Summary
- The EU’s new long-term budget cuts farming subsidies from €387bn to €300bn.
- The budget, though smaller, is ringfenced from reallocation.
- Farming and industry groups have come out against the cuts, suggesting they threaten food security and food prices.
- The Commission has defended them, suggesting that “agriculture will be strengthened.”
The EU’s recently proposed budget, totalling just shy of €2 trillion, includes significant cuts to farmer subsidies in the Common Agricultural Policy (CAP).
This is despite the fact that the overall budget is slightly larger than the previous one.
The long-term budget, which is slated to cover the time period from 2028 to 2034, designates €300bn to income support for farmers. The preceding 2021-2027 budget allocated €387bn for the same. This is a 22% reduction but, reports Euractiv, the reduction is more like 30% when inflation is taken into account.
However, the Commission states, the money is “ringfenced,” protecting it from being reallocated.
The eventual outcome is not set in stone, however, and a two-year negotiation process between the EU and member states lies between this announcement and the budget being made a reality.
“It’s really early days and the start of a multi-annual discussion between Commission, Parliament and member states. No one knows how this discussion will play out and what changes will be required,” explains Thijs Geijer, sector economist for food and agriculture at ING.
How will the budget cut affect EU food and farming?
The proposal has seen significant backlash from a range of quarters, including farmers.
Dairy farmers’ association ICMSA has suggested that the budget could contribute to food inflation.
“It’s not even difficult to predict the disaster that will follow this announcement, it’s just simple logic: As the direct supports for farmers fall, they will have to raise prices as they sell along the chain with a resulting impact at the point of sale to the consumer,” said IMSCA President Dennis Drennan.
Industry association FoodDrinkEurope suggests that the CAP cuts could harm food security. European farmers “depend on a stable, predictable CAP” to deliver such food security, it suggests.
EU farming organisation Copa and Cogeca has hit back hard against cuts, branding the day of the announcement “the Black Wednesday of European agriculture.”
The budget cuts, the organisation suggests, put the onus back onto member states to support farmers, “justified by the alleged virtue of administrative simplification.“ It suggests that European farmers had been “ignored” and abandoned, despite being the “backbone of European (food) security.”
Led by the organisation, farmers marched on the Commission on Wednesday in protest against the budget cuts.
The budget has also received harsh words outside of farming. The European Environmental Bureau (EBB), a network of environmental organisations, suggests that such cuts will harm farmers’ ability to transition to more sustainable farming practices.
Commission President Ursula von der Leyen has, however, defended the cuts, suggesting that “agriculture will be strengthened” as a result of the budget. The payments to farmers, she says, are “clearly safeguarded and secured”, as well as “targeted,” and “transparent”, and they will “come faster”.
Economists have also defended the policy. Economic think tank Bruegel suggests that farming subsidies do not actually support food security and are mainly used for “social policy”. It says that reorienting them to national budgets is desirable, as this would “free EU resources for areas with true European value added”.
Past EU pledges on CAP
Much of the bloc’s farming policy this year has been aimed at simplifying regulation and strengthening CAP, according to the EU itself. Protests in the preceding years had signalled widespread dissatisfaction with farming policy in the EU.
The EU’s Vision for Agriculture and Food, published in February, outlined plans to not only streamline regulations, but make CAP payments ‘simpler and more targeted’ for farmers.
In May, the annual limit of lump-sum payments to smaller farmers was doubled, aiming to increase competitiveness between larger and smaller farms.
At the same time, the EU offered farmers crisis payments for animal disease and natural disaster.