CAP budget and farm payments agreed by EU leaders

EU leaders have agreed a CAP budget for the next seven years and a COVID-19 recovery package, but farmers will have to settle for less than was proposed by the EU Commission at the end of May.

The budget for delivery of the CAP has been set at €356.3bn, at 2018 values for the next seven years.

The total multiannual financial framework (MFF), which is the EU budget for the next seven years is €1,074bn, with a number of extra commitments to the value of €20.1bn outside the main budget.

This is in addition to the special €750bn COVID-19 recovery fund, which is a mix of €390bn of grants to member states and €360bn of loans.

Pillar II hit hard

Particularly hard hit has been the proposed €15bn in extra funds for Pillar II payments.

This has been halved to €7.5bn as the leaders wrestled to compromise between what became known as the frugal group (Netherlands, Austria, Sweden, Denmark and Finland), who wanted a smaller budget and less contributions from themselves, and Mediterranean countries that wanted increased expenditure to assist their recovery from COVID-19.

Irish top up

Ireland is one of a number of EU countries that will receive a top up payment for Pillar II environmental expenditure where there are “particular structural challenges” or where there has “already been heavy investment in Pillar II expenditure”.

For Ireland this is valued at €300m, and several other countries have been granted this as well, with France receiving the largest allowance of €1.6bn.

There is also a €5bn Brexit fund for countries that are most severely impacted by the UK's departure from the EU. Again this is in addition to the MFF.

Climate measures

Overall 40% of the expenditure in the CAP budget is to be dedicated for climate measures, with an upper limit of payment capped at €100,000 per farmer for the Basic Income Support for Sustainability (BISS), which will replace the Basic Payment Scheme.

There will be further convergence in direct payments between the most recent members of the EU, with 50% of the remaining gap between the countries with the lowest per hectare payments and the EU average removed over the next seven-year budget period.

Farm organisations have reacted angrily to the budget news with IFA president Tim Cullinan questioning how the EU wants farmers to do more, but for less money. He said EU funding is not consistent with its aspirations for farmers and called for "significant" co-financing from the Irish Government to make up the shortfall.

The ICMSA president had a similar thought process, with president Pat McCormack saying that farming families will take a hit under the new CAP budget and is calling on the Government to make up for any reductions.

ICSA president Edmond Phelan said it is hard to see how farmers will be able to deliver all they are being asked to if there is going to be significantly reduced CAP funding.

For full analysis and reaction, read this week’s Irish Farmers Journal.

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