A sweeping overhaul of European Union farm payments could lead to delays, uncertainty, and a potential weakening of efforts to streamline regulations, according to a new warning from the EU’s financial watchdog. The European Court of Auditors cautioned that the proposed changes to the Common Agricultural Policy (CAP) require further adjustments before the next long-term budget is finalized.
“Our message is very simple,” said Iliana Ivanova, a member of the European Court of Auditors. “Clarity, predictability and fairness are essential for a Common Agricultural Policy that truly supports farmers and rural communities. This proposal on the table is not completely ready yet to be harvested.”
The next seven-year budget, known as the Multiannual Financial Framework (MFF) and totaling €2 trillion, will run from 2028-2034. Member states and EU institutions face pressure to agree on its broad outline before the end of the Irish presidency later this year.
A Radical Shift in Farm Funding
The European Commission’s proposal, unveiled last July, envisions a significant departure from the current budget structure, prioritizing innovation and competitiveness alongside changes to farm spending. For the first time since 1962, agriculture will not receive dedicated funding.
Instead of the traditional two-pillar system – direct payments to farmers (Pillar One) and rural development funding (Pillar Two) – each member state will receive a single allocation encompassing agricultural supports, cohesion funds, and other regional programs. This new system will operate under a single ‘European Fund’ worth €865 billion, covering agriculture, rural development, fisheries, and maritime sectors.
These national financial envelopes will be jointly managed by member states 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 are ringfenced at €293.7 billion, along with certain supports previously allocated under Pillar Two. Non-ringfenced funding, totaling €453 billion, will cover cohesion, agriculture, fisheries, security, and programs like LEADER, support for outermost regions, and the EU school scheme, managed jointly through NRPPs.
Potential for Delays and Uneven Competition
While auditors acknowledged positive aspects of the new system, they warned that the legal framework and adoption of new rules could be complex, potentially delaying funds to farmers and creating unpredictability. The overall CAP budget won’t be finalized until after NRPPs are adopted, contributing to this uncertainty.
Auditors cautioned that the flexibility granted to national capitals in allocating CAP funds could delay the disbursement of money to farmers. The report also highlighted the risk of an uneven playing field between member states due to these flexibilities.
“This…creates a risk for the common character of the policy,” Ivanova explained. “A significant divergence across member states may hamper the alignment of CAP spending with the EU’s priorities, and it could lead to distortion of competition and an uneven playing field.”
The ECA also expressed concern that efforts to simplify the CAP’s integration with climate goals – by merging eco-schemes with agri-environmental and climate measures – could be undermined by the fragmented nature of the relevant legal proposals.
“All these efforts may be undermined by the fact that the CAP interventions are really scattered across several legal proposals,” Ivanova said. “This, we think, may create confusion for national authorities and also for beneficiaries when trying to understand and implement the regulatory provisions.”
Commissioner Acknowledges Challenges
Christophe Hansen, the EU agriculture commissioner, acknowledged the challenges during a hearing before the Oireachtas European Affairs Committee last week, suggesting adjustments are possible. He stated, “This is not a sprint, it is a marathon. Now that the proposals are on the table, the co-legislators have to contribute to this fine tuning. And this fine tuning will be about the governance, it will be about the change, it will be about uncertainties.”
The Irish Farmers Association (IFA) has criticized the current MFF proposal, predicting a cut of over 20% in the agriculture budget. The IFA is advocating for the restoration of Pillar Two with a specifically ringfenced farm budget. Member states are currently considering changes that could move relevant articles from the NRPPs back into a CAP regulation, a move the IFA supports.
IFA President Francie Gorman stated, “We would share many of the observations noted within the Auditors report and have highlighted them in our interactions on CAP both at National and European level. Undoubtedly, there is more risk than opportunity with the Commission proposals; more complexity, and more financial uncertainty which won’t be of benefit to genuine active farmers – either existing or the next generation.”
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 economic activity and employment.
Worth a look
