10% cut in EU direct payments to farmers must be avoided: ICOS

10% cut in EU direct payments to farmers must be avoided: ICOS

European Council President Charles Michel with Dutch Prime Minister Mark Rutte, in one of a series of meetings where Michel briefed heads of state and governments ahead of the special European Council meeting on July 17-18, where leaders will be under pressure to make progress on budget and recovery plans. With these negotiations delayed , the EU has agreed a two-year CAP transition.

A cut of close to 10% to direct payments to farmers is included in the EU budget proposals which leaders of member states will discuss on July 17, says ICOS European Affairs Executive Alison Graham.

She warns that unless our politicians can ensure that the CAP budget is at least maintained at current levels, our farmers could face cuts in EU payments.

That’s the crunch issue for farmers when EU leaders’ talks start on July 17, on the proposed seven-year EU budget of €1.1 trillion, together with a €750 billion recovery fund.

“While this proposal provides a minor increase in funding compared to what was previously on the table, it still represents a cut of €34 billion compared to current levels, specifically a cut of close to 10% to direct payments”, says Ms Graham (all figures are expressed in 2018 prices for comparison purposes).

“A cut of this size will have significant implications for the sustainability of many farms and the ability of our rural economy to survive the economic downturn.

“At a time when we need additional supports for our farmers and rural communities, this proposal to continue to cut funding to the CAP is hugely disappointing,” says Ms Graham.

She says the proposals include €348.8 billion dedicated to the CAP, including €258.3 billion for Pillar 1 (direct payments and market supports) and €75 billion for Pillar 2 (rural development), which will be topped up by an additional €15 billion from the recovery fund.

This additional money is to be front-loaded and used by the end of 2024, with the aim of stimulating the economic recovery of rural areas.

It should therefore be treated separately to the funding provided under the multiannual budget and will likely be dedicated to separate schemes.

“Under this proposal, over the seven-year period, Ireland would receive €7.9 billion for Pillar 1 supports and €1.7 billion for Pillar 2 [which is co-financed by Ireland], in addition to €353 million [2.36%] for rural development from the recovery fund.

“Direct payments are the central supports for farmers managing today’s difficult market situation, which has provided low market returns long before the COVID-19 crisis struck.

“For 60% of Irish farmers, their direct payment represents over 100% of their farm income.”

n In other EU agriculture funding news, whenever the EU reaches agreement on its seven-year budget, a Common Agricultural Policy until the end of 2022 is ready and waiting to channel the funds to the agri-food industry.

This follows the EU Council of agriculture ministers and the European Parliament having reached political agreement on the CAP transitional regulation, so all that needs to be agreed is funding amounts.

The agreement includes:

n Extension of the CAP until the end of 2022, for two years, compared to the Commission’s original one-year proposal.

n Extension of the current rural development programming until the end of 2025, including LEADER, which would otherwise have ended in December this year.

n  Extension of multi- annual measures which can continue funding rural development (agri-environment schemes, animal welfare) for a period between one and five years, with further extension for exceptional cases, compared to the three years maximum proposed by the Commission.

Multi-annual financing is also now reinstated for organic agriculture.

“Extending the current rules for two more years and until the new CAP is agreed and enforced, gives much-needed predictability and certainty to all farmers across Europe during the COVID-19 crisis,” said Marija Vuckovic, Minister for Agriculture of Croatia, who oversaw the Council-Parliament agreement, before Croatia’s six-month presidency of the EU ended on June 30.

“The EU will continue to fund rural development programmes and to grant support to European farmers through direct payments while ensuring a smooth transition to the next CAP period,” said Ms Vuckovic.

According to the EU, the extension of farmer support under the current legal framework until the end of 2022 will allow for uninterrupted payments to farmers and other beneficiaries.

Moreover, in these two years, member states will have time to prepare their strategic plans required under the new CAP legislation, and to plan for their implementation after approval by the Commission.

The final adoption of the transitional regulation is expected by the end of 2020, as it is closely linked to the seven-year EU budget currently under negotiation.

The EU was forced to plan for a transitional period when it became clear from the state of play of the CAP reform discussions and EU seven-year budget negotiations that the legislative procedure would not be concluded in time to apply the new rules and the CAP Strategic Plans as of January 1, 2021.

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