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On May 27, the European Commission published a revised proposal for the next multi-annual EU budget, 2021-2027.

Although a proposal for the budget has been under discussion since 2018, due to the economic impact of the COVID-19 lockdown and subsequent recession, as well as the need to better fund certain programmes in order to meet the goals of the European Green Deal, including achieving carbon neutrality by 2020, a significant revision to the proposal was considered necessary.

In total a budget of €1.1 trillion is now being proposed, together with a €750 billion recovery fund. Combining both proposals, €348.8 billion is dedicated to the CAP, including €258.3 billion for Pillar 1 (direct payments & market supports) and €75 billion for Pillar 2 (Rural Development), which will be topped up by an additional €15 billion from the recovery fund. This additional money is to be front loaded and used only by the end of 2024, with the aim of stimulating the economic recovery of rural areas. It should therefore be treated separately to the funding provided under the multiannual budget and will likely be dedicated to separate schemes. While this proposal provides a minor increase in funding compared to what was previously on the table, it still represents a cut of €34 billion compared to current levels, specifically a cut of close to 10% to direct payments.

  Current Initial/2018 Revised
Total CAP 382.8 324.28 348.3
Of which is Pillar 1 286.1 254.24 258.3
Of which is Pillar 2 96.7 70.037 75 + 15 = 90

Comparison between current CAP budget, initial (2018) proposal & revised proposal (May 2020), in billion, real/ constant prices

Under this proposal over the 7-year period, Ireland would receive €7.9 billion for Pillar 1 supports and €1.7 billion for Pillar 2 (which is co-financed), in addition to €353 million (2.36%) for rural development from the recovery fund.

Direct payments are the central supports for farmers managing today’s difficult market situation which has provided low market returns long before the COVID-19 crisis struck. For 60% of Irish farmers, their direct payment represents over 100% of their farm income.

A cut of this size will have significant implications for the sustainability of many farms and the ability of our rural economy to survive the economic downturn. At a time when we need additional supports for our farmers and rural communities, this proposal to continue to cut funding to the CAP is hugely disappointing.

EU leaders are to meet on July 17 and will attempt to reach an agreement on this proposal. It is vital our politicians take every possible initiative to ensure that the CAP budget is at least maintained at current levels, as promised by many during the last general election, thereby protecting farmers, rural communities and the environment.

(All figures are expressed in 2018 prices for comparison purposes)

Alison Graham – European Affairs Executive