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EU Budget Deal – What’s in it for agriculture?

EU leaders reached a deal on the next multiannual EU Budget 2021-2027, worth €1.074tn and €750bn COVID-19 recovery fund on July 21.

With a budget of €336.44 billion committed to the CAP, topped up by an additional €7.5 billion for rural development from the recovery fund, the deal signifies a disappointing cut of more than 11% compared to current CAP funding levels.

  Current CAP Final MFF +Recovery Fund Comparison
Total CAP €382.8 €336.44 €343.94 -11.29%
Of which is Pillar 1 (Direct Payment and Market Supports) €286.1 €258.59   -10.6%
Of which is Pillar 2 (Rural Development) €96.7 €77.85 +€7.5 = €85.35 -13.29%

In 2018 Prices, in Billions

As a result, direct payments in Ireland are expected to reduce from 2021, with the annual budget decreasing of €30 million to €1.18 billion. Considering the significant environmental objectives set by the EU, to be achieved through pillar 1 supports, this is an illogical and unacceptable move.

Ireland has however benefited from a top-up to its rural development funding, provided by the EU following negotiation by Irish representatives and in recognition of the substantial funding commitments already established under its rural development programme. Annual funding will increase by €37 million to €352m. ICOS is now calling on the Irish government to ensure that this funding is met with substantial national co-financing and is used to support farmers in meeting environmental targets through well targeted, accessible and effective schemes to help address the shortfall in direct payments.

Aside from the CAP, agriculture and the agri-food industry have the potential to benefit from a number of additional funding programmes within the agreed budget and recovery fund.

  • Horizon: €5 billion has been ringfenced for research and innovation in agriculture.
  • Brexit Adjustment Reserve: €5 billion is committed to supporting the countries and sectors worst affected by the impact of Britain’s exit from the EU. With the details of who gets what and how the funding is to be used still to be decided, ICOS is seeking for the agri-food sector to be a chief benefactor, given our integrated supply chains with the UK and exposure to the worst impacts of Brexit.
  • Just Transition Fund: €17.5bn has been set aside for achieving a green transition of the EU’s economy. Ireland is anticipated to have access to approximately €80 million. With agriculture being one of the main sources of greenhouse gas emissions in Ireland, ICOS is calling for the funding to be dedicated to climate change mitigation and adaption on farms. 
  • Recovery and Resilience Facility: Ireland is to receive €1.3 billion from the COVID-19 recovery fund. It will need to develop a national recovery plan, outlining where the money will be spent, with the aim of restarting the economy, supporting businesses worst hit by the health crisis and driving environmental sustainability and a green transition. Again, the agricultural sector and our agri-food businesses, which have been hit with significant additional costs as a result of the pandemic and which have substantial environmental targets they are required to meet in the coming year, must have access to this funding to help them and our rural economy recover and invest in the future.

Alison Graham  – European Affairs Executive