Parliament defies Council on decoupling crisis reserve from CAP budget

Talks on Common Agricultural Policy (CAP) are currently stuck on the issue of the crisis reserve fund, designed to support the sector when crises affect production and/or distribution. [SHUTTERSTOCK/MAXBELCHENKO]

The crisis reserve fund remains an outstanding issue in the otherwise advancing talks on the reform of the EU’s Common Agriculture Policy (CAP), as positions of the European Parliament and EU farm ministers on the issue are still far apart.

Introduced by the 2013 CAP and designed to support the agriculture sector in times crises, this reserve can be used to finance exceptional measures to counteract market disruptions affecting production or distribution.

However, the fund has never been used so far despite calls to do so, since it set up each year through reductions to direct payments under the financial discipline mechanism.

That means that activating the crisis reserve would result in corresponding cuts in direct payments to farmers.

Member states, but also the farmers association COPA-COGECA, have not been willing to allow this to happen as they think that the fund would not bring any additional benefit for suffering farmers but would just transfer money from one pocket to another

For the 2014-2020 period, the reserve fund comprises seven equal annual instalments of €400 million, totalling €2.8 billion. But not even in the midst of the COVID-19 disruption, this financial firepower has been deployed for the reasons given above.

In order to avoid similar situations arising in the future, the Commission’s next CAP proposal includes the idea of decoupling use of the fund with the reduction in direct payments for farmers.

In the negotiating mandate for the transitional CAP, the European Parliament passed an amendment which called for the crisis reserve to be financed from outside the CAP budget, as an addition to direct payments and rural development funding.

The Parliament is advocating for an initial budget of €400 million, with further funds that could be added each year together with any unused money from the previous year, until it reaches €1.5 billion.

“We supported this proposal, but the Council is very sceptical,” the Parliament’s negotiator Ulrike Müller told EURACTIV.

According to the German liberal lawmaker, the funds for this emergency reserve should not stem from the agriculture budget if the EU wants to use this money when farmers will face another crisis.

She pointed out that the way the crisis reserve was funded in the past was that direct payments were held back for a year and farmers got access to the money from that reserve only in the year to come when there was not needed anymore.

“The debate on the crisis reserve is something that we still have ahead of us, but we will stand by our position,” she said, adding that the negotiations are about “giving and taking.”

The European Commission backs the Parliament stance, as the crisis reserve fund should be larger than the one currently in place and become a proper crisis reserve that does not depend on subsidies or aid.

On Thursday (21 January), the EU’s Committee of Regions published an external study that also stresses the need to decouple the crisis reserve from the CAP direct payments, as farmers will indirectly come to pay for the crisis reserve otherwise.

“An effective agricultural crisis reserve is clearly an essential part of the tool kit to respond to any future pandemic emergency, and it needs to be properly financed on a sustainable footing,” the study reads.

The reform of the CAP, the EU’s main farming programme, is currently at the trilogue stage, meaning that interinstitutional negotiations are undergoing between ministers and MEPs.

Both negotiating parties expect to reach a final deal by April or May under the Portuguese rotating presidency of the EU.

EU agri-food sector puzzled by crisis reserve conundrum

As the exceptional measures taken by the European Commission have not been deemed adequate to relieve distressed agri-food markets, the idea of deploying the so far unused crisis fund, set up in the 2013 Common Agricultural Policy (CAP) reform, is coming to the fore.

[Edited by Zoran Radosavljevic]

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