The CAP no longer fits EU ambition

There was a time when the Common Agricultural Policy (CAP) was the jewel in the crown of the EC/EEC/EU. That is clearly no longer the case. The proposals for reform of the CAP and the broadening of ambitions for the EU are clear indications that other challenges facing the 27-member EU will take precedence over maintaining the integrity of the CAP. Realistically, the erosion of the CAP as a standalone support mechanism for Europe’s farmers has been ongoing for many years. The emergence of environmental challenges, some of them related to commercial farming practices, has already claimed a considerable portion of the CAP’s financial largesse. We now see new challenges and priorities emerging for the EU that will necessitate further diversion of funding, including migration, competitiveness, defence, research, and ambitions to improve economic and social cohesion across the 27 Member States.
Last month, the EU Commission president, Ursula von der Leyen, published her multi-annual budget proposals for five years commencing from 2028. It is notable that the proposals were developed by a close-knit group of officials in von der Leyen’s office, without major input from either her fellow commissioners or the European Council of Ministers. This suggests that there is a very long road ahead before any agreement is reached on future EU funding. The fact that the proposed budget is double the current EU budget provokes the immediate question as to where the additional funding is to come from. As referenced in my previous editorials, many Member States have their own financial challenges, before any further monetary commitments are made towards funding the EU. The German economy, particularly, is stagnating and the historical powerhouse of Europe needs to improve its competitiveness significantly before any thought is given to increasing its financial support for the European project. Germany has always been the major financial supporter of the EU and without its support, President von der Leyen’s budgetary proposition is doomed to failure. It is not even clear that the Commission president’s cabinet will actively support her budget proposals. The Commissioner for Agriculture and Food, Christophe Hansen, is known to be opposed to any diminution of the CAP as a standalone funding mechanism for European agriculture. It was Ursula von der Leyen herself who instigated the Strategic Dialogue on the Future of Agriculture in the EU, authored by a fellow German, Professor Peter Strohschneider, with input from a wide range of stakeholders. There was no suggestion in the Dialogue Report that the CAP should be subsumed into a broader, all-encompassing EU budget. The implementation of the Dialogue proposals comes under Commissioner Hansen’s brief and given justifiable fears that the funding of the CAP could be reduced and/or spread too widely and thinly under von der Leyen’s radical budget proposals, he is unlikely to view the 2028-2033 EU Multiannual Financial Framework with much enthusiasm.

A critical aspect of President von der Leyen’s budgetary proposals, which may determine its successful implementation or otherwise, is the proposed expansion of funding. Among a range of finance-raising proposals, including increased e-waste and tobacco revenues, a tax on companies with turnover in excess of €100m is the most contentious. Just as there is a limit to how much milk a cow can deliver before compromising its long-term health, there is also an awareness that EU companies, however profitable they may be, must constantly invest in research and development and competitiveness improvements. There is a contradiction between EU competitiveness aspirations, as highlighted under President von der Leyen’s budget proposals, and increased taxation on the companies that must ultimately deliver on competitiveness in the global marketplace.