The European Commission has introduced a landmark €2 trillion budget—its largest to date—which implies significant modifications to agricultural funding in comparison to the current 2021–2027 period. Notably, agricultural subsidies and regional development funds are set to be amalgamated into a singular mega-fund valued at €865 billion. This structural shift is marked by a commitment to the Common Agricultural Policy (CAP), which has a specified protection from reallocation (ringfenced) for income support totaling €300 billion. The meaning of ‘income support’ has evolved, encompassing not only direct payments, which have historically constituted a large faction of CAP funding but also co-funded initiatives that were aspects of rural development, now being phased out. A crucial component of this new budget includes a €6.3 billion safety net, enhancing the agricultural reserve from €450 million to €900 million over a seven-year period to address market fluctuations.
While the proposed budget marks a significant restructuring, it raises questions about whether farmers will receive more or less financial support. Comparing it directly to the previous budget is complex due to its altered structure, a point the Commission has utilized to fend off criticism. Commission President Ursula von der Leyen asserted that “agriculture will be strengthened,” while EU agriculture Commissioner Christophe Hansen maintained that “the money that gets directly to the farmers is not cut at all.” However, scrutiny of the figures suggests otherwise. The allocation for CAP in the prior budget was €386.6 billion, with direct payments to farmers accounting for €270 billion. In contrast, the €300 billion ring-fenced amount appears to be less than necessary when considering inflation adjustments, leading experts to project a 20% to 30% cut in real terms for EU agricultural spending.
The proposed budget also highlights agriculture’s diminishing role within the overall EU budget. The total long-term budget is set to rise from €1.21 trillion to €1.816 trillion, while the CAP’s share significantly declines from 32.2% to merely 16.5%. This reflects a long-term trend; the CAP constituted over 70% of the EU budget in the 1980s. This realignment demonstrates the Commission’s evolving priorities, with a marked reduction in spending for agriculture in favor of new initiatives such as defense and competitiveness. This trajectory suggests that the EU is transitioning away from traditional agricultural subsidies and towards more diversified funding methods.
The budget proposal provoked immediate backlash from policymakers and stakeholders alike. Numerous Members of the European Parliament (MEPs) expressed their disapproval during discussions with Commissioner Hansen, with many asserting that a doubling of the multi-annual financial framework (MFF) does not justify a 25% cut to CAP funding. MEP Herbert Dorfmann, from the European People’s Party (EPP), succinctly articulated this sentiment, prompting a symbolic protest by farmers labeled ‘European Agriculture’s Black Wednesday’. Farmers’ representative organizations, notably Copa-Cogeca, criticized the Commission for ostensibly decoupling the “common” nature of CAP through what they termed as “concealed budget cuts.”
In response to these pressures, the Commission introduced several measures intended to placate lawmakers and address farmer concerns. Key among these is an inflation adjustment mechanism that would allow for revision of subsidy amounts based on inflation changes, aiming to protect farmers from price volatility. Moreover, new transition payments of up to €200,000 are set to support farms willing to implement ambitious reform plans, effectively encouraging agricultural innovation while mitigating the risks involved. Despite these adjustments, the core debate surrounding the future of European agriculture and its standing within the EU’s shifting priorities is expected to persist, with discussions anticipated to continue over several months prior to the finalization of the long-term budget.
As stakeholders prepare for the upcoming negotiations, the prevailing sentiment hinges on how these shifts will impact the agricultural sector in both the short and long term. The introduction of new measures demonstrates an attempt by the Commission to address some criticisms, yet doubts remain over the overall sustainability of agricultural funding in light of evolving priorities. The network of agricultural policy experts is poised to evaluate the ramifications of these reforms on rural economies and the livelihood of farmers. The challenge now lies in finding a balance between the EU’s emergent focus on defense, competitiveness, and sustainable growth, while also ensuring the resilience and innovation within its agricultural landscape.
