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.'

Future pathways for the CAP

An important report on the next reform of the CAP has been produced for the European Parliament Agri Committee: https://www.europarl.europa.eu/RegData/etudes/STUD/2025/759316/CASP_STU(2025)759316_EN.pdf

The report notes: 'The European agri-food system is facing an increasing number of challenges. Most of these challenges were already present when the current CAP was discussed. Other challenges, such as global food security on the European continent and the autonomy of European agriculture, have been put back on the agenda due to the Covid-19 crisis, the war in Ukraine, world geopolitical tensions and agricultural protests.'

The report helpfully distinguishes five future pathways: Within the two “production” pathways (Pathways A and B), there is a second trade-off between Pathway A (Intensification and exports)based on price competitiveness and Pathway B (Support for all types of farms)which aims at maintaining productive capacity by supporting farm incomes for all types of farms Within the three “climate and environment pathways, Pathway C (Resource use efficiency through the optimisation of current production systems), contrasts with Pathways D and E, which require much more profound changes (land-sparing for Pathway D vs land-sharing/agro-ecology for Pathway E).

The report comments: 'The dominance of transnational companies in food value chains is high and increasing (Howard, 2016). Industrial concentration is very high in the global agricultural commodity market, agri-food industries and farm input suppliers(seeds, pesticides, farm equipment, etc.). Multinational firms have a strong incentive to lobby against measures at the EU border.'

The report also notes: 'The growth in the economic power of multinational companies gives them increasing power over political processes. Interest groups that are financially and politically powerful are able to discredit their rivals on policy decisions (see, for example, Oreskes and Conway, 2010). The EU and MSs should strengthen the rules on the integrity and transparency of lobbying to improve the trade policy-making process.'

The usual suspects continue to subsidise

The OECD Agricultural Policy Monitoring and Evaluation Outlook 2024 has just been published and provides a comprehensive analysis and global reference on government support to agriculture across 54 countries, which shows that total support to agriculture averaged USD 842 billion per year during the 2021-23 period.

Support remains concentrated in a few large economies, with China, the United States, India and the European Union representing 37%, 15%, 14% and 13% of the total respectively. Although public support for agriculture has declined since 2021 it remains near historic highs and is still not sufficiently directed at critical innovation, productivity and sustainability goals, according to a new report from the OECD.

In this context, the share of estimated support dedicated to general services such as innovation, biosecurity or infrastructure averaged only 12.6% of total support in 2021-23. While it has been fairly stable since 2020, this share is well below the 16% seen at the beginning of the 21st century. These services are key elements in countries’ efforts towards sustainable productivity growth – the ability to produce more with less while reducing demands on the environment.https://doi.org10.1787/74da57ed-en

Why Mercosur deal concerns EU farmers

The EU deal with Merocsur has not gone down well with European farmers and this analysis refers to some of their concerns as well as the drivers of the deal: https://ukandeu.ac.uk/eu-and-mercosur-bloc-breakthrough/?mc_cid=60623adc76&mc_eid=a47fa58ca7

New EU farm supremo sets out his stall

The EU’s new agriculture chief is pushing for more of the bloc’s generous subsidies to be doled out to low-income farmers rather than big agribusinesses. Christophe Hansen told the Financial Times that the seven-year €387bn Common Agricultural Policy (CAP) should no longer reward the biggest landowners and instead focus on small farms, as discussions get under way on the bloc’s finances for the next decade.

[This, then, is a move towards treating the CAP as a welfare payment, but it is not an efficient instrument for delivering such payments.   What about international competitiveness and efficiency?]

 “We all know that the CAP budget will not be higher,” he said. “There is a lot of pressure because we have a lot of political priorities in the European Union so we need to better target the support to those most in need.”

The new EU commissioner, who took office on December 1, said his reform of CAP would not amount to a “revolution” and would not move “entirely” away from hectare-based payments. But changing the allocation would constitute the most significant overhaul in the history of the 62-year-old subsidy programme, which represents a third of the bloc’s annual budget.

The largest farms in the bloc have traditionally received most of the funding, with an analysis by the Institute for European Environmental Policy, a Brussels-based think-tank, estimating about 80 per cent of the direct payments go to roughly 20 per cent of farms.   [My view is that this is a lazy application of the Pareto rule and the actual figure is lower].

 Nearly 6mn farmers and landowners received direct payments in 2022, according to the European Commission. Discussions around the next EU multi-annual budget, which is due to run from 2028, have shifted towards a much greater focus on defence spending in recent months in response to Russia’s invasion of Ukraine and Donald Trump’s return to the White House. The US president-elect has threatened to pull out of Nato if allies refuse to spend more on the military.

Any CAP reduction will be met with fierce resistance from farmers who took to the streets of Brussels and other European capitals last year to protest against stringent environmental regulations, red tape and unfair prices. European Commission president Ursula von der Leyen in September vowed to ensure farmers receive “fair and sufficient income” and preserve farming amid financial and environmental pressures. Hansen, a centre-right Luxembourgish politician, said the commission should encourage farmers to look at “alternative income” streams.   [Historically there has been a suspicion that farm commissioners from Luxembourg are susceptible to French pressure].

While “producing and selling a tomato” was good, “it makes you vulnerable because it’s your only income”, Hansen told the Pinl ‘Un. Farmers could grow crops for biofuels or use their land for solar panels and other renewable energy sources. Planting trees that could be monetised as carbon credits should also be considered, he said.   [Farmers in the UK have been diversifying for decades].

Part of the commission’s response to the protests was to water down environmental standards that farmers were required to meet in order to access CAP support, despite widespread outcry from green groups. Von der Leyen on Tuesday is set to put forward further measures aimed at helping farmers sell their products at a better price.

The proposals, if agreed by EU lawmakers and member states, will make written contracts between farmers and food companies mandatory and allow more co-operation between national authorities to manage cross-border disputes.

Hansen said he also intended to ease competition rules to promote products from young farmers and require greater transparency in retail pricing. “Big retailers use certain products to attract the consumers and they use the weak position of the farmers in the supply chain,” he said. Christel Delberghe, director-general of the retail industry body EuroCommerce, said introducing stricter pricing rules would result in “inflation. What else?”

[Farmers in the UK have certainly been turned into price takers by supermarkets, but changing the balance of power is not easy because consumers demand cheap food]. 

The limits of Dutch lessons for farmer protests

This article by a political scientist looks at the impact of farmer protests in the Netherlands and their implications for the UK: https://ukandeu.ac.uk/farmer-protests-lessons-from-the-netherlands/?mc_cid=6bb3292f21&mc_eid=a47fa58ca7

What it doesn't mention is that the Netherlands has a very pure system of proportional representation which makes it easy for insurgent parties with a narrow support base to win legislative seats.

Doing the Brexit walk

In a thorough and authoritative analysis, Alan Matthews examines the repurposing of the English agricultural budget since Brexit, noting that the only other developed country to attempt such extensive changes is New Zealand: http://capreform.eu/agricultural-policy-reform-in-england-and-the-2024-uk-budget/

There has been a much greater reallocation to agri-environmental funds in England than in the CAP.

Benelux countries increase net contributions to CAP

Alan Matthews takes a look at net contributions to the CAP: http://capreform.eu/how-net-balances-might-influence-member-state-views-on-the-size-of-the-next-cap-budget/

He notes: 'Instead of the smooth transition from the largest net contributors to the largest net recipients as we move from left to right [on the chart], the general picture is now more jagged even if the general pattern is maintained.

The two smallest Member States, Luxembourg and Malta, with relatively limited agricultural area relative to the rest of their economies, now appear as the largest net contributors in relative terms.

More significant in economic terms is that, despite the huge significance of Germany’s absolute net contribution to the CAP, in relative terms the contribution of the Netherlands and Belgium is even greater.'

New farm commissioner in EU

The outgoing EU agriculture commissioner reviews his five years in office which appear to be ones of problem free achievement: https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/highlights-2019-24_en?s=09

The new commissioner, Christophe Hansen, is from Luxembourg, often perceived to be amenable to French concerns.  Food has been added to his portfolio, but animal welfare goes to health.   His biography is here: https://commission.europa.eu/document/download/1af2336d-a010-4ac0-b8de-81a23772a5ac_en?filename=CV%20Hansen.pdf

In 100 days he has to produce a vision for agriculture and food, so good luck with that.

Agriculture needs to cut emissions

The EU’s chief climate scientist has warned that the bloc will miss its climate targets if it does not force the agricultural sector to pay for its greenhouse gas emissions. Ottmar Edenhofer, chair of the European Scientific Advisory Board on Climate Change, told the Financial Times that it would be “almost impossible” to achieve the European Commission’s proposed aim of cutting emissions by 90 per cent by 2040 without a levy on agricultural emissions.

 “[Over] the last 15 years, the emissions in the agriculture sector remained quite stable,” Edenhofer said, while other sectors had cut their climate impact. “The price signal is important because without the price signal, it is very unlikely that, basically, we can reduce emissions,” he added.

Farming makes up 12 per cent of the EU’s emissions, of which about two-thirds comes from meat and dairy production. But it is one of the few sectors in the EU to have so far avoided strict climate legislation, including sectoral emissions reduction targets, in part because of farmers’ ability to stage widespread and disruptive protests.

Earlier this year, tractor blockades and demonstrations by farmers in many European capitals catalysed a rethink in the EU about how it was approaching efforts to decarbonise farms. It prompted the commission to retract a proposed law on pesticides and delete recommended targets from a document outlining how the bloc would reach its 2040 goal.

But the issue of making either farmers or other parties in the food chain pay for emissions has risen up the agenda as Brussels starts to outline its priorities for the next five-year mandate starting later this year.

 Denmark has also been lobbying Brussels to introduce an EU-wide system after it announced the world’s first carbon tax on farm emissions in June. EU officials are weighing options including a levy on food processors that would also include incentives for farmers to use their land as a carbon sink.

But a report on the future of farming in the EU that stemmed from consultations between food and farming industry groups as well as environmental NGOs, published this month, said it was “premature” to come to a conclusion about pricing agricultural emissions.

Strategic dialogue report

The final report of the Strategic Dialogue on the Future of EU Agriculture is now available: https://agriculture.ec.europa.eu/common-agricultural-policy/cap-overview/main-initiatives-strategic-dialogue-future-eu-agriculture_en#strategic-dialogue-report

'There is consensus among members of the Strategic Dialogue that economic, environmental and social sustainability in the agri-food sector can reinforce each other, especially when supported by coherent policy measures.'   One can but hope for the latter.

“Business as usual, be it economic, social or environmental, is not an option,” said the report.. “Bold and swift action at all levels is needed” to tackle the “multiple crises” affecting farmers, including increased impacts from extreme weather such as drought, from inflation and from low-cost global competitors.

Among other proposals of the report are schemes to encourage consumers to cut their meat intake, including through tax incentives and labelling, and to help farmers move away from livestock farming, including a controversial suggestion to introduce voluntary buyout schemes for farms in areas with high levels of intensive animal farming.

The most significant recommendation is a major overhaul of the EU’s CAP subsidy scheme, which was first launched in 1962 and consumes a third of the bloc’s multiannual budget. Instead of allocating direct support to farmers according to the amount of land they own and linking that to mandatory environmental standards, the report recommends that subsidies should go to “the active farmers who need it most” based on their “economic viability”.

The report proposes that farmers receive incentives within the CAP to green their practices, as well as from a “Just Transition Fund” that is outside the CAP budget and is dedicated to longer-term changes such as converting farms to “regenerative” or organic methods. There should also be a loan package of up to €3bn from the European Investment Bank that prioritises young farmers.

The continuing power of the farm lobby

Behind the scenes the agricultural lobby is a sprawling, complex machine with vast financial resources, deep political connections and a sophisticated network of legal and public relations experts, argues the Financial Times in a Big Read analysis. “The farm lobby has been one of the most successful lobbies in Europe in terms of relentlessly getting what they want over a very long time,” says Ariel Brunner, Europe director of non-governmental organisation BirdLife International.  Industry groups spend between €9.35mn and €11.54mn a year lobbying Brussels alone, according to a recent report by the Changing Markets Foundation, another NGO.

Food systems are responsible for between 21 and 37 per cent of greenhouse gas emissions depending on what is included, according to the Intergovernmental Panel on Climate Change. Over half of those emissions come from animal faming alone. Yet agriculture remains one of the last sectors in developed countries still to face binding limits on its carbon emissions. It is one of the few industries not covered in the EU’s emissions trading system, although proposals are under discussion.

The regular meetings between Copa-Cogeca, the umbrella body for farming unions and co-operative bodies across the EU, and the bloc’s officials show that the reach of the agribusiness lobby has been “institutionalised”, says BirdLife’s Brunner. Patrick Pagani, acting secretary-general of Copa-Cogeca, counters that lobbying is normal practice and “transparent” because the body publishes videos of its presidents’ main points.

Farmers in Europe say they are being strangled with red tape at a time when many are struggling with rising input costs following the Covid-19 pandemic and the war in Ukraine, which inflated energy and fertiliser prices. The EU’s Green Deal climate law, drafted in 2019, set out proposals to cut pesticide use and improve food systems, as well as reduce emissions from industrial-scale farms.

In the EU, lobby groups are already staking out positions ahead of the next major revision of the Common Agricultural Policy, which will take effect in 2028. The present iteration has been criticised by farmers for its attempts to tie payments to better environmental performance and cuts to pesticide usage. Following widespread protests, European Commission president Ursula von der Leyen has pledged that the next CAP will be “targeted” and find “the right balance between incentives, investments and regulation”.

Who benefits?

Research suggests that big farms and landowners reap far greater benefits from subsidy packages than small-scale growers, even though the latter are often the public face of lobbying efforts.

That has led to some tensions within the sector.  It has been suggested that the agricultural lobby “hijacked” the spring protests and put the emphasis on deregulation, which served the interest of the biggest industrial farms and agribusinesses, when the main concern of ordinary farmers was insufficient incomes.

FNSEA, France’s largest farming lobby has been accused of having ‘ no interest in securing income for farmers” but “a huge interest” in driving pesticide usage, because FNSEA is headed by Arnaud Rousseau, chair of agro-industrial company Avril.  At the EU level, Marion Picot, secretary-general of CEJA, the bloc’s main body for young farmers, says its members often feel drowned out by more dominant voices in Copa-Cogeca. “We are trying to make sure that young farmers are visible in other farming groups.”

In farm policy, it often seems that benefits go to those already doing well.

Alan Matthews sets out his views on the future of EU agripolicy in the light of the European Parliament elections here: https://www.europenowjournal.org/2024/08/15/thinking-the-future-of-agrifood-policy-in-light-of-the-eu-parliament-elections/

National state aids on the up but hard to track

National aids to agriculture have increased, but they are difficult to track and more transparency is needed: http://capreform.eu/greater-transparency-needed-in-national-aids-to-agriculture/

Alan Matthews estimates that national state aids led to additional transfers of €9 billion to farmers.   He forecasts: 'It is likely that relying on Member States to provide national aids will continue to be a feature of future crises.'

He notes: 'This is an extremely murky area as, despite the obligations on Member States to report State aid and other aid to farmers, there is no central registry which keeps track of these amounts.'

New food security report

The EU has brought out a second report on the state of food security in the EU: https://agriculture.ec.europa.eu/document/download/a91b3841-6021-489e-b877-7f0f5278c88c_en?filename=efscm-assessment-spring-2024_en.pdf

It highlights weather and cost concerns on supply side and high food prices on demand side.