Agriculture’s share of the EU budget is set to be cut substantially from 2013 onwards, according to leaked copies of the EU Commission’s budget review circulating in Brussels.

The full communication is expected in November, and will set out key priorities for future spending in the EU.

In keeping with the demands of the UK government when the last financial perspectives were agreed in December 2005, the communication will include a review of the Common Agricultural Policy and the UK’s annual rebate.

It is understood that the leaked paper makes recommendations in relation to agriculture including:

| The share of the EU budget devoted to agriculture should be reduced

| The modernisation of the CAP along the lines of last year’s CAP health check should be continued

| Decoupled direct aids to farmers could be retained, but should no longer be based on historic production criteria.

| Direct aids should also be reduced and linked to the greater delivery of public goods

| Market intervention should be further reduced

| Pillar 2 measures should still be supported, possibly by increasing levels of modulation

| A Pillar 3 could be established, dealing purely with climate change

| A greater degree of national funding of the CAP, for example co-funding of direct aids, should be introduced.

According to an NFU briefing paper, the biggest concern is this last point on the co-funding of direct aids. “To the commission, this would remove some of the issues that hamper the debate on the budget, especially the UK rebate,” it says.

“In addition, it is seen as making the member states more accountable for proper financial control. The problem, however, is any voluntary co-funding would lead to further distortions in aid levels between those member states that seek to co-fund, and those like the UK, that do not.”

The NFU is also concerned that any attempt to link future support more closely to delivering public goods, for example through cross-compliance, will make EU agriculture less competitive.

“The idea of a Third Pillar may be appealing, especially if this can be oriented towards supporting research and development to give the tools that allow farmers to be productive, to adapt to climate change and to increase profitability,” said NFU head of economics, Tom Hind.

The leaked document has emerged from the EU budget directorate and relates to the 2009 budget review.

A further EU Commission communication specifically dealing with the CAP post-2013 is expected from the agriculture directorate in the middle of next year.