The Directorate General for Agriculture says in an in-house budgetary simulation that it is perfectly justified to maintain the current level of resources of the Common Agricultural Policy (CAP). The document evaluates the impact of cuts in the agricultural budget (€408 million for the 2014-2020 period) of 15% and 30% in 2021-2027.
The situation of many farmers is already precarious, with the average hourly wage in the sector about 40% of that in the economy as a whole, and they are being asked to do still more for the environment, for example, by state agricultural services.
In a scenario where the budget is reduced by 30%, the incomes of farmers in Sweden and Finland would fall by 30% and farmers in Bulgaria, Estonia, Greece, Hungary, Romania, Slovenia and Slovakia would see their incomes reduced by more than 10%. In some sectors, the average drop could be as much as 26%, with cattle, cereal, oil seed and protein plant, olive and sheep producers hardest hit. Similarly, small farms, very large farms and farms in areas with natural constraints would be most affected.
Were there to be a 15% cut in the budget, farms most affected would be largely the same though to a lesser degree (-10% for of the beef sector and -7% for cereals).
Beyond the direct economic effects, others are to be expected: a modest fall in the price of land which would not, however, help the problem of access for young farmers, an increase in the risk of concentration of production in certain areas and land abandonment in others, and a worsening of the already insecure position on farmers on the food supply chain.
Lastly, the Directorate General for Agriculture says that it is against the idea of co-financing by the member states of direct payments (an option that appears in the Commission’s reflection document on the future financing of the EU). This would have an extremely unbalanced impact in terms of cost sharing among the member states, it argues. For example, 30% co-financing of direct payments would reduce the CAP budget by around €82 billion over the 2021-2027 period (a drop of 19.8%), with some member states (Germany, Italy and the Netherlands) benefiting while others (Bulgaria, Spain, Poland, the Baltic States and more) would lose out. (Original version in French)