand, they must "practice" the Good Agricultural and Environmental Conditions (GAEC) (which include good practices for maintaining crop soil, protecting land from erosion, or protecting habitats).

CAP grants are divided into two types:

• Direct; Those received by farmers for the products they obtain or, also, for maintaining their farmland in good condition. These can be, in turn, coupled (granted based on production volume and crop) or uncoupled (granted based on the hectares).
• Indirect; or those received for meeting other objectives that are not related to the above.