Big farmers to bear brunt of cuts to EU farm budget

Big farmers will bear the brunt of proposed cuts in the European Union farm budget following the departure of the UK from the bloc.

The European Commission is seeking cuts of 5 per cent to its overall farm budget as part of a Multiannual Financial Framework (MFF) that will see overall spending to €1.27 trillion between 2021 and 2027.

But Irish Commissioner for Agriculture Phil Hogan told journalists on Wednesday that small farmers' pockets should not be hit by the proposed farm budget cutbacks.

However, he added that continued financing of grants to rural development projects would require the Government to find an extra €47 million a year from the Irish budget if they are to be sustained.

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Direct payments to farmers in most member states, including Ireland, will be cut by 3.9 per cent overall.

The commission has promised that any savings the Government makes by capping direct payments at a ceiling of €60,000 a year can be put back into sustaining the current levels of payments to smaller farmers with annual income below that level. The current national cap on such payments is €150,000 a year, which the Government had been proposing to reduce to €100,000 in the next budget.

‘Setback’

Irish Farmers' Association (IFA) president Joe Healy said that while it was clear the commission had moved to fill the Brexit gap, "they have prioritised other areas at the expense of the CAP, which is another setback for Irish farmers".

Speaking after the publication of the proposed budget framework, he said: “All sectors have shared in the economic revival, yet farmers have had their direct payments eroded by inflation. At the very least, farmers need a CAP [Common Agriculture Policy] increase in line with inflation.”

Some 80 per cent of direct payments across the EU go to the wealthiest 20 per cent of farmers, a reality that is believed to be reflected in Ireland. That indicates that significant savings should be available over the €60,000 level for redeployment. Exact figures from the Department of Agriculture were not available.

The reduction of 10 per cent in EU cofinancing support for so-called Pillar 2 rural development projects will see Ireland having to make up the shortfall to match the current spending in this strand or see some of these projects curtailed.

Mr Hogan described the cut of 5 per cent in the CAP budget as “fair” in the context of the financial pressures on the EU. Special measures would still be taken to protect and indeed increase direct payments in five states, including Estonia, Latvia and Lithuania. In six states they would be more or less frozen, while in 16, mostly “old” Europe they would be cut by 3.9 per cent.

In a report published just ahead of the MFF, the Oireachtas Committee on Budgetary Oversight said a reduction in funding under CAP would have a “detrimental effect” on both the Irish agricultural sector and the economy as a whole.