EU budget: “Deal done” – but best or worst still to come

When Herman Achille Van Rompuy, the first full-time President of the European Council tweeted a “deal done!” at 7:22 a.m. on February 8th, it was clear that the EU’s agricultural budget was not the major victim of a night that David Cameron and other austerity hawks called a victory. The greening of the CAP didn’t get slashed; nor did Pillar 2 agro-environmental programs get chopped beyond the cruelties already proposed back in November.

Moderate losses for agricultural subsidies

The Heads of State left the door wide open for the greening of the CAP, defending most of the better parts of the CAP reform. However at the same time they also opened the back-door to national level ‘de-greening’ and the greed of the agro-industrial lobby.

The final deal allocated slightly more Euros to the agricultural budget than had been proposed in November (see chart). However, up to 15 percent of each pillar can be moved to the other one. In countries with direct payments below 95%, an additional 10 % of Pillar 2 can be shifted to Pillar 1.

Cohesion between Member States’ direct payments has been set at a minimum of 196 € per hectare by 2020 along with a complicated concept of reducing the disparity between present-day payments and average payments by one third of the difference during the same period.

On the subject of Greening the Council adopted the following position:

67. The overall environmental performance of the CAP will be enhanced through the greening of direct payments by means of certain agricultural practices, to be defined in the Regulation of the European Parliament and of the Council establishing rules for direct payments to farmers under support schemes within the framework of the common agricultural policy, beneficial for the climate and the environment, whilst avoiding unnecessary administrative burden; that all farmers will have to follow. In order to finance those practices, Member States will use 30 % of the annual national ceiling, with a clearly defined flexibility for the Member States relating to the choice of equivalent greening measures. The requirement to have an ecological focus area (EFA) on each agricultural holding will be implemented in ways that do not require the land in question to be taken out of production and that avoids unjustified losses in the income of farmers.

The heads of state have left wide open key issues such as crop diversification or crop rotation; the percentage of environmental focus area (EFA), as well as possible equivalence, concepts and types of pasture and meadow protection. However the sentence “that all farmers have to follow” points to a determination of excluding concepts of voluntary greening and opt-out scenarios promoted e.g. by the Parliament’s agricultural committee (COMAGRI).

The credit for saving the agricultural budget and for backing the Commission’s greening concept went to France’s president Francois Hollande, who prevented Frau Merkel from slashing funds and greening efforts. According to inside sources, Merkel had been determined to promote 3,5% instead of 7% of ecological focus areas.

While representing the largest number of industrial farms within the EU (North of East Germany) Frau Merkel was apparently appeased with the concession to leave it to member states whether or not to decrease subsidies to their biggest farmers (capping).

At a first glance and not withstanding a more detailed analysis, it appears that the summit’s budget deal still leaves room for a meaningful CAP reform. The only decision that will be hard to shift, is of course, the budget. All other issues will be subject to further negotiations amongst Europe’s ministers for agriculture and the European Parliament.

COMAGRI’s recent proposals for a de-greening of the CAP might be regarded as deplorable. However, the heads of state support for the greening of the CAP can be seen as a defeat of the anti-green, agro-industrial lobby that had taken over COMAGRI. Their chance to secure support amongst the MEP’s plenary session in March is all of a sudden uncertain.

Download the full text of the budget agreement with all figures

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