Farm subsidies still get top share of EU austerity budget

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Reuters / Farm subsidies will continue to gobble up the biggest share of the European Union’s budget to 2020, despite a 13 per cent drop in future agricultural spending, under a deal struck by EU leaders Feb. 8.

Agriculture’s budget supremacy was secured after France and other major farming nations thwarted attempts by Britain and its northern European allies to shift a greater share of EU spending towards new measures to boost growth and jobs.

As a result, farm subsidies will consume some 38 per cent of the EU budget for 2014-20, equivalent to 363 billion euros ($485.7 billion) of the 960 billion total, or around 50 billion euros a year.

That is still a significant reduction compared with the 417 billion euros earmarked for farming under the current seven-year budget, but supporters of the bloc’s 50-year-old common agricultural policy (CAP) will reflect that the result could have been a lot worse.

French President Francois Hollande was quick to claim victory in the negotiations, saying that France had managed to maintain its farm subsidies while other nations saw theirs cut.

“The relative share of agricultural spending in the European budget will decrease, but I made sure to preserve the funding destined for our farmers,” he told a news conference at the end of the 24-hour talks.

The EU’s farm commissioner, Romanian Dacian Ciolos, said the deal confirmed the importance of Europe’s farm policy for the 50 per cent of EU citizens that live in rural areas.

“EU leaders have reiterated their confidence in a modernized CAP and recognized the important contribution of farming and rural areas to the EU economy,” he said in a statement.

The only outright dissent came from Europe’s powerful farm lobby, accustomed to seeing its subsidies protected in previous EU budget deals.

“The decision will mean a 15 per cent reduction in CAP spending, threatening the employment of 40 million in the agri-food sector and millions more in rural areas,” EU farm lobby Copa-Cogeca said in a statement.

In 2011, Ciolos proposed an overhaul of CAP rules to coincide with the new budget period, and some of the main elements of his reform were endorsed by EU leaders as part of the budget deal.

Chief among these was a plan to make a third of the direct subsidies paid to farmers conditional on improvements in the environmental performance of agricultural production.

EU leaders also backed plans to share out farm payments more fairly across the bloc to address the disparity between producers in Italy, Belgium and the Netherlands who receive more than 400 euros per hectare on average and those in the Baltic states who get less than 150 euros per hectare.

But a proposal to limit subsidy payments to Europe’s wealthiest landowners by capping individual payments at 300,000 euros per year was weakened at the summit, with leaders saying governments should be able to choose whether to impose the limit or not.

Provided the budget deal gets the approval it needs from the European Parliament, EU politicians will push ahead to try to finalize the CAP reform during the first half of this year.

Even if they meet that ambitious deadline, officials say it will leave too little time to implement the complex changes in direct subsidy payments for the start of the new budget cycle in 2014. As a result, next year’s direct payments will be based on the existing rules but using the revised lower budget.

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