Proposed CAP budget will lead to reduction in direct payments

THE European Commission unveiled the next Multi-annual Financial Framework (MFF) on May 2nd for the EU-27, including a 5% cut to the overall Common Agricultural Policy (CAP) budget, while direct payments to farmers will be reduced by less than 4%. Following the deduction of the UK’s contribution (€27.7 billion), the proposed allocation for the farm budget for 2021-2027 is €365 billion – comprising €286.2bn for the 1st Pillar (Direct support and market measures) and €78.8 billion (Rural Development). 

Speaking to reporters in early May, EU Farm Commissioner Phil Hogan described the reduction as a ‘fair outcome for agriculture and European farmers, particularly given the very challenging circumstances in which the budget has been framed.’ The future financial perspectives ‘vindicate the argument … that the CAP needs to be adequately funded to support farmers and the wider agri-food sector, which supports millions of farmers throughout the EU.’ 

Under the financial perspectives post-2020, Member States are requested to contribute 1.114% of Gross National Income (GNI) – less than was originally expected – with Hogan reiterating that ‘in the absence of more money from Member States, there will be a cut to the CAP budget and there’s no point trying to sugar-coat that fact.’ In terms of the next steps, the Commission is pushing for a quick adoption before European Parliament elections in May of next year and the Sibiu Summit scheduled for May 9th, 2019, which seems rather optimistic, with talks most likely to drag on beyond 2019. 

‘Disappointment’

The EU’s largest farm lobby Copa-Cogeca expressed ‘strong disappointment’ at the proposed CAP spending cuts, voicing opposition to any plan to reduce farm expenditure. In a statement issued on May 2nd, Copa president Joachim Rukwied said ‘farmers’ incomes are already 40% below average EU earnings in other sectors of the economy.’ The proposed cuts ‘threaten not only farmers’ livelihoods and vast parts of Europe’s rural areas, but also the delivery of the EU’s environmental and social goals.’ 

Cogeca (farm co-operatives) president Thomas Magnusson said ‘farmers and their families should not have to pay twice the price of Brexit’ and stressed the good value for money provided by the EU’s farm policy. 

The European Council of Young Farmers (CEJA) aired grievances about the ‘substantial cuts to the CAP.’ CEJA president Jannes Maes said young farmers’ ambitions, ‘in terms of environmental care, community building, and economic output,’ could only be achieved ‘with an equally-ambitious agricultural budget.’ 

Any cuts would only undermine the CAP reform process, the Flemish dairy farmer added. CEJA backed Hogan’s call for Member States to increase their contributions to ensure that the farm budget is maintained.

‘Tooth & nail’ 

Irish Minister for Agriculture, Food and the Marine, Michael Creed said he was ‘extremely disappointed’ at the CAP budget reduction for the next seven years. In a statement issued by the Department, Creed said farm families will be required to play a ‘vital role’ in the protection and enhancement of the environment and the production of food “to the highest standards in the world. 

‘These high standards, and the family-farm model, are part of the fabric of European values, but come at a price that EU citizens have shown they are willing to pay.’  The Minister said the Irish agricultural sector was also facing a period of ‘significant market uncertainty’ as a result of the UK’s decision to leave the EU. 

The Macroom man assured farmers that he would ‘fight tooth and nail to protect the CAP budget in the negotiations to come.’ 

•  Rose O’Donovan is Editor-in-Chief of the Brussels based publication AGRA FACTS and has been following the evolution of European farm policy for over 10 years.