EU budget talks to determine fate of CAP reform

PRIME Minister David Cameron heads to Brussels today for two days of talks with fellow EU leaders on the EU budget that could have profound implications for the Common Agricultural Policy (CAP).

While the outcome could see an agreement that slashes funding for the CAP from 2014-2020, failure to reach a deal could also be significant as it would jeopardise the prospects of a deal on the CAP being reached in the first half of next year.

The UK, as one of 12 net contributors to the EU budget, is pushing for a freeze in the overall EU budget from 2014-2020 and Mr Cameron has threatened to use his veto to block any increase in the budget, as proposed by the European Commission.

Germany, France, the Netherlands and Sweden are among the UK’s allies in this but other member states, generally the net beneficiaries from EU spending, want an increase.

Mr Cameron has also stated his determination to protect the UK’s EU rebate, worth £3bn a year, which could come under pressure in the negotiations.   

The talks are inevitably complicated by the CAP, which still accounts for more than a third of the EU budget.

The UK and most of its budget allies would like to see the CAP but France, as a net beneficiary from the CAP, is pushing for the CAP budget to be maintained and cuts to be made elsewhere.

The starting point for the negotiations has been laid out in a paper by European Council president Herman Van Rompuy, which is in line with UK thinking on the overall budget but proposes a €25bn cut in the CAP budget - beyond the 12 per cent reduction in real terms that the European Commission has proposed.

This includes cuts of €13.2bn to direct payments, approximately another 5 per cent beyond the Commission’s 12 per cent proposed cut, and €8.3 billion to the rural development budget, 9 per cent further than the Commission proposed 10 per cent reduction.

Unless France can win a reprieve for the CAP, most observers the final agreement will not be far removed from the figures outlined in the Van Rompuy negotiating paper.

NFU president Peter Kendall said an agreement of this nature should lead to ‘significant amendments’ of the Commission’s proposed reforms, particularly the greening element.

He pointed out that the Agriculture Commissioner Dacian Ciolos had justified the greening plans, which will see 30 per cent of direct payments conditional on greening measures, on the basis that it would help protect the CAP budget.

Mr Kendall said: “Greening is going to impose a lot costs onto farming and will certainly make us less competitive. The Commission decided greening was a legitimate cost to bear to protect the budget.

“So if the budget is now going to be cut we need to have a corresponding look at the costs and bureaucracy imposed on the farming industry through greening.  We need to help farmers become more competitive, not force them to be more inefficient.”

He added that senior MEPs involved in the reform process shared this view.

Scottish Liberal Democrat MEP George Lyon said it was unlikely there be any move away from the overall proposal to link 30 per cent of direct payments to greening. But he said MEPs were already moving to ease the burden of greening, for example, by giving member states flexibility in implementation and allowing agri-environment and other accredited schemes to count towards it.

Of potentially greater concern, however, is the clause in the Van Rompuy paper permitting member states to shift up to 15 per cent of funds from the Pillar One direct payment pot to fund rural development schemes and vice versa. The policy, made partly at the request of the UK to fund England’s agri-environment schemes could leave UK farmers ‘severely disadvantaged’, said Mr Kendall, who warned the UK is pushing to for the figure to be increased to 20 per cent.  

The paper drops the Commission proposal to impose a compulsory cap on the biggest farm payments, a move generally welcomed in the UK but described as ‘illogical and hypocritical’ in the face of the CAP budget cuts by Mr Ciolos.

But of equal significance could be failure to reach any agreement at all in this week’s talks. There cannot any final political agreement on CAP reform until the EU budget settlement is resolved.

Mr Lyon, who sits on the EU Parliament’s Agriculture Committee, warned that a ‘no deal’ could completely derail the CAP reform timetable, which is currently set out to achieve agreement by the end of the Irish presidency of the EU on June 30.

He said the EU budget would realistically need to be agreed by ‘early February’ to give the EU institutions involved in the CAP reform process time to reach agreement by that date.

If it goes beyond into the Lithuanian presidency of the EU, with German elections looming, the timetable becomes even harder to predict, he said.

Readers' comments (1)

  • It is a result of the Lisbon Treaty that the decision making process has become so complex. With food prices rising, global stocks in decline you would think that it would shape the direction of the reform and ensure it stuck to the time frame set out years ago.

    Little wonder that the Prime Minister is faced with a virtual no win situation. In asking for a budgetary increase against the financial backdrop of cuts the EU has lost all credibility with both the electorate and those requiring their votes.

    Just how accountable are MEP's to the process particularly on the back of proportional representation? The real question though should be what do they add to the process that producing the reform through the Commission and council of ministers other than compelexity and delay?

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