EU to ringfence billions of farming subsidies
Brussels reworks plans to protect direct income for farmers in new budget after pressure from industry
Brussels is planning to ringfence hundreds of billions of euros of direct subsidies to farmers despite efforts to redirect its budget towards other objectives, such as boosting Europe’s defence and economic competitiveness.
The European Commission plans to merge several funding streams into a single envelope per country in its multiannual budget due in mid-July, giving capitals more leeway on how to spend the money. But most agricultural subsidies will be handed over in a separate, protected package, according to three officials with knowledge of the plans.
Under pressure from the EU’s powerful farming lobby, the commission has acknowledged that many small farms would go under if they lost the direct income support paid under the EU’s Common Agricultural Policy (CAP), the officials said.
“Farmers must have their direct payments,” one EU official said.
The CAP makes up around one-third of total EU spending in the current budget cycle. It is one of the EU’s oldest policies, first established in 1962, and was designed to protect the bloc’s food security and ensure farmers were paid a fair wage.
EU officials have said that overall the CAP budget is likely to fall compared with the current €386bn fund, over the seven-year period.
Income support for farmers currently amounts to €291bn of the fund, or around three-quarters.
The CAP has been mired in controversy over the amount of money going to large landowners. Farmers took to the streets in protest last year, burning hay and blocking roads with tractors — in part over the complex bureaucracy involved in accessing the funds.
The remaining quarter of the CAP is currently paid to farmers if they fulfil certain environmental criteria, such as preserving hedgerows and allowing land to lie fallow. After the protests, however, the commission cut back on the requirements that farmers must fulfil in order to access the funds.
Environmental groups have already complained that the commission’s efforts to simplify the CAP have weakened protections for natural ecosystems.
Célia Nyssens-James, policy manager for agriculture and food systems at the European Environmental Bureau, said that only protecting the CAP direct payments was “not acceptable” and that they were “broken subsidies” in need of a “genuine overhaul”.
The much-anticipated plan for the new EU budget, which will run from 2028 and is mostly funded by member state contributions, has caused deep divisions in the EU executive, as commissioners fight to preserve pots of money for the departments they are responsible for.
The proposal had been to combine funding streams, such as regional funds, social spending and agricultural subsidies, into one payment dubbed “national and regional partnerships”.
There has also been pushback from current beneficiaries, including farmers and regions that fear their funding streams will be lost in favour of new priorities like defence spending.
“The proposal to centralise EU funding into a single fund by the European Commission risks dissolving the CAP into a broader framework with less focus, fewer guarantees and no shared vision,” said a petition signed by more than 3,100 farming groups, including dairy multinational Arla Foods and the European Landowners Organisation.
The commission’s Romanian executive vice-president Roxana Mînzatu has, for example, been pressing to maintain social spending. “The next budget needs to have a strong social dimension, as strong as the competitiveness and security dimension,” she told the Financial Times.
A majority of EU countries, alongside regional and local governments, have called to preserve regional development funds — or cohesion policy — which make up over one-third of the current EU joint budget.
“Only a distinct and robust budget and a region-based allocation methodology” can ensure that the next budget “will deliver long-term unity, competitiveness and convergence across EU regions”, wrote 14 countries including Italy, Spain and Poland.
The commission declined to comment on the budget plans.