The all too familiar tale of the ‘least worst’ CAP outcome

The challenge in defending the Common Agriculture Policy is unprecedented this time around.

The all too familiar tale of the ‘least worst’ CAP outcome

By Stephen Cadogan

The challenge in defending the Common Agriculture Policy is unprecedented this time around.

These are words that should frighten farmers, but they do not, because they have heard it all before. The same warning comes from the EU Commissioner for Agriculture and Rural Development every time the EU re-negotiates its medium-term budget.

This time the warning comes from the mouth of Ireland’s Phil Hogan.

No doubt, he is anticipating huge difficulties in getting EU money for Agriculture and Rural Development, but too many of his predecessors have cried wolf, for farmers to be quaking in the boots.

Commissioner after commissioner all warned their CAP budget was under the greatest pressure ever, but in 2018, farmers remain still fairly well protected by the EU’s agricultural policy, despite dire warnings from Commissioners, and the CAP’s opponents wrongly predicting its demise decade afer decade.

Mr Hogan may have to ratchet the warnings up a level or two to bring home to the agricultural industry that this time really is the worst, because Brexit is blowing a €12bn hole in the EU budget, and other budget priorities such as security, migration and defence have grown in prominence in recent years, compared to agriculture.

Hence, he says, the Common Agricultural Policy is viewed as the obvious target for cuts which are necessary after the UK leaves the EU, taking its contribution to the EU budget with it.

Mr Hogan says he has met the prime ministers of Ireland, Hungary, Portugal, France, Slovenia and the Baltic states in recent months, and they are receptive to his proposals that they make up the Brexit shortfall by contributing a higher percentage of their Gross National Income (GNI) to the EU.

Without the extra money from member states contributing a higher percentage, there will be a cut to the CAP budget, warned Mr Hogan last week at the Citizens’ Dialogue with 400 farmers in Kilkenny, co-organised by the IFA and the European Commission Office in Ireland.

He sees it as his job to achieve the best outcome, for farmer income support to continue, particularly for small and medium-sized farmers.

Unfortunately, the outcome is largely out of his hands. And it really is unprecedented, this time around, that the second largest net contributor to the EU budget is departing the scene.

That leaves €12bn–13bn annually to be found to maintain the status quo of EU funding. Hence the EU Commission is asking member states to increase their EU contributions from around 1% of GNI to 1.1%.

Despite the good response Mr Hogan says he got to this proposal, several net contributor member states are reported to have expressed their opposition to such an increase. Before the European Council meeting in February, the Commission publicly suggested different scenarios for how the CAP budget will be affected.

They included no change in the CAP budget, a 15% reduction, and a 30% reduction. That a near one third cut in agriculture spending could even be possible backs up Mr Hogan’s warning that the challenge in defending the CAP really is unprecedented now.

And the unprecedented final outcome may be that member states must themselves take over some of the farmer and food industry financial support.

We will know more next month when the Commission proposed the EU budget for the years ahead.

If the news is bad, national co-financing of the EU’s income support to farmers may then become one of the “least-worst” proposals.

When suggested by the Commission last June, it was immediately rejected by agriculture ministers.

The explanation is that agriculture ministers do not want to have to negotiate with their national finance ministers for the additional resources to make direct payments to farmers, says CAP expert Alan Matthews, in his capreform.eu analysis.

But he is probably just one of the many who recommend that national co-financing of CAP Pillar 1 direct payments should be included in the Commission’s EU budget proposal in, and that the European Council endorse it in due course.

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Karen Walsh

Karen Walsh

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