Farm lobby wins Parliament budget vote

Professor Alan Matthews reports on Linkedin: "The European Parliament has now voted in plenary (7 May) on its MFF resolution. The AGRI Committee through its Chair re-introduced amendments not previously accepted by the Budget Committee but which were accepted by plenary 381 votes to 245 for paragraph 29 and by 358 votes to 268 for paragraph 30.

Para 29 now "calls for an increased and dedicated budget for the CAP in the next MFF, safeguarding it from possible cuts" as well as calling for "additional dedicated funding sources to be explored where appropriate, including outside of the CAP, in order to cope with natural disasters and provide incentives to farmers and foresters to contribute to climate change mitigation, biodiversity recovery and nature protection, without measures causing a regression in EU agricultural production".

Para. 30 notes that "the CAP urgently needs an increased budget in the next MFF that is indexed to inflation through annual re-evaluation" and underlines that direct payments "should continue to strengthen income security, production and protection against price volatility, better targeting persons actively engaged in agricultural production and the provision of public goods, while respecting realistic and balanced EU environmental and social standards"  

This looks like a win for the farm lobby to me.

Budget structure proposals upset farm lobby

It may seem a very technical matter, but proposed changes to the EU budget structure have upset farm lobby COPA/COGECA.   They have sent an open letter to the Commission president, reminding her of the large scale farm protests in 2024.

They state: 'In an era of geopolitical instability, economic uncertainty, and mounting societal challenges, a strong and resilient agricultural sector is not just strategic; it is the keystone that supports the EU’s entire security architecture. Copa-Cogeca and its members representing European farmers and agri-cooperatives are steadfast in our commitment to ensuring food security, sustainability, as well as economic and social stability for 450 million citizens of Europe and beyond.

The pan-European agricultural protests of 2024, though driven by different causes, all revealed the vulnerability of our communities, exposed to the cumulative and conflicting effects of policies in an increasingly complex market environment.

The recent European Commission’s Vision for EU Agriculture and Food rightly acknowledges the sector’s strategic importance. Likewise, the Council’s EU Strategic Agenda and the Commission’s political guidelines for the 2024-2029 mandate recognise the indispensable contribution of farmers and rural communities to Europe’s economic and social fabric.

The farming community is still grappling with numerous challenges, such as geopolitical instability, high energy prices, legal uncertainties, and stricter environmental regulations. While farmers have made significant progress in improving productivity and reducing emissions, they still face rising costs and unfair competition, which is eroding their income and making it harder to remain competitive.

As you, President von der Leyen, rightly emphasised: we are entering a new era of rearmament in which Europe must assume greater responsibility for its own security. In this spirit, we firmly believe that there is no security without food security — and no strategic autonomy without food autonomy.

This is why we are profoundly alarmed by recent discussions on reallocating EU funding into a Single Fund effectively eliminating the EAGF and EAFRD – the pillars of the Common Agricultural Policy (CAP). Such a shift represents a fundamental change to the governance of the next Multiannual Financial Framework (MFF) and would severely undermine the CAP, which remains the cornerstone of Europe’s competitiveness and food sovereignty.

Dismantling the two-pillar CAP structure based on the EAGF and EAFRD alongside using a single national programming approach per Member State will lead to a further loss of commonality in European policies. Besides further weakening the Single Market, this will have far-reaching consequences for food production and security and the maintenance of vibrant and populated rural areas in the EU. There is a clear added value in European expenditure when it comes to policies such as the CAP and this must be recognised and kept.

We are not the only ones who think so. Alongside 28 other key EU agri-food organisations, we have already conveyed a simple but crucial message to you and EU leadership: a dedicated increased CAP budget is not merely a matter of financial support, but a strategic investment in Europe’s future resilience and security.     [Good luck with that call given the other demands on EU funds and the still disproportionate share of EU finding that goes on the CAP.]

It was also one of the key conclusions of the Strategic Dialogue that were delivered to you last September: the multiple transitions required for European agriculture can and will only be achieved 

Agri-food may stand in way of new EU trade deals

Professor Alan Matthews provides an authoritative and informative analysis of Trump tariffs and the EU agro-food sector.  Although originally published in February, it largely stands the test of time, other than for the ease of imposing tariffs on US spirit exports: http://capreform.eu/trump-ii-tariffs-and-the-eu-agri-food-sector/

As the EU seeks to expand and diversify its trade deals, it is evident that concerns about agriculture are a potential obstacle to its scope of action.   Discussions with Australia collapsed in 2023 over beef exports, although they could be revived after its general election next month.

Notwithstanding von der Leyen’s ambitions to secure new deals, the recent history of EU trade talks underscores how difficult it will be to consummate meaningful alliances.  Brussels has struggled to clinch agreements in recent years because of sensitivities in its 27 member states over agricultural products. 

Although the bloc has a €63bn trade surplus in agri-food, it does not want to allow more chicken, beef and sugar in after huge protests by farmers over the past two years. France and several other countries, for example, have yet to ratify a deal with Canada signed in 2016 because it would allow more beef imports. 

Paris, Vienna and The Hague have yet to back the Mercosur accord, saying they need greater protection for farmers, although it contains a mechanism to choke off imports if there is market disruption.

EU budget format changes and their implications for the CAP

Proposals for changes to the EU budget format that could affect the CAP are discussed in depth by Professor Alan Matthews: http://capreform.eu/fitting-the-cap-into-the-next-mff-long-term-budget/

Both the Budget and the CAP are very complex and technical issues so considering them alongside each other is almost mind blowing, even for those with some expertise in the area.

However, the take home message from Professor Matthews is: 'there is limited scope to improve the effectiveness of CAP spending by redesigning the MFF, which reinforces the need for a greater focus on the CAP regulations themselves.'

The underlying issues are very familiar and have been around for decades.   Nevertheless, they require fresh consideration.

US tariffs will hit EU agri-food sector

Professor Alan Matthews examines the likely impact on the EU agri-food sector of 25 per cent tariffs imposed by the United States: http://capreform.eu/trump-ii-tariffs-and-the-eu-agri-food-sector/

It's not good news for the sector which has an overall trading surplus with the US.   Some niche or more up market products may be able to withstand the resultant price hike, but products more to the commodity end of the spectrum will be hit.

The EU doesn't have many options.  The favoured one of retaliation is unlikely to help the sectors that will be most affected.

Farmers welcome EU shift of tone but want more money

Farmers' lobby COPA/COGECA has given a broad welcome to a new Commission document on the CAP, but argues that more funding is needed to realise the vision.

The Commission's statement on the roadmap is here: https://ec.europa.eu/commission/presscorner/detail/en/ip_25_530

The farmers state: 'Today, the European Commission unveiled a key communication, long trailed by Ursula von der Leyen, outlining the EU’s vision for agriculture and food policy. This roadmap represents a pragmatic reset based on relevant analysis and grounded observations and proposes an ambitious catalog of future work strands. However, it fails to address the elephant in the room: the future CAP budget and the resources needed to finance this package of measures.

In its assessment of the current situation, the Commission appears to have regained its bearings in agricultural policy and is now speaking a different language. The importance of agriculture—its role and vulnerabilities—within the current geopolitical context is now fully acknowledged. Commissioner Hansen’s approach rightly repositions agriculture as a key strategic asset and a pillar of European sovereignty. Farmers are also recognized as entrepreneurs and innovators who play a crucial role in addressing climate challenges, protecting the environment, supporting the bioeconomy, and contributing to society as a whole. The Commission has also correctly diagnosed the sector’s demographic and economic fragilities, bringing the issues of farm income, competitiveness, innovation, cooperation and generational renewal back to the fore.

Political will, starting with a focus on simplification, also forms part of the picture. We welcome the need for stricter alignment of production standards for imported goods, particularly concerning plant protection products and animal welfare based on stronger and more comprehensive impact assessments, which should be published prior to any major trade decisions. The principle of ‘no bans without viable alternatives’ for plant protection products is explicitly stated, as is the need for a renewed approach toward the livestock sector.

Yet despite these positive elements, today’s announcement misses a fundamental part of the equation. In the current context, it is impossible to ignore the ongoing debate over CAP financing in the next Multiannual Financial Framework (MFF). Last week, Copa Cogeca warned of the dangers of merging funds and establishing single budgetary national plans. However, today’s vision makes no mention of the CAP budget and references to the second pillar and its funding are simply absent from the final version of the communication. The complementarity between the EAGF delivering on support and the EAFRD facilitating multiannual measures and investment is crucial for the sector and must be maintained.

Let’s be clear: ambitions and proposals will amount to little without a robust CAP. One which supports active farmers - regardless the size - and is backed by an increased budget in the post-2027 MFF. This budget must include automatic corrections for inflation and the growing responsibilities placed on agriculture. Without this, Europe’s farming communities will face significant challenges, and the vision for the sector’s future risks becoming a hollow promise.

How do we get older farmers to exit in favour of younger ones?

Generational renewal in agriculture is a hot topic in Brussels (and in the UK in the context of the APR debate) and Alan Matthews summarises his views given in a recent submission to a Commission looking into the topic in Ireland: http://capreform.eu/addressing-generational-renewal-the-situation-in-ireland/

He concludes: 'allocating yet more funding to young farmer measures mainly provides support to those who have already succeeded in entering the farming profession. There is mixed evidence on the extent to which it actually allows or facilitates more young people to enter farming. Here the principal barrier is gaining access to land, and this requires the exit of older farmers. Without giving a clear financial incentive for earlier transfer, the generational imbalance between young and old farmers will hardly improve.'