EU plans subsidy cuts for big farms

The European Commission will, on 20 November, present controversial plans to cut agricultural payments to Europe’s biggest farms and shift the money towards rural development projects.

The idea of curbing farm subsidies will be tabled as part of a communication on possible improvements to the EU’s Common Agricultural Policy (CAP) – the so-called “health check” – in an attempt to achieve “a better way of handling available resources”, Commission agricultural spokesman Michael Mann confirmed on 7 November. 

While the communication will not yet contain detailed legislative proposals, it will suggest “a graduated reduction in payments above a certain level”. Precise figures would not be decided until next spring, but Mann said that “perhaps” the plan could entail a 10% reduction in payments for all farms receiving more than €100,000, 25% for those getting more than 200,000, and 45% for those above €300,000. 

The pressure on the EU to reform its agricultural model increased when the Commission launched its Transparency Initiative in November 2005 (see LinksDossier). Since then, member states have had to disclose information on the beneficiaries of EU farm subsidies (see EURACTIV 3/05/06), highlighting an embarrassing tendency for Europe’s €55 billion CAP to mostly benefit massive industrialised farms and wealthy landowners, such as the British royal family, rather than the small farmers (particularly in the new member states) that need the money to survive (see EURACTIV 18/07/06). 

“Large farms already have a significant economy per scale and therefore do not need similar per hectare payments to those small farms would need,” said Mann, adding that, under the plans, the money saved would be invested in rural development projects in the country which sees its subsidies cut. 

However, the plan is likely to face significant resistance from member states. A plan to cap payments at €300,000 per farm was put forward in 2002, but, as Mann pointed out, “it did not get beyond the idea stage, so we’ll have to see what happens this time.” 

The countries likely to be hit hardest by the proposals are Britain and Germany, where many of Europe’s biggest farms are concentrated. Thus despite its traditional stance in favour of CAP reform, the UK could find itself leading the opposition to this proposal. France, on the other hand, despite receiving much higher total subsidies, is home to fewer large holdings because ownership is frequently divided. 

However, according to the NGO Farmsubsidy.org, which campaigns for greater transparency over payments, the proposed limitations would affect just 0.3% of all recipients, cutting total subsidies by just €554 million (1.7% of all payments). 

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