Brian Gardner's Blog

It is becoming ever clearer that there is no real intention on the part of the European Union’s agriculture ministers to agree any effective reforms of the EU agriculture policy. The Council of Agriculture ministers meeting at the beginning of this month indicated only too clearly that the final agreement for the 2014-20 MFF will consist only of a continuation of the same policy. Lip service will be paid to the greening concept, but the emphasis will still be heavily on the boosting of farm business profits through continuation of the massively irrelevant direct income payment system. To make matters worse, an important part of the agreement will fully extend this system to the twelve newer member states.
What is certain is that the ministers will not even begin to rejig the policy and the agriculture budget so as to put the emphasis where it is needed: on restructuring in the NMS12 and economic boosting of the less favoured rural areas of the EU15. There will be some reduction in the European Commission’s original CAP financing plans for the MFF, but by time the farm ministers have finished their deliberations, it is certain that cuts will fall heavily on the rural restructuring Pillar 2 budget. This will lead to preservation of the income subsidy and market support budget which will remain largely at the increased level proposed by the Commission.
Weasel words will be employed to justify this approach, arguing that some of the functions of the P2 budget will be taken into P1 by the so-called ‘greening’ conditions to be imposed on direct income payments. The problem is that, as usual, the activities of the farm ministers will bear little relation to the financial realities of the period. As far as disposition of spending within the farm budget is concerned the ministers need only take their cue from the highly irresponsible suggestion of European Council President Herman Van Rompuy that a 19% real-terms cut in CAP spending should fall wholly on rural development.
Having accepted that there has to be a cut, the French-led, no-reform majority in the farm council are likely to follow this lead by ring-fencing Pillar 1 spending at current levels and hacking away at rural development aids. As the Institute for European Environment Policy has pointed out: “The resolution of this[disposition of funds between P1 and 2] will be very important for environmental interests as well as farmers, given that the CAP contains considerably more EU budgetary power for achieving environmental objectives in rural areas than any other fund”.
The IEEP argues that if the MFF deal involves a cut in EU and all headings by, for example, 10% and all the agriculture budget cut is borne by Pillar 2, this would mean a 42% cut in total rural development public expenditure. If P1 spending is ring-fenced, then even a 4% CAP budget cut all borne by P2 would cut its expenditure by 17%. “This would mean a substantial restructuring of rural development programmes to the detriment of their objectives in fostering sustainable competitiveness, natural resource and climate protection, and innovation”, the IEEP warns.

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