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Irish Independent

EU proposes major cut to farm subsidies

Under the new proposal, CAP funding would fall to €300 billion for the next seven-year period, compared to €387 billion allocated for 2021–2027. When adjusted to real prices, this amounts to an estimated 30% reduction in funding. The CAP will also no longer be a standalone fund. Instead, it will be merged into a single mega-fund alongside cohesion and rural development spending, to be managed at the national level through new National and Regional Partnership Plans. It comes as a draft proposal on the next CAP leaked in recent days also outlines a controversial shake-up of how direct farm payments are distributed, including new caps on large payouts. Under the Commission's blueprint, income support would be capped at €100,000 per year per farmer. Tiered reductions would apply to larger recipients: payments above €20,000 would face a 25% cut, those above €50,000 a 50% cut, and anything over €75,000 would be cut by 75%. The goal is to reallocate support towards smaller farms. Previous efforts to impose caps on farm subsidies have been blocked by member states concerned about their larger farming operations. The proposals are likely to spark resistance from Europe's powerful farming lobby. The influential COPA-COGECA group, of which the Irish Farmers' Association (IFA) is a member, has strongly opposed the merging of CAP's two-pillar structure and warned against the redistribution of direct payments. Ireland, a net contributor to the EU budget since 2013, receives the bulk of its EU receipts through CAP. Under the current CAP Strategic Plan (2023–2027), Ireland receives nearly €2 billion annually to support its farming and agri-food sectors. Minister for Agriculture Martin Heydon recently warned of the economic risks posed by CAP cuts. 'As a country that is now a net contributor to the overall EU budget, there are many things we pay into that we don't get a direct return from,' he said. 'Of the receipts the Exchequer gets back from what we pay into Europe, 75pc comes through the CAP. If CAP is reduced, that hits the overall economy in terms of how much of that return we see.' In 2023, Ireland contributed €3.6 billion to the EU budget. That figure is forecast to rise to almost €4.5 billion by 2027. However, speaking today Minister Heydon said today's publication is just the beginning of a 'protracted process'. ADVERTISEMENT Learn more "Member States will, through the Council of Ministers, begin the process of agreeing a general approach to the Commission's proposals, before engaging in line by line negotiations with the EU Parliament and the EU Commission. "This will take some time, and I fully expect the progression of these proposals to be a significant feature of Ireland's Presidency of the EU Council in the second half of next year.' Broader overhaul of EU spending The CAP reform is part of a wider redesign of the EU's long-term budget. The Commission today unveiled a draft Multiannual Financial Framework (MFF) for 2028–2034 worth nearly €2 trillion — equivalent to 1.26% of the EU's gross national income. President Ursula von der Leyen said the revamped budget would help the EU 'shape its own destiny' in an era of global uncertainty. 'Our new long-term budget will help protect European citizens, strengthen Europe's social model and make our European industry thrive,' she said. 'In a time of geopolitical instability, the budget will allow Europe to shape its own destiny, in line with its vision and ideals.' The Commission stressed that new demands on the EU budget — including defence, migration, energy resilience and industrial competitiveness — require a fundamental overhaul. 'Europe faces an increasing number of challenges... These are not temporary but reflect systemic geopolitical and economic shifts,' the Commission said. One pressing concern is the EU's mounting debt, with repayments of €25–30 billion per year due to begin in 2028. To fund new priorities and ease the burden on national budgets, the Commission proposed five new 'own resources,' including levies on emissions, e-waste, tobacco, and large corporate revenues. Combined, these are expected to raise €58.5 billion per year. Next steps The Commission's draft budget must be agreed unanimously by member states, following approval from the European Parliament. Several proposals, including new revenue streams, require ratification by national parliaments.