Farm Ireland

Tuesday 19 June 2018

Farmers face plunging incomes in 'worst-case' EU budget cuts

European Commission President Jean-Claude Juncker
European Commission President Jean-Claude Juncker

Sarah Collins and Louise Hogan

Farmers and less affluent regions face swingeing cuts in EU subsidies post-Brexit unless the bloc can raise fresh cash.

With Brexit set to blow a €14bn annual hole in the EU budget, the European Commission is pressing governments to stump up more or allow the bloc to raise new taxes, including on corporate profits.

Farm bodies reacted with concern to a commission document that outlined a number of options for the new seven-year budget post-2020.

It includes cutting by up to 30pc the Common Agricultural Policy (CAP) funding which provides vital payments to farmers.

Commission president Jean-Claude Juncker said he did not want "broad cuts" in farm and regional (or "cohesion") spending - which together make up 70pc of the bloc's budget.

"I think we do have to operate cuts in the field of Common Agricultural Policy and in the field of cohesion if we want to meet all the new priorities we have to meet, but I'm not in favour of broad cuts," said Mr Juncker.

Ireland gets around €2bn a year in farm subsidies and less than €500m a year in cohesion funding, most of which goes to the Border, Midlands and West.

In an options paper, the commission suggested ending regional subsidies to well-off countries, including Ireland, trimming an estimated €95-€124bn off the budget.

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And in a worst-case scenario, the commission warned agriculture could face a 30pc spending cut, which would lead to a 10pc drop in average farm incomes. It stated CAP mobilises €400bn with 80pc of direct payments going to 20pc of farmers.

It pointed out maintaining the same expenditure would account for 37pc of the EU budget. A 15pc cut would save €60bn - with a noticeable impact in certain sectors.

EU agriculture commissioner Phil Hogan defended CAP, warning his colleagues that an attack on farm spending would be strongly resisted.

And Irish Farmers' Association president Joe Healy said Ireland cannot agree to the cutbacks "as they would shut down agriculture and rural Ireland". The ICMSA also described the cuts as a "disaster".

The commission's ideas paper is intended to prod national governments into boosting their budget contributions, with EU sources saying the worst-case scenario will not materialise.

"I don't think anybody seriously thinks they are going to cut the agriculture budget by 30pc, but there will be cuts and everybody knows it," said a senior EU official.


EU sources say the bloc's new seven-year budget should ideally measure 1.2pc of total GDP, which could mean an increase of up to €200bn over the 2020-27 period.

Taoiseach Leo Varadkar said Ireland is "open to contributing more" to the EU as long as cohesion and agricultural spending are ringfenced, and money is set aside for priorities such as research, education and European Investment Bank loans.

EU leaders will meet on February 23 to discuss the CAP ahead of a budgetary proposal in May.

Irish Independent