CAP spending faces further €5bn cut in bloc’s budget blueprint

Addressing the European Parliament last week, Agriculture Commissioner Janusz Wojciechowski stressed MEPs about the importance of having a "good CAP budget". [SHUTTERSTOCK]

In the latest compromise proposal for the next EU 7-year spending plan, fresh money allocated to the European Agricultural Fund for Rural Development (EAFRD) was trimmed by €7.5 billion, only partly offset by a €2.5 billion increase in direct payments to farmers.

On Friday (14 February), European Council President Charles Michel proposed a slight increase in the overall size of the Multiannual Financial Framework (MFF)  from 1.067% to 1.074% of EU27 gross national income (GNI) compared to the Finnish presidency proposal, resulting in a new expenditure ceiling of €1,094 billion.

Leaders of the EU27 are due to discuss the various budget proposals at an extraordinary summit on Thursday (20 February).

The adjustment proposed by Michel happens to correspond to the €7.5 billion required for the setting up of the new EU’s Just Transition Fund, which is listed under the heading ‘natural resources and environment’, the same as Common Agricultural Policy (CAP).

In this last draft budget, the money allocated under the heading ‘natural resources and environment’ amounts to €354.1 billion, and includes also CAP’s twin fund for fisheries, namely the European Maritime and Fisheries Fund (EMFF), but also the climate action program LIFE.

The CAP envelope is made up of three main sources: the direct payments to farmers and the market-related expenditures, which together form the so-called first pillar, plus the rural development support which is considered as the CAP’s second pillar.

In Michel’s proposal, the budget allocation for the first pillar is €256.7 billion in constant 2018 prices, with a €2.5 billion increase compared to the amount earmarked in both Commission’s CAP proposal presented in June 2018 and the Finnish presidency’s negotiating toolbox.

However, the fresh money devoted to CAP’s second pillar is proposed to be set at €72.5 billion, which is €7.5 billion less than the Finnish proposal, resulting in an overall €5 billion cut for the main bloc’s agricultural subsidies programme.

Such a decrease also frustrates the efforts of the Finnish presidency to allocate €10 billion more to the rural development funds, which they put forward in their draft proposal in a bid to compensate for the huge loss of funds the second pillar will face in the next programming period.

In the Commission’s proposal, rural development aid fell by 28% compared to the 2014-2020 CAP budget, whereas the first pillar only decreased by 11%.

Finland aims to put €10bn more in CAP's second pillar

Finland’s presidency proposed an EU’s seven-year budget that leaves allocations for direct payments and market measures as they were set up in Common Agricultural Policy’s Commission proposal, adding €10 billion of fresh money in the rural development funds.

Addressing the European Parliament last week, Agriculture Commissioner Janusz Wojciechowski stressed to MEPs the importance of having a “good CAP budget”, as the new environmental ambitions of the Commission will be costly for farmers.

Not all member states are on the same page though. Commenting on Michel’s proposal, Dutch Prime Minister Mark Rutte said the EU needs to focus less on traditional areas like agriculture and more on the major challenges of our time, like climate change and migration.

External convergence and flexibility

In his proposal, Charles Michel also scrapped the controversial new criterion for external convergence introduced by Finland’s presidency that would have bound the member states to guarantee a minimum level of aid per hectare of direct payments by 2027.

Introduced by the 2013 CAP reform, external convergence aims to reduce differences in the average support per hectare after Eastern enlargement. This process is designed to gradually allow equal direct payments for all the member states.

But the concept of external convergence has recently faced criticism by some EU countries, which are opposed to retaining the process in the next CAP.

Commission, Finnish presidency clash with member states over CAP convergence

A group of member states opposed to retaining external convergence in the next Common Agricultural Policy (CAP), have criticised the Finnish Council presidency for not even considering scrapping the concept.

Michel’s negotiating box also presents a relevant change ensuring more flexibility in the transfer between CAP’s two pillars.

The percentage for shifting up direct payments under the first pillar to rural development programmes in the second pillar is proposed to be increased to 20%, from 15% in both the Finnish presidency and the Commission draft proposals.

Also, the maximum rates of EU co-financing for rural development programmes have been increased from 70 to 75%, but only for Europe’s less developed regions.

[Edited by Zoran Radosavljevic]

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