FACTBOX-Europe's fight to make farming subsidies 'green'

by Reuters
Friday, 25 June 2021 15:59 GMT

By Kate Abnett

BRUSSELS, June 25 (Reuters) - European Union negotiators clinched a deal on Friday to reform the bloc's huge farming subsidy programme, aiming to make it greener and support smaller farms.

The Common Agricultural Policy (CAP), worth around a third of the EU's 2021-2027 budget, will spend 387 billion euros ($474 billion) on payments to farmers and support for rural development. The new rules will apply from 2023.

Farming accounts for 10% of EU greenhouse gas emissions, but the 27 EU member states and the European Parliament have squabbled for three years over what to do about it.

Roughly 80% of CAP payments go to 20% of the beneficiaries, with big landowners and agro-industrial firms receiving much of the cash. The reform is also intended to route more money to smaller farms.

Here are the key parts of the deal:


The new CAP would require countries to spend 20% of payments to farmers from 2023-2024, and 25% between 2025-2027, on "eco-schemes" that protect the environment.

Any funds below those limits that are not spent on eco-schemes must be spent on green measures in other areas. Eco-schemes could, for instance, mean restoring wetlands to absorb CO2, or organic farming.

Parliament had wanted a 30% share, while member states' starting point was 20%.

All payments would be tied to minimum environmental rules, such as farmers setting aside 3% of arable land for areas where nature can thrive, or rotating crops annually to boost soil health.

Some EU lawmakers said the rules contained loopholes that failed to align farming with the EU's climate targets. Campaigners said the deal lacked a clear definition of an "eco-scheme", thus failing to ensure that money would not go to more polluting farming practices.


Each country must submit a plan for spending its share of the CAP to the European Commission, which will assess whether it meets legally-binding EU targets.

These could include the bloc's aim to cut net greenhouse gas emissions 55% from 1990 levels by 2030, but are unlikely to include targets that are not yet legally binding, such as halving the use of chemical pesticides by 2030.


A major goal is to stop the decline of Europe's small farms.

The draft agreement would oblige each EU country to redistribute a minimum 10% of payments to farmers to smaller farms.

Countries could dodge this requirement if they use other methods to distribute the funds fairly - which member states had pushed for in the talks.

Parliament had pushed, unsuccessfully, for an annual cap of 100,000 euros per beneficiary.


The new CAP says countries should use criteria like income tests to define who is an "active farmer" and can receive subsidies - another attempt to stop large businesses and landowners sucking up money.

Parliament wanted a stricter definition that would exclude large-scale processors of agricultural products and stop funds going to non-agricultural businesses such as waterworks.

Countries must give roughly 3% of subsidies to young farmers, under the age of 40, to help attract new talent.

The deal also creates a 450 million euro crisis fund in case agricultural markets are disrupted by an emergency such as a pandemic.

($1 = 0.8173 euros) (Reporting by Kate Abnett; Editing by Kevin Liffey, Toby Chopra and Dan Grebler)

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