Overshadowed EU agriculture negotiations could easily be compromised

Three months on, the EU is no nearer to agreeing its seven-year food agriculture policy funding.
Overshadowed EU agriculture negotiations could easily be compromised
Food argiculture worker

Three months on, the EU is no nearer to agreeing its seven-year food agriculture policy funding.

Buried in last week’s proposed 2021-2027 total EU funding of €1.85 trillion, the proposals for the Common Agricultural Policy look much the same as they did last February when a summit meeting to negotiate seven-year budgets failed.

Allowing for inflation, CAP funding is proposed to fall by 12% in real value for agricultural and rural economic actors.

Further negotiations are quite likely to fail even bigger. Now there’s also €750 billion Covid-19 recovery plan recovery plan to agree on, along with the EU’s seven-year budget, and all the sectoral budget stemming from it.

However, if the way ahead can eventually be agreed as targeted for January 1, 2021, last week’s proposals are likely to have been unrecognisably bent out of shape by fierce negotiations.

In any case, after Covid-19, and the recently published Farm to Fork plan, any EU farmers trying to plan even 10 years ahead would be better off with a crystal ball than predicting what hoops the EU will want them to jump through.

Farmers cannot now be blamed for turning a deaf ear to Brussels, where the previous Commissioner (Phil Hogan) first fanfared proposals for the CAP   back in May 2018.

They are no nearer to being enforced now than then.

Now, with the €750 billion recovery plan including an unprecedented scale of joint debt incurred by the EU’s 27 member countries, to revive economies decimated by the coronavirus, it would be no surprise if negotiations failed to reach agreement on the recovery plan, seven-year budget, or CAP funding.

In order to make funds available as soon as possible to respond to the most pressing needs, the Commission proposes to amend the current seven-year budget to make an additional €11.5 billion in funding available in 2020.

Hopefully, EU leaders can at least agree on that at their next meeting, on June 19.

The plans require the unanimous approval of EU heads of state and government, and the approval of the European Parliament.

European Parliment
European Parliment

There are many thorny issues to trip up the negotiations.

That poses a threat to agriculture. In previous CAP negotiations, protection of rural life and production of food was always too important to compromise, and were left unscathed in the bargaining and compromises.

Not so this time around.

With a new Commission; member state ideologies never further apart; and huge decisions to be made, agriculture may be only a bargaining chip

Member states are being asked to agree on €500 billion in grants, and €250 billion available as loans.

The European Council will have to agree new revenue streams such as a proposed digital tax, a carbon border tax (to counterbalance imports of cheap products from abroad which damage the climate), and a “large enterprises” tax, which could together, in theory, cover the repayment and interest costs of the money borrowed for the recovery plan.

Member states will have to newly discover a spirit of fiscal solidarity and co-operation to agree, even as critics warn the deal could leave all EU taxpayers with 30 years of repaying loans that will benefit only some member states, some of which have a record of ignoring EU fiscal discipline.

The Frugal Four, Austria, Denmark, the Netherlands and Sweden may be very hard to bring onside.

Reduced spending for the European Defence Fund and military mobility might be hard to swallow for France.

With the €750bn recovery plan designed to help the hardest hit countries survive the unprecedented economic downturn caused by the pandemic, it’s not surprising that Italy heads the proposed recipients of grants and loans, according to leaked documents which suggest the country will get access to €82bn in grants and €91bn in loans.

Others at the top of the list are Spain, Poland, France, Greece, Romania, and Germany.

Countries down the list may feel aggrieved.

The leaked documents suggest Ireland will be the third lowest beneficiary, getting a grants allocation of €1.91 billion.

Ireland gets nearly that much annually from the CAP, to main farm incomes and rural areas.

Unfortunately, a 12% cut in our share of the CAP is on the cards, even before the negotiators’ knives come out, perhaps to carve it even further.

Allowing for inflation, the Commission’s proposal for the CAP 2021-27 budget fund is €352.145bn, compared to €383.6bn in 2014-2020.

For 60% of Irish farmers, their direct payment represents over 100% of their farm income; a 12% cut in that would rub salt in the Covid-19 wounds.

Anyone looking for where farmers might gain in the proposals will be eyeing the proposed new €40 billion Just Transition Fund for spending on climate and environmental actions to achieve a “green transition” of the economy.

ICOS, representing the Irish co-ops, asks, “Could this be used to help farmers achieve the ambitious environmental targets laid out in the Farm to Fork and Biodiversity Strategies published by the European Commission last week?

How much could agriculture get, as the fund is targeted across the industry, energy and transport sectors as well, all under pressure to achieve carbon neutrality and protect the environment?

Unfortunately, although important to farmers, such matters are trivial in the overall scheme of things, as European Commission president Ursula von der Leyen urged member states to recognise the historic need for solidarity, for “the greatest collective challenge we have faced since the beginning of the EU.”

With such issues at play, anything could happen in an all-night EU leaders negotiation next autumn, in order to get the recovery fund across the line.

If paring more money off the CAP is needed in order to persuade the 27 EU countries to take a huge leap of faith into an unprecedented level of joint debt, farmers could be the ones to lose out.

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