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- In the new EU budget for long term, farming subsidies are reduced from EUR387bn down to EUR300bn.
- This budget is not to be reallocated, despite its smaller size.
- Farmers and industrial groups are against these cuts and claim that they will threaten food safety and prices.
- They have been defended by the Commission, who has suggested that “agriculture would be strengthened.”
In the recent EU budget proposal, which totals just under EUR2 trillion (just shy of 2 trillion Euros), there are significant reductions in farmer subsidies within the Common Agricultural Policy.
The budget for this year is slightly higher than last year’s.
In the long-term budget that will cover 2028-2034, EUR300bn is allocated to support income for farmers. In the budget for 2021-2027, EUR387bn was allocated to this purpose. It is 22% less, but Euractiv reports that the actual reduction would be closer to 30% when you take inflation into consideration.
The Commission claims that the money has been “ring-fenced” to prevent it being redistributed.
However, the final outcome is still not in the bag. A two-year long negotiation between the EU, member states, and other stakeholders will be needed before the budget becomes a reality.
It’s still early in the process and just the beginning of an ongoing multi-year discussion among the Commission, parliament and members states. “No one can predict how the discussion will unfold and which changes may be needed,” explains Thijs Gieder, sector economist at ING for food and agricultural.
What will be the impact of budget cuts on EU agriculture and food?
Farmers have been among those who strongly oppose the proposal.
The Dairy Farmers’ Association ICMSA suggested that budgetary constraints could lead to an increase in food prices.
Dennis Drennan, IMSCA president, said that it is not difficult to see the consequences of this decision. As direct support for farmers falls, the price they charge to sell their products will rise, causing a negative impact on the final consumer.
FoodDrinkEurope, an industry association, suggests that CAP reductions could have a negative impact on food security. It suggests that European farmers rely on stable and predictable CAP to provide food security.
Copa and Cogeca, the EU agricultural organisation, has reacted strongly against the cuts and branded the day the announcement was made “the Black Wednesday in European agriculture”.
According to the organization, budget cuts have put onus onto the member states in order to provide support for farmers. This is “justified” by administrative simplification. It also suggests that European Farmers were “ignored”, and even abandoned, while being “the backbone of European food security”.
On Wednesday, led by their organization, the farmers protested against budget cuts at the Commission.
Budgets have also been criticized by those outside the farming industry. According to the European Environmental Bureau, a network comprised of several environmental organizations, such budget cuts would make it harder for farmers to switch to sustainable farming methods.
Ursula von der Leyen, the President of the Commission, has defended these cuts. She says that the budget will strengthen “agriculture”. She says that the payments made to farmers are “clearly protected and secure”, “targeted”, “transparent” and will be “faster”.
The policy has also been defended by economists. The economic think tank Bruegel claims that agricultural subsidies are not used to support food security, but rather for “social policies”. The report says that moving them from the EU budget to national budgets would be desirable as it “would free up EU resources” for areas of true European value.
Farmer’s anger at cuts to their income (epeters/Getty Images).
Previous EU commitments regarding CAP
According to the EU, the EU’s agricultural policy has focused on simplifying regulations and strengthening the CAP. The protests of the previous years signaled widespread dissatisfaction in Europe with the farming policy.
In February the EU Vision for Agriculture and Food published plans for not only streamlining regulations but also making CAP payments “simpler and targeted” for farmers.
The annual maximum of lump sum payments for smaller farmers has been doubled in May. This is to improve the competitiveness among larger and smaller farms.
Gleichzeitig, EU offers farmers emergency payments in the event of animal diseases and natural catastrophes.