Economic value of Cap could halve by 2034 if not linked to inflation, experts warn

Farm Europe has called on the EU to adjust the 2028-2034 common agricultural policy budget so it is indexed to inflation

Inflation, and the accession of Ukraine, make huge changes necessary if strong support for agriculture as a strategic sector for Europe is to continue, said experts at the Farm Europe think-tank.

The economic value of the EU's common agricultural policy will be more than halved by 2034, and if Ukraine joins the EU, it could claim about 20% of the Cap budget.

Inflation, and the accession of Ukraine, make huge changes necessary if strong support for agriculture as a strategic sector for Europe is to continue, said experts at the Farm Europe think-tank, after the European Commission recently made the first moves ahead of the negotiation of the next EU seven-year budget.

Farm Europe experts said the 2028-2034 budget negotiations would be one of the most complex due to several factors, including the first payments coming due in 2028 of the EU’s €300bn of joint debt to rescue the economy after the covid pandemic.

The EU must also cope with inflation, and the enlargement to include Ukraine.

For farmers, it is vital Cap support remain undiminished during the expected tortuous and contentious negotiations over the EU's next seven-year central budget.

However, Farm Europe experts say the economic value of the Cap would be more than halved (cut 54%, or by €250bn) by 2034 in comparison to its 2020 value, unless it is indexed to inflation for the 2028-34 period (assuming a modest inflation rate of 2% a year).

Farm Europe called for a strong and dedicated EU budget, for a truly "common" Cap.

"This budget should be adjusted to inflation, with strong leverage effect on investments, territorial balance, risks and crisis management, and generational renewal", said Farm Europe secretary general Luc Vernet last week, when he met European Commissioner for Agriculture and Food Christophe Hansen.

He warned negative trends in EU agriculture must be reversed, namely the 12% fall in EU farmers’ income over the past 20 years, the disappearance of 37% of the EU's farmers, and EU farmers’ debts increasing by 30%.

With these indicators turning red, "we urgently call for a new direction for the EU policy so that the farming communities across Europe see concrete and positive developments", said Vernet.