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13th Aug 2022

EU plans to defend farm policy but limit large payments

  • Debate on the EU's future farm policy has already seen member state clashes under the Belgian presidency (Photo: EUobserver)

European Commission proposals to be published next month are set to defend the bloc's interventionist Common Agricultural Policy (CAP) post 2013, but will also propose a reformed system of payments including a ceiling on the largest handouts.

"Withdrawing public support would lead to greater concentration of agricultural production in some areas … while less competitive areas would face marginalisation and land abandonment," reads a draft copy of the upcoming commission communication seen by EUobserver.

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"Such developments would result in increased environmental pressures ... with serious economic and social consequences," continues the text, likely to disappoint supporters of a significantly more market-orientated CAP in the future.

The ideas paper – to be followed by concrete legislative proposals in July 2011 – calls for a restriction on the largest direct handouts to farmers, with stories of ‘subsidy millionaires' among factors contributing to negative public sentiment in recent years.

Grants of €1 million or more were made to over 1000 entities in the EU in 2009, says Farmsubsidy, a CAP watchdog group which analyses the online data published by member states.

In the same year, a Swedish accordion club received €59,585, while a Danish billiards club netted €31,515, a practice the commission hopes to weed out in future by limiting aid to "active" farmers.

Distributing the money

The question of how to distribute CAP payments between 'older' and 'newer' member states has also added to tensions in recent months.

European agriculture ministers clashed on the subject in September, with France and Germany rejecting a Polish proposal to introduce a per-hectare distribution for the subsidies.

While farmers in newer member states are currently paid according to farm size, those in the EU15 receive payments calculated using a complicated system that takes into account historic stock or crop levels.

As a result, subsides vary from over €500 per hectare in Greece to less than €100 in Latvia, a system the newer member states are keen to change.

While the commission plans acknowledge the need for a fairer distribution, they also appear lukewarm towards a simple hectare-based rate on the grounds that "agricultural producers face very different economic and natural conditions across the EU."

Instead, one suggestion in the paper proposes that farmers receive a minimum income support payment, variable according to their country, plus a further payment linked to environmental protection.

EU budget

The debate on agricultural reform is closely linked to the EU's future budget post-2013, with politicians in the Netherlands and UK among those hoping to reduce their national contributions to Brussels in the future.

But the commission's CAP communication assumes that the EU's farm budget will remain stable at roughly €55 billion a year, although EU officials acknowledge they will have to fight to maintain this figure, even within the college of 27 commissioners.

"Some in the college don't understand why roughly 40 percent of the money should go to agriculture," one EU official recently told this website, insisting that it represented good value when reduced national spending was taken into account.

Next year's legislative proposals will need European Parliament and member state support if they are to become law.

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