CAP faces battle to prove its value in a changing EU

Farmers frequently view environmental conditions as burdensome and expensive, while environmental organisations argue agricultural payments have failed to deliver sufficient measurable improvements

Professor Matthews, emeritus professor of European agricultural policy at Trinity College Dublin, said agriculture no longer enjoyed the privileged position it once held within the EU budget.

The EU’s Common Agricultural Policy reform proposals seek to balance competing demands relating to farming, food security and the environment.

According to agricultural economist Alan Matthews, they represent an effort to establish a new settlement around agriculture’s place within the EU.

Professor Matthews, emeritus professor of European agricultural policy at Trinity College Dublin, said agriculture no longer enjoyed the privileged position it once held within the EU budget.

Historically, the CAP was justified by agriculture’s distinctive economic characteristics, including unstable markets, uncertain production, low farm incomes and the strategic importance of maintaining food supplies.

However, the structure of European agriculture has changed considerably.

Production has become increasingly concentrated, with just 1.5% of EU farms accounting for 37% of agricultural output. Meanwhile, the largest 11% of farms generate 79% of production.

Income disparities have also widened and, while average farm incomes have improved relative to other sectors, the benefits have not been shared equally.

Direct payments were originally introduced to compensate farmers for reductions in price support. However, the area-based system is now frequently criticised because the greatest payments go to those controlling the most land.

At the same time, many farmers remain under severe economic pressure. They continue to face volatile markets, while rising energy, fertiliser and other input costs have squeezed margins.

The CAP is also being asked to address increasingly complex environmental challenges.

Farmers frequently view environmental conditions as burdensome and expensive, while environmental organisations argue that agricultural payments have failed to deliver sufficient measurable improvements.

Food security has also returned to the centre of European policymaking.

The covid-19 pandemic exposed weaknesses in global supply chains, while Russia’s invasion of Ukraine highlighted the EU’s dependence on external sources of energy, fertiliser and animal feed.

However, agriculture must now compete for EU funding against priorities including defence, energy security and migration.

This competition will become increasingly difficult as pressure grows on the EU budget, and policymakers demand clearer evidence that public spending delivers value.

The commission has proposed giving member states greater flexibility over how funding is allocated. Professor Matthews warned this could result in agricultural and environmental priorities varying considerably between countries.

EU expansion has already increased the diversity of its agricultural sector, while the possible accession of Ukraine would introduce a major producer with a very different farm structure.

Professor Matthews said the strongest case for continued EU-level agricultural spending lies in areas where countries share common interests, including research, innovation, food security, climate policy and environmental protection.

However, prioritising that expenditure within an increasingly constrained budget will be the central challenge.

“The future CAP is unlikely to emerge exactly as proposed by the commission, yet neither is a complete reversal of the reform agenda likely,” Prof Matthews said.

The eventual policy will reflect not only the needs of farmers, but the value European governments and taxpayers place on agriculture, food security and management of the countryside.