2025 a critical year for next CAP budget

It may seem strange when we are not even halfway through the CAP Strategic Plan 2023-2027 to be talking about the metrics of the next Common Agricultural Policy (CAP).

However, 2025 will be a key year, with the agreement of the next EU budget (known as the multi-annual financial framework (MFF)) for the period 2028-2032 set to take place.

The might of the CAP is a shadow of its former glory. There are some within the European Union that would support a move to see CAP further downgraded to being a facet of a wider brief, with the role of CAP gradually moving away from food security to environmental management.

The war in Ukraine and other global tensions is reported as bringing the topic of food security back on to the agenda, but even if this is the case, it is hard to see a big reversal from the direction of travel in recent decades.

Figures from the European Commission has witnessed CAP’s share of the EU budget decline from 73.2% in 1980 to just approximately 24.6% in 2023.

Budget share

As can be seen in Figure 1, the amount of money spent on CAP has increased through the decades, but this has occurred against a backdrop of successive EU enlargements.

In addition to funding tightening due to successive EU enlargements, the level of funds allocated to CAP has in no way maintained pace with an increasing EU budget. This is without taking into account funding being diluted in real terms by inflationary pressures.

The lower budget share has intensified since 2021 following an enlargement in the EU budget to try to kickstart a recovery in economics following COVID-19, address migration and border control and reinforce security.

A briefing document requested by the European Parliament budget committee noted that European public goods (EPGs) such as foreign policy, development co-operation, security, defence, migration and border management combined now receive 11.8% of the common budget.

It says that these figures reflect the long path away from budgets dominated by the CAP and illustrate big steps towards more funding being allocated to EPGs.

The document also stated that in the next MFF, EPGs should start to gradually dominate EU activities and expenditure and highlighted that for this to be achieved a doubling of the EU budget would be required.

The document raised the possibility of a small part of this expansion being “financed by the gradual decentralisation of agricultural policy and the streamlining of cohesion policy with a view to its function as a fiscal equalisation. For the larger part, additional sources of EU revenue will be needed”.

The document states that the MFF agreed also needs a stronger focus on annual budgeting and a less restrictive long-term MFF.

Agricultural ministers

The idea that CAP could be subsumed in to a wider policy brief shows the job of work that will need to be done not only to retain it as an independent policy, but also to increase its budget share. This is critical if CAP has any hope of maintaining its important role.

A meeting of agricultural ministers in October saw an almost unanimous opposition to CAP losing its independent position within the EU budget.

While there was a consensus on this topic, there are many areas that ministers are likely to differ on in upcoming negotiations. Some ministers in eastern European countries are pushing for a fairer distribution of funds.

Under previous CAP reforms, such countries received a lower allocation of the budget on the premise that costs of production were lower.

There are also a number of countries that are pushing for payments to be further directed away from supporting conventional production, with a greater allocation of funds diverted to organic farming and delivering greater environmental policies.

The possibility of full convergence will also be up for debate, but such discussions will be for a day further down the line, as the primary aim in 2025 is to agree the actual MFF budget.

Fianna Fáil leader Michael Martin has previously stated that an increased budget is vital for CAP to have any hope of maintaining its important role in supporting food production.

CAP beginnings

CAP was introduced in 1962 following the devastation of World War II. In a bid to restore the social and economic fabric of European communities, the six founding members - Belgium, France, Italy, Luxembourg, the Netherlands and West Germany - entered discussions on a common approach to agriculture.

The primary aims according to the European Council included:

The foundation to achieving these goals included an economic system of price and market support. This system provided farmers with guaranteed prices for their produce, introduced tariffs on external products and state intervention rules to protect against falling market prices.

Farmers were encouraged to increase productivity via supports payments according to levels of production.

This ethos has been weakened through consecutive reforms, with funds almost totally decoupled from supporting production and an increasing share of the funds becoming more closely aligned with delivering what is described as greater environmental ambition.