Common Agricultural Policy: Irish farmers expecting bad news in overhaul to EU funds

Irish farmers are expecting bad news on Wednesday when the European Commission announces a major overhaul of the Common Agricultural Policy (CAP).

The Commission is expected to merge CAP into a "super fund" along with other sectors, meaning agriculture will no longer have a ringfenced budget.

The Irish Farmers' Association (IFA) said changes to the European Union's farming subsidies are potentially devastating coming alongside potential US tariffs. IFA president Francie Gorman told Newstalk radio that it will impact farmers and consumers who buy their products.

The mammoth CAP is today worth around €387 billion, or a third of the bloc's entire budget for 2021-2027.

Brussels is also set to propose capping the EU subsidies a single farmer can receive each year, in an attempt to redistribute the bloc's massive farming subsidies in favour of smaller businesses, a draft European Commission proposal seen by Reuters, showed.

The document is part of the Commission's proposal for the EU's next budget, due to be published on Wednesday.

The Commission proposal would attempt to redistribute more subsidies to smaller farmers, by capping at €100,000 per year the area-based income support they can receive, the draft said.

It would also progressively reduce the amount paid out per hectare, for those receiving the most.

For example, farmers receiving area-based income support above €20,000 per year would have their subsidies above this level cut by 25 per cent, payments above €50,000 per year would be cut by 50 per cent, and payments above €75,000 by 75 per cent, the draft said.

This is not the first time Brussels has attempted to cap subsidies, to limit payouts to big landowners and agro-industrial firms. In the previous CAP, roughly 80 per cent of payments went to 20 per cent of the beneficiaries.

Past proposals to do this were rejected by EU governments concerned about their farming industries. EU countries and the European Parliament must approve the new budget for 2028-2034.

A Commission spokesperson did not immediately respond to a request for comment on the draft, which could change before it is published.

The draft would set overarching EU-wide green targets that farmers must meet to receive subsidies, while obliging countries to set additional, locally-tailored conditions.

"The new CAP is to be a simpler and more targeted Union common policy, with more flexibility for farmers and a shift from requirements to incentives," the draft said.

The draft did not confirm the size of the new CAP. Its core would still be direct income support for farmers, which would be "ring-fenced" – meaning it cannot be spent on anything else.

The proposal would merge the CAP's current two-pillar structure into one overarching fund – a move opposed by the influential European farmers' lobby COPA-COGECA. – Additional reporting: Reuters