EU agricultural policy: 387 billion for strategy from the previous millennium

FIt was a long night for Julia Klöckner. The Federal Minister of Agriculture and Consumer Protection led the almost two-day negotiations on a reform of EU agricultural policy.

Because Germany currently holds the EU Council Presidency, the members of the federal governments coordinate the negotiations between the member states. When Klöckner stepped in front of the microphones in the Luxembourg conference venue early on Wednesday morning, the minister was able to announce an agreement.

This is a success for the federal government, because an agreement seemed anything but certain. The marathon negotiations were preceded by months and years of tough disputes and intensive lobbying by the industries and companies concerned – not only in Brussels, but above all in the national capitals. Until recently it was not clear whether there would be an agreement.

Because there is a lot of money involved; a lot of money. The European Union (EU) intends to spend a total of 387 billion euros on the so-called common agricultural policy over the next seven years. Most recently, agricultural spending made up around 38 percent of the budget and it will continue to do so in the coming budget period.

There were good reasons for steering agricultural policy from Brussels

The money for the farmers is by far the largest item in the EU budget. This enormous weight of agricultural policy is actually an anachronism, after all, only a fraction of all employees work in agriculture and it only accounts for 1.5 percent of the Union’s annual economic output.

In some countries like Poland this percentage is higher; far lower in richer north-west European countries. At the beginning of European unification, there were good reasons to give such weight to support for European agriculture. The markets in Europe were fragmented, supply chains were not yet as spread across the continent as they are today and the food supply in post-war Europe was at stake.

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An agricultural policy controlled by Brussels made sense here. Since then, however, the EU has found it difficult to part with this obligation. In the 1980s, agricultural spending still represented two thirds of the EU budget.

Since then, the European Commission, which manages the EU funds, has tried to modernize the EU budget. But the progress is so slow that the composition of the upcoming budget is not adequate for the challenges of the 21st century.

This is mainly due to the Member States – first and foremost, those who are net recipients of agricultural policy. They are not interested in cutting the overall budget. But even in countries like Germany, farmers remain an influential interest group and that is another reason for the tough negotiations at the beginning of this week: No country wants to do without money from the large agricultural pot.

Reward commitment to animal welfare and environmental protection

What is falling by the wayside is the modernization of agricultural policy. This is also the case with the currently adopted reform. In essence, it was about scaling down the share of agricultural policy in the EU budget – to a limited extent.

At the same time, changes to the budget should make agriculture greener and ensure that farmers in Europe become a driving force in the fight against climate change.

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Agriculture, especially livestock farming, is currently a major source of greenhouse gases. The commission had therefore proposed that farmers should receive more money in future if they strive for environmental protection, climate protection and animal welfare.

So far, a large part of the agricultural money has been paid out directly to the farmers – in Germany it was recently an average of almost 21,000 euros per year. The amount depends primarily on how large the area is that the farms cultivate.

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The fact that the money flows by area and that land ownership guarantees subsidies is often criticized, not least because this practice ensures that large companies get a lot of money.

Farms already have to meet minimum ecological standards, but the money flows largely regardless of how environmentally friendly they are.

Critics find the eco-regulations too vaguely worded

The group of member states has now agreed that at least 20 percent of the direct payments should only go to those farmers who achieve an above-average ecological level, for example in the protection of species.

Klöckner assumes that in future Germany will receive almost as much money from the agricultural budget as it has before. Your ministry expects the payments to German farmers to fall by 0.7 percent to 44 billion euros.

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Consume with a clear conscience

Critics consider this linkage of the funds to so-called eco-schemes or ecological services to be little more than a fig leaf. “The compromise is a bitter disappointment,” says Friedrich Heinemann, Head of Public Finance at the Center for European Economic Research (ZEW).

“The vaguely worded eco-regulations play a far too small role in the allocation of funds. Moreover, the details are left to the Member States. This will lead to a race to the bottom when it comes to eco-requirements. “

Even environmentalists reacted disappointed to the overnight agreement, as did the Greens and Environment Minister Svenja Schulze (SPD). Schulze said that now the more progressive member states have to ensure that the requirements are implemented at least nationally in such a way that they strengthen climate, animal and nature protection.

There is a maximum premium for companies – not for individuals

In the coming weeks, however, the European Parliament could still ensure that more ecology comes into the package. Because it is not yet done with the agreement of the member states. The parliamentarians also approve the agricultural budget. And they demand that in future not just 20 percent, but 30 percent of the direct payments should be linked to the ecological services.

Because there is a lot of money involved, there was also a lot going on during the vote in parliament behind the scenes of the deserted meeting room. Leading MPs were still working on Wednesday to bring an amendment through the plenary that could ensure that organized crime and oligarchs can make less money from agricultural payments than before.

The legislative proposal of the European Commission, which is on the table, provides that the amount of basic bonuses a company receives will be capped. Monika Hohlmeier, the chairwoman of the Budgetary Control Committee in Parliament, does not consider this provision to be sufficient on its own.

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“The Commission’s proposal is a step in the right direction, but there are natural persons who control dozens or even hundreds of sole proprietorships. An upper limit of a maximum of 500,000 euros per hectare premium must therefore also apply to people of course, including billionaires and oligarchs like Andrej Babiš. Tax money must be distributed fairly! ”

The CSU politician was still working on Tuesday and Wednesday to organize a large majority for this initiative. Negotiations between Parliament and the member states should be concluded by the end of the year. However, the new rules will come into force in 2023 at the earliest.

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