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Farmers face nearly 10pc cut in direct payments under proposed new CAP budget

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European farmers are facing a cut in direct supports under the Common Agricultural Policy (CAP) budget, as the European Commission today announced details of its Multiannal Financial Framework (MFF) Buget proposals and a recovery plan.

The European Commission today published its revised plan for its multiannual budget for 2021-2027, including a CAP budget of €348.3 billion. This is a cut of close to €35bn to the CAP on current levels, according to farming groups, who criticised the proposal and said it would impact struggling rural economies as it does not cover inflation.

The Commission also announced its Next Generation EU Recovery Programme, a €750billion recovery instrument made up of grants and loans.

However, the proposal for EU spending up to 2027 would see direct payments cut by 8.8pc, according to farming groups, while spending on rural development would increase by €15bn. For 60pc of Irish farmers, their direct payment represents over 100pc of their farm income.

According to the EU Trade Commissioner Phil Hogan Ireland will benefit directly from the Next Generation EU instrument with grants worth almost €2 billion.

He said the announcement also includes an additional €15bn for the European Agricultural Fund for Rural Development to support rural areas in making the structural changes necessary in line with the European Green Deal and achieving the ambitious targets in line with the new biodiversity and Farm to Fork strategies.

"This will mean an additional €354m in Ireland’s rural development envelope for the next programming period (2021-2027), compared with the Commission’s 2018 proposal."

The Minister for Agriculture Michael Creed said the revised proposal for the CAP sees additional funding being added to bring funding levels to some €375 billion (current prices), with a further special injection of rural development funds - some €16.5 billion - from the new Next Generation EU fund, bringing the total allocation to €391 billion for the period 2021-2027.

However, European farmers group Copa/Cogeca said the allocated amounts under CAP was a reduction of 8.8pc in direct suppots in real terms and that more needed to be done to support agriculture.

"This Next Generation EU must be the starting point for a post-pandemic reality and follow a truly common and coordinated approach anchored on the principles of solidarity, understanding and flexibility. When it comes to agriculture and forestry all necessary tools should be deployed and implemented, from grants to loans and financial instruments in order to incentivise the much-needed investment support for the sector to recover."

ICOS said it welcomed new funding being made available for farmers for environmental and climate action, but warned the proposed cuts of some 10pc in direct payments would impact struggling rural economies.

It said that for 60pc of Irish farmers, their direct payment represents over 100pc of their farm income and 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.

It also said the proposal seeks to establish a new €40bn Just Transition Fund for spending on climate and environmental actions to achieve a “green transition” of the economy will be vital to help farmers achieve the ambitious environmental targets laid out in the Farm to Fork and Biodiversity Strategies published by the European Commission last week.

"However, it is still unclear just how much of this funding will be made available to agriculture, as the fund is targeted to achieving carbon neutrality and environmental protection across the industry, energy and transport sectors as well."

The next European Summit is scheduled to take place in Brussels from 18th – 19th June.

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