The European Union’s budget watchdog has cautioned that proposed changes to farm payments under the next seven-year EU budget could lead to delays in funding, increased uncertainty for farmers, and potentially undermine efforts to reduce regulatory burdens.
EU Farm Payment Overhaul Faces Scrutiny
The European Court of Auditors (ECA) warned that the new approach to managing the Common Agricultural Policy (CAP) within the broader budget framework requires further adjustments before the next budget system is implemented.
“Clarity, predictability and fairness are essential for a Common Agricultural Policy that truly supports farmers and rural communities,” said ECA member Iliana Ivanova. “This proposal on the table is not completely ready yet to be harvested.”
The next Multiannual Financial Framework (MFF), totaling €2 trillion, will run from 2028-2034. Member states and EU institutions are under pressure to agree on its broad outline before the end of the Irish presidency later this year.
The European Commission’s proposal, presented last July, envisions a significant shift in budget structure, prioritizing innovation and competitiveness, and altering how farm spending is organized. For the first time since 1962, there would be no separate funding allocated specifically for agriculture.
The traditional division of supports between direct payments to farmers (Pillar One) and rural development funding (Pillar Two) would be eliminated, replaced by a single allocation for each member state. This allocation would also encompass cohesion and other regional supports.
These new allocations would fall under a single ‘European Fund’ – valued at €865 billion and representing the largest portion of the MFF – covering agriculture, rural development, fisheries, and maritime sectors.
Each member state’s pre-allocated financial envelope would be jointly managed by national governments and the European Commission, implemented through National and Regional Partnership Plans (NRPPs).
The current proposal includes both ringfenced and non-ringfenced CAP funding. Direct payments to farmers have been ringfenced at €293.7 billion, along with some supports previously allocated under Pillar Two.
Non-ringfenced funding, totaling €453 billion, will cover cohesion, agriculture, fisheries, and security, including traditional CAP supports like LEADER programs, support for outermost regions, and the EU school scheme. This funding will be jointly managed by member states and the European Commission under the NRPPs.
While auditors acknowledged positive aspects of the new system, they cautioned that the legal framework and adoption of new rules could be complex, potentially causing unpredictability and delays in fund disbursement to farmers.
The unpredictability stems from the fact that the overall CAP budget won’t be finalized until after NRPPs are adopted. Auditors warned that assessing and adopting these plans could delay payments.
Auditors also expressed concern that the increased flexibility in allocating CAP funds by national capitals could create an uneven playing field among member states, potentially undermining the common character of the policy and distorting competition.
“A significant divergence across member states may hamper the alignment of CAP spending with the EU’s priorities,” Ivanova stated.
The ECA also warned that efforts to streamline the CAP’s interaction with climate goals by merging eco-schemes with agri-environmental and climate measures could be counterproductive due to the scattering of CAP interventions across multiple legal proposals.
“This…may create confusion for national authorities and also for beneficiaries when trying to understand and implement the regulatory provisions,” Ivanova said.
EU Agriculture Commissioner Christophe Hansen acknowledged the challenges during a recent hearing before the Oireachtas European Affairs Committee, suggesting changes are possible. He stated, “This is not a sprint, it is a marathon…the co-legislators have to contribute to this fine tuning.”
The Irish Farmers Association (IFA) has criticized the current MFF proposal, claiming it represents a 20% cut to the agriculture budget and has called for the restoration of Pillar Two with a specifically ring-fenced farm budget.
Member states are currently considering changes to the proposed budget that could shift relevant articles from the NRPPs back to a CAP regulation, a move the IFA supports.
IFA President Francie Gorman stated that the auditors’ observations align with concerns raised by the IFA at both national and European levels. He added that the Commission’s proposals carry more risk than opportunity, increasing complexity and financial uncertainty for farmers.
Gorman warned that a 20% budget cut would increase financial pressure on Irish farmers, potentially leading to lower farm incomes and negative consequences for rural Ireland’s economy and employment.
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