CAP budget ‘likely to fall by 10%’

The Common Agricultural Policy (CAP) budget for 2014-2020 is likely to fall by about 10%, according to reports.

The total CAP budget over the next seven years will be set at around €373bn, according to a leaked paper on the total EU budget – the Multiannual Financial Framework (MFF).

Richard King, head of business research at Andersons, said: “The cut in the budget is not good news for farmers, but the fact that EU leaders have agreed something is better than nothing.

“It is not quite clear how this will filter down to what UK farmers will get. We will have to wait and see. But it will probably mean at least a 10% cut in payments in future.”

Other highlights of the leaked paper showed:

  • Total EU Budget (MFF) for 2014-2020 will be cut by around 3% in real terms compared to 2007-13 figures
  • Cut in Pillar 1 (SPS) and Pillar 2 (Rural Development) will be about equal
  • No details yet on UK share of total CAP Budget (especially Rural Development allocation)
  • “Modulation” of up to 15% of Pillar 1 funds allowed
  • Modulated money has to be matched-funded by national Treasuries at 1:1
  • “Greening” to remain at 30%
  • Concept of greening “equivalence” specifically written into final deal

Mr King said UK farmers would be delighted to learn that the capping proposal to limit direct payments for larger farms was likely to be introduced on a voluntary basis for EU member states – and therefore unlikely in the UK.

“The cut in the budget is not good news for farmers, but the fact that EU leaders have agreed something is better than nothing.”
Richard King, Andersons

“A lot of farmers on bigger farms were worried about capping,” said Mr King. “If their farm size reached a certain threshold, then they would not receive any additional payments.

“But it looks likely that the capping policy will be left to individual member states to decide. DEFRA has been saying for a long time that they don’t believe in capping, so unless there is a dramatic change in policy, it is unlikely that capping will be introduced in England.”

He pointed out, however, that devolved governments in Scotland, Wales and Northern Ireland, could choose to take a different view.

Mr King said it was positive news for farmers that political leaders were closing in on a deal on the EU and CAP budgets following months of debate and lengthy talks in Brussels over the past two days.

“No deal would mean a bit of a logjam on the whole CAP reform process. If the budget is not agreed at this meeting, we would likely have to wait until the autumn until it is passed,” he said.

The 27 European leaders could not reach an agreement over the EU budget when they met in November. However, if an agreement on the budget can be reached this week, it is hoped that Ireland, which holds the EU presidency, can finalise a CAP deal by the end of June, which will frame the post-2015 CAP agenda.

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