CAP budget faces 5% cut after 2021

New proposals from the European Commission promising significant cuts in CAP spending from 2021 onwards have underscored the value of Defra’s promise to UK farmers that support payments will be maintained at current levels until at least 2022.

Agriculture is a significant loser in the long-term EU budget plans for 2021-27 unveiled by the commission on Wednesday (2 May), with funding for the CAP set to be cut by 5% compared with the current 2014-20 funding period, according to the commission’s calculations.

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This contrasts with Defra’s promise to “maintain the same cash total funding for the [agriculture] sector until the end of this parliament [2022]”.

As things stand, therefore, UK farmers face the prospect of unchanged subsidy payments for at least the first two years after Brexit, while their continental counterparts face reductions.

The reduction in CAP funding is due in large part to the loss of the UK’s net contributions to the EU budget after the Brexit transition period finishes in 2020.

To soften the political effect of the changes, the cuts will fall more heavily on agri-environmental and rural development measures in Pillar 2 of the CAP than on direct aid payments (Pillar 1).

Unveiling the plans, EU agriculture commissioner Phil Hogan promised no EU member state would see its national budget for direct aid payments reduced by more than 3.9% – and some countries, especially in eastern Europe, will see increases.

CAP payment cap

But Mr Hogan also confirmed earlier leaks suggesting that under the new CAP, payments per farmer will be capped at €60,000 (£52,000). The detailed proposals on changes to the CAP are due to be officially presented on 1 June.

The total CAP budget for 2021-27, adjusted for inflation, will be about €365bn (£322bn), compared with €382.5bn (£337bn) for the EU (excluding the UK) in 2014-20.

But the axe will fall especially heavily on Pillar 2, where seven-year spending totals are going to be about 15% lower than in 2014-20 – much to the annoyance of environmental and countryside campaigners.

The commission also wants member states to make significantly higher contributions to co-funded programmes in Pillar 2 than at present.

The whole financial package will be the subject of fierce and complex arguments between member states over the next 12 months or so, and there could be significant changes to the plans before they are finally agreed next year.