In a document presented on Thursday 13 October, Farm Europe expressed its concern about the effects of rising inflation on the EU’s Common Agricultural Policy (CAP) funds.
The think-tank thus mentions a rapid decrease in the CAP budget. Because of rampant inflation, “which reduces the real value of support” provided to farmers.
When the budget (2021-2027) for the CAP was adopted by the EU Council and the European Parliament, the scenario was still one of low inflation (maximum expected annual rate of 2%). “Today, we witness an average EU inflation close to 10%”, recalls Farm Europe.
Therefore, taking into account European Central Bank (ECB) data and price increase forecasts, the real value of the CAP budget “will shrink by an aggregate €84.57 billion in real terms in the period 2021-2027” compared to 2020, according to Farm Europe. The total real value of the CAP budget for the period 2021-2027 will shrink 21.95% with regard to 2020, which represents “over one third less real support in 2027”.
Pillar I (direct aid) will lose €68.6 billion and Pillar II (rural development) €15.97 billion. According to Farm Europe , the CAP budget should be re-assessed, i.e. adjusted annually according to the level of inflation. (Original version in French by Lionel Changeur)