Thursday, September 06, 2012

Cypriot presidency contemplates CAP budget cuts

The informal meeting of farm ministers in Nicosia from 9 to 11 September which marks the effective start of the Cypriot presidency after the August holiday break is going to focus on water scarcity, land abandonment and soil erosion. These are important topics, against the background of climate change, and especially important to southern member states, but they are not at the heart of the CAP reform agenda.

However, the word is that the Cypriot presidency thinks that there will have to be much bigger cuts to the CAP budget in the next seven year cycle than contemplated hitherto. This comes against the background of talk of a €100m cut in the EU budget to match austerity at home. As the largest budget line, the CAP would have to take its fair share of the pain.

It is being said that direct payments to farmers and rural development would take the biggest hit which makes sense as they are the largest components of the budget. There might be more flexibility to switch between these two budget lines.

Needless to say, some member states are already gearing up to oppose any such move. The other difficulty is that there is a great temptation in such circumstances to reduce spending by x per cent across the board without considering which spending offers a cost effective way of achieving policy objectives. But, then, that has been the story of the CAP.

1 comment:

Anonymous said...

How much more austerity are countries going to be subjected to before governments realise that this economic policy doesn't work without external demand. Making cuts after cuts of public spending only serves to reduce the amount of cashflow in the economic cycle. It's important that farm ministers discuss topics such as soil erosion and the issue of climate change, and how we all should embrace green sources but we also need to question government policy of reducing spending when the private sector is unwilling to make up for any shortfall. Taking money out of an economy in recession only makes matters worse and hampers any form of recovery.