The new tool, approved today by Spain’s CAP Coordination Body, will reward regions with the highest execution of European agricultural funds (EAFRD) and will be applied from 2026 onward.
The Ministry of Agriculture, Fisheries and Natural Environment of the Balearic Islands, through the Directorate-General for Agriculture, Livestock, and Rural Development, has led the proposal and approval of a performance-based compensation mechanism under the Strategic Plan of the Common Agricultural Policy (PEPAC). Approved today by the national CAP Coordination Body, this mechanism is the final measure pending to complete the implementation of the 2023–2027 CAP and will come into effect in 2026.
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Agriculture Promotes Approval of a Compensation Mechanism for the Effective Implementation of the CAP Strategic Plan
The mechanism aims to incentivise and reward autonomous communities that exceed 100% execution of their allocated EAFRD (European Agricultural Fund for Rural Development) funding—used to finance the second rural development plan—by redistributing funds from communities whose execution rates fall below 85%.
Fernando Fernández, Director General for Agriculture, Livestock, and Rural Development, explained that “the CAP Coordination Body is responsible for monitoring and coordinating the application of the CAP across the country, approving the necessary annual adjustments and corrections.” Fernández also led the negotiation of the 2023–2027 CAP for the Balearic Islands and represents the region in this coordination space.
He emphasised “the persistence and constructive approach taken by the Ministry, through the Directorate-General for Agriculture, to ensure this mechanism was approved.” He added, “This was about implementing what we had already agreed upon during the PEPAC negotiations, a commitment included in the Sectorial Conference Agreement of July 14, 2021, later incorporated into Article 15 of Royal Decree 1046/2022 of December 27, which governs the Strategic Plan’s governance in Spain. However, it was politically and technically very complex.” The Basque Country also played a leading role in this initiative.
Fernández acknowledged the efforts of the Spanish Ministry of Agriculture, Fisheries and Food, highlighting the sensitivity of the measure: “Naturally, the over-execution achieved by some regions comes at the expense of resources from others that failed to meet the minimum threshold.” Nevertheless, he clarified that “the mechanism approved today will benefit all autonomous communities in the medium term—not just those with higher execution levels.” He also pointed out that the tool aims to prevent the risk of fund decommitment, since unused funds must be returned to the EU.
If the mechanism were to take effect today, only the Balearic Islands and the Basque Country would qualify as having surpassed 100% execution. The Balearic Islands currently stand at 126%, which would represent a return of approximately €3 million in a single year. According to Fernández, “this would provide financial relief, offsetting the additional effort the Balearic Government already makes to fund all aid lines.” Some other autonomous communities, however, are currently executing less than 50% of their allocated funds.
Fernández recalled that the 2023–2027 CAP negotiations already marked a paradigm shift for the Balearic Islands. “A specific island region was officially recognised, and eligibility criteria were expanded. We managed to negotiate differentiated payment amounts from mainland averages for all CAP interventions, leading to unit rate increases between 20% and 60%,” he explained. “The only pending item from those negotiations was the creation of this performance-based compensation mechanism, which has now been implemented. It will be based on execution data as of December 30, 2025.”
The redistribution of funds will begin at the first Sectoral Conference of 2026 and will continue annually until the end of the CAP programming period.