EU farmers to get back crisis reserve

CAP spending next year is on course to be virtually the same as in this year’s budget, says CAP expert Alan Matthews.

The EU’s budget year runs from October 1 of the previous year to September 30 of the budget year, and barring an EU agricultural crisis before September 30, the amount retained from farmers in 2013 to establish a crisis reserve this year will be returned to them later this autumn.

“This means that the amount €425 million will be added to farmers’ direct payment receipts in the 2015 financial year.

“This would bring total CAP spending next year to €59.2 billion, or virtually the same as in this year’s budget, in fact, a drop of 0.1%,” said Professor Matthews in his latest contribution to the capreform.eu blog.

These amounts are, of course, in nominal terms, so there will be a real decline corresponding to the rate of inflation, added the Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College, Dublin.

He has estimated there will be a slight increase in the amount available for direct payments in the 2015 budget (from €42.4 billion to €42.6 billion), and this increase would have been slightly greater if some member state governments had not voluntarily decided to transfer funds from Pillar 1 to Pillar 2.

“Of course, some individual farmers will see their payments reduced later this year because of decisions made on external convergence and coupling, but other farmers will see an increase for these reasons.”

“The Commission does not project that Pillar 1 budget appropriations (EAGF) are likely to exceed the MFF sub-ceiling in 2015, so the financial discipline mechanism is only needed in order to create the reserve for agricultural crises.

“The proposed rate of financial discipline next year necessary to establish the crises reserve is 1.3%,” said Professor Matthews.

“This compares to 2.45% this year, when there was also a need to bring EAGF projected expenditure inside the MFF sub-ceiling.

“The financial discipline adjustment is applied only to amounts in excess of €2,000 and not in member states that are still in the process of phasing-in direct aids.”