1 July 2011

The European Commission has proposed reductions to the Common Agricultural Policy (CAP) budget between 2014 and 2020. The European Parliament had urged the commission not to cut the CAP after presenting its own proposals last week.

The Commission, which released its proposals yesterday, recommends a cut of €5.5bn to the annual budget for direct payments between 2013 and 2020 and cuts of around €2bn to the Rural Development Budget over the same period.

The €372 billion figure proposed for the 2014-2020 budget is largely in line with Agriculture Commissioner Dacian Ciolos’s requests, however, it does represent a cut of around €37billion on the current policy.

The cuts to the Rural Development Budget appear much less severe than the RSPB had warned they would be last week. Pillar one funding, which covers direct payments, is projected to fall gradually from €43.5bnto €38bn over the period.

Commission President José Barroso and EU Budget Commissioner Janusz Lewandowski unveiled the proposed budget on Wednesday. The percentage of the EU budget which goes to CAP will drop by around 3%; it currently accounts for nearly 40% of EU spending.

Greening measures

The commission stated its intention to make 30 per cent of direct payments conditional on farmers adopting ‘greening’ measures. Farmers could be required to implement steps to improve biodiversity, source green energy and cut their carbon emissions in order to receive their full payment. Some in the farming industry have expressed concerns that this may result in a drop in productivity.

Furthermore, the widely supported ‘ceiling on direct payments per farmer,’ which the UK government and industry resist, was widely welcomed by both the Parliament and Commission, as were proposals to reserve direct payments for ‘active farmers’.

Past attempts to create a ceiling for CAP payments have been unsuccessful, having been met in the UK by concerted lobbying from the Country Land and Business Association and the National Farmers Union in particular. In its Cereal Injustice Under the CAP in Britain report, released during CAP reforms in 2003, Oxfam lamented the current CAP system, saying it “Lavishes subsidies on some of Britain’s wealthiest farmers and landlords.” The charity claimed this had a detrimental effect for “small farmers, consumers, taxpayers and the environment in the UK – and millions of people in developing countries.”

Responses to proposals

Responding to the proposals, The RSPB, who had warned of even more drastic cuts, expressed disappointment at the commission’s decision to cut pillar two by 5 per cent. The charity pointed out that the proposed cuts coincide with a 5 per cent increase in overall EU spending. An RSPB statement accused the Commission of “squander[ing] a key chance to save Europe’s countryside and wildlife.”

NFU president Peter Kendall, addressing a conference on the future of CAP in Germany yesterday, said, “Given the austerity and budget deficit reduction policies around Europe, we could not expect agriculture to be entirely spared. The Commission are proposing a budget freeze for the CAP, which I believe represents a realistic outcome.

“Some of the budget proposals are extremely welcome- in particular the increased allocation for research and development- an essential precondition for meeting our challenge of producing more and impacting less”