The Commission proposes a drop of almost 15% of direct payments by 2027
Updated with final figures presented by the European Commission
The European Commission has presented, today, its proposals for the multiannual budget framework for the 2021-2027 period. This budget project lacks 43 billion (constant euros) in the Common Agricultural Policy (CAP) budget to maintain support for farmers at their current level, 27,4 for the first pillar (direct payments and market expenditures) and 16,2 for the second pillar (rural developpement).
This proposal, if accepted by the Member States and the European Parliament, would reduce the CAP budget by 11,7% over the next 7 years and be a decrease of 16% in 2027.
The impact on the direct payments would be considerable, with a shortfall for farmers of nearly 10% over the period, and about 15% in 2027. For the second pillar, this would be a 21% decrease over the period. The agricultural budget would thus not only assume the full CAP-Brexit bill (18.9 billion). But, in addition, it would contribute 24,2 billion euros to the deployment by the European Union of other policies.
In the end, the CAP would only represent 30.4% of the European budget.
Despite the ambitions displayed, the Commission has decided not to increase the overall scope of the Community budget by limiting the effort required to the Member States to 1.08% of GDP. On the other hand, the proposed cut for the Common Agricultural Policy is much more severe than that announced by the Commissioner for the Budget, Günther Oettinger during these various interventions.
8,15% drop in farmers income
In an uncertain political and economic context – where almost all agricultural sectors are in crisis – this proposal is very worrying for the future of European industries and the economic sustainability of many farms across the European Union.
According to Farm Europe’s simulations taking into account the share of direct payments in final farm income, the Commission’s budget proposal would have an immediate impact with a 8,15% drop in European farmers’ income in 2027, without changing parameters of the current CAP. The decline would reach 26,4% in Denmark and 13% in the Czech Republic – countries where the share of direct payments is the largest. In Germany and France, agricultural income would fall by around 6,5% in constant agricultural policy and by around 3,5% in Italy and Spain.
The equation proposed by the European Commission is deeply questioning the ability of the European agricultural sector to meet growing societal expectations. Even though the establishment of young farmers is a priority, the proposed guidelines would lead to an acceleration of the restructuring of the agricultural sector, particularly in the milk, field crops and beef sectors. This would lead to an expansion of the farms and a search for intensification.
In the context of rising societal demands and the need to invest to ensure the transition of agronomic systems towards more resilient models both economically and environmentally, the decline envisaged by the Commission appears untenable and is the relevance of the CAP reform guidelines presented last November.
At a time when some Member States might be tempted to find direct or indirect measures to compensate for the fall in the European budget, more than ever, the European Union should put in place a genuinely common policy, at European level, allowing to boost the competitiveness of European farms, their ability to invest and transform, avoiding any distortion of competition.