EU’s new agriculture chief seeks extra funds for small farmers | USAEMALL.com

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

The EU’s new agriculture chief is pushing for more of the bloc’s generous subsidies to be doled out to low-income farmers rather than big agribusinesses.

Christophe Hansen told the Financial Times that the seven-year €387bn Common Agricultural Policy (CAP) should no longer reward the biggest landowners and instead focus on small farms, as discussions get under way on the bloc’s finances for the next decade.

“We all know that the CAP budget will not be higher,” he said. “There is a lot of pressure because we have a lot of political priorities in the European Union so we need to better target the support to those most in need.”

The new EU commissioner, who took office on December 1, said his reform of CAP would not amount to a “revolution” and would not move “entirely” away from hectare-based payments. But changing the allocation would constitute the most significant overhaul in the history of the 62-year-old subsidy programme, which represents a third of the bloc’s annual budget.

The largest farms in the bloc have traditionally received most of the funding, with an analysis by the Institute for European Environmental Policy, a Brussels-based think-tank, estimating about 80 per cent of the direct payments go to roughly 20 per cent of farms. Nearly 6mn farmers and landowners received direct payments in 2022, according to the European Commission.

Discussions around the next EU multiannual budget, which is due to run from 2028, have shifted towards a much greater focus on defence spending in recent months in response to Russia’s invasion of Ukraine and Donald Trump’s return to the White House. The US president-elect has threatened to pull out of Nato if allies refuse to spend more on the military.

Any CAP reduction will be met with fierce resistance from farmers who took to the streets of Brussels and other European capitals last year to protest against stringent environmental regulations, red tape and unfair prices.

European Commission president Ursula von der Leyen in September vowed to ensure farmers receive “fair and sufficient income” and preserve farming amid financial and environmental pressures.

Hansen, a centre-right Luxembourgish politician, said the commission should encourage farmers to look at “alternative income” streams.

While “producing and selling a tomato” was good, “it makes you vulnerable because it’s your only income”, he said. Farmers could grow crops for biofuels or use their land for solar panels and other renewable energy sources. Planting trees that could be monetised as carbon credits should also be considered, he said.

Part of the commission’s response to the protests was to water down environmental standards that farmers were required to meet in order to access CAP support, despite widespread outcry from green groups.

Von der Leyen on Tuesday is set to put forward further measures aimed at helping farmers sell their products at a better price. The proposals, if agreed by EU lawmakers and member states, will make written contracts between farmers and food companies mandatory and allow more co-operation between national authorities to manage cross-border disputes.

Hansen said he also intended to ease competition rules to promote products from young farmers and require greater transparency in retail pricing.

“Big retailers use certain products to attract the consumers and they use the weak position of the farmers in the supply chain,” he said.

Christel Delberghe, director-general of the retail industry body EuroCommerce, said introducing stricter pricing rules would result in “inflation. What else?”

The revision of unfair trading rules to cover cross-border issues could mean countries try to apply their own laws in other EU member states in violation of the single market, she added.

Looming over the discussions for the next CAP budget is the prospect of Ukraine — a major agricultural producer whose output is more than that of France and Germany put together — joining the bloc.

Hansen said this would be a “challenge” but it could also help Europe reduce its dependency on regions such as South America for protein crops such as soy.

“This could allow us to be a leading global player in agriculture,” he said.

Farming groups last week were angered that the EU finally signed a free trade deal with the Mercosur bloc of South American countries that they have vehemently opposed.

Sectors including beef, poultry, sugar and rice face “heightened risks of market saturation and income loss due to the influx of low-cost products from Mercosur countries”, Copa Cogeca, the EU’s biggest farming lobby group, said.

Climate Capital

Where climate change meets business, markets and politics. Explore the FT’s coverage here.

Are you curious about the FT’s environmental sustainability commitments? Find out more about our science-based targets here