Farm Ireland

Monday 20 August 2018

Farmer concern over reports signaling 6pc CAP budget cut

German EU Commissioner for budget and human resources Gunther Oettinger
German EU Commissioner for budget and human resources Gunther Oettinger
Ciaran Moran

Ciaran Moran

Reported comments made by Commissioner Oettinger that the European Commission will propose a cut of 6pc in CAP funding will be extremely worrying for all farmers but especially for those in the low income sectors where EU supports are vital, according to ICSA president Patrick Kent.

Mr Kent said ICSA understands that the Commissioner has outlined this to the presidents’ committee of the European Parliament this week, in advance of the publication of the Multi-Annual Financial Framework (7 year budget proposals) in early May.

"While this figure is considerably lower than some of the figures that were doing the rounds, it is still unacceptable.

“It has been suggested that this cut will be applied solely to Pillar 1 payments which are direct income supports for farmers. ICSA is calling on the government to outline how it proposes to make up the difference. Options could include national co-funding of Pillar 1 or a higher co-funding of Pillar 2.”

Last month, Commissioner Oettinger said the European Union’s next long-term budget should be bigger than the current one despite the departure of major net contributor Britain.

Oettinger told a news conference that the next budget, spanning 2021 to 2027 should be between 1.1 and 1.2 percent of EU gross national income, compared to the 1.0 percent now.

Because the size of the budget will be ultimately decided by EU governments, Oettinger left the exact size needed open, saying only it should be “1.1x” of EU GDP.

Earlier this year, the Commission outlined several options for funding of joint new projects like an EU border management system, which in its full form would cost about €150 billion over seven years, or a stepped-up student exchange program which could set the budget back €90 billion if one in three young people were given the opportunity to learn abroad.

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The most ambitious approach to research and development spending would be to double the amount earmarked for it to 160 billion euros, which would create 650,000 new jobs by 2040 and boost EU GDP as well, the Commission said.

At the same time money spent on equalizing living standards across the 27 countries, now accounting for more than one third of the total budget, could be cut by up to a third, or €124 billion, ending support for regions in Austria, Belgium, Denmark, Finland, mainland France, Germany, Ireland, the Netherlands, Sweden and many regions in Italy and Spain.

Also, spending on the common agriculture policy could be cut by almost a third, or €120 billion, the Commission said.

The EU should also consider tapping new sources of revenue.

The Commission suggested taking over a share of money from the trade of greenhouse emissions permits, modifying what it gets from the value-added tax across the EU, getting a contribution from corporate taxes and the revenue generated by the European Central Bank from issuing money, known as seigniorage.

To better use the money available, the next EU budget could make use of financial engineering like leveraging, drawing on the success of the EU’s investment scheme which used €21 billion of public money to generate investment of €315 billion.

Additional reporting by Reuters

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