Author: Alan Matthews

Alan Matthews is Professor Emeritus of European Agricultural Policy in the Department of Economics at Trinity College, Dublin, Ireland. His major research interests are agricultural policy analysis, the impact of international trade on developing countries, and computable general equilibrium analysis of trade and agricultural policy reforms. He has worked as a consultant to the European Parliament, the OECD, the Food and Agricultural Organisation of the United Nations and the UN Industrial Development Organisation, and has been a panel member in a number of WTO Dispute Settlement procedures. He is a former President of the European Association of Agricultural Economists but writes here in a personal capacity.
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Horizontal Principles in the Next MFF and Implications for the CAP

Merging the EU’s Common Agricultural Policy (CAP) into the single National and Regional Partnership (NRP) Fund raises more than just the fungibility of resources between the different priorities in that Fund (though this is largely neutralised for the CAP by ring-fencing a minimum amount for CAP income support and fisheries interventions, for further details see my post on this topic). The CAP is also subject to a new set of management regulations that will have important implications for the governance of the policy.

Elements of governance that are affected include the division of competences between the Commission and Member States under shared management, the preparation, approval and monitoring of the CAP chapter in the NRP Plans, performance monitoring, and the role of partnerships. One important change is that the design of CAP interventions will now be even more clearly subject to several horizontal principles such as the rule of law and compliance with the Charter of Fundamental Rights of the European Union, the ‘do no significant harm’ (DNSH) principle, climate and environmental mainstreaming, and gender equality.… Read the rest

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Negotiating the Member State allocations in the next MFF

Negotiations on the EU’s Multi-annual Financial Framework (MFF) take place within the General Affairs Council of the European Union. Ultimately, the final decisions are taken by the European Council of Heads of State and Government and must also receive the consent of the European Parliament. There are many points of friction, including the overall size of the MFF, its allocation across headings, and the question of own resources and how to finance the budget. Traditionally, there is a specific focus on the pre-allocated amounts as these are a significant determinant of the net balance between receipts and contributions for individual Member States – often referred to as the focus on juste retour in the MFF negotiations.

In the Commission’s proposal for the next MFF, the pre-allocated funds have all been merged into a single European Fund for economic, social and territorial cohesion, agriculture and rural, fisheries and maritime, prosperity and security.… Read the rest

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Changes proposed to the management of agricultural crises

The term of office of the previous Commissioner for Agriculture Janusz Wojciechowski 2019-2024 was dominated by crises, including the COVID pandemic, the impacts of the Russian invasion of Ukraine on energy and fertiliser prices, and the impacts of Ukrainian exports of grains and oilseeds on the markets of neighbouring countries. Following the announcement to launch a Strategic Dialogue on the Future of Agriculture in December 2023, it was thus not surprising that Wojciechowski speculated on the need for a common crisis intervention instrument in the future CAP with a reinforced budget, proposing that this should form a “third pillar” of the CAP.

Since then, the Commission has proposed a new architecture for crisis management in the CAP, first in its legislative proposal on CAP simplification in May 2025 and, more recently, in its legislative proposal for the European Fund accompanying its MFF proposal published in July 2025. This post reviews the Commission proposals highlighting the main innovations and assesses the likely performance of the proposed new architecture.… Read the rest

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What impact will degressivity and capping have?

In my previous post, I calculated the size of the amounts that could be allocated to the degressive area-based income support payment using the minimum and maximum amounts of aid per hectare proposed in the NRPF Regulation of 130 EUR and 240 EUR, respectively. This payment is intended to provide area-based income support for eligible hectares to farmers to address income needs. The purpose of the exercise was to examine the potential allocations to other CAP instruments, for example, agri-environment-climate actions, depending on how much Member States allocated to the degressive area-based payment.

The limitation of that calculation is that it assumed that all hectares would receive these amounts, and thus it took no account of the potential impact of degressivity and capping. In this post, I try to provide a crude estimate of the likely impact of degressivity and capping for several Member States. It turns out that the degressivity and capping rules, though they seem sharp, will have a limited impact in practice in many countries.… Read the rest

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Commission proposal could allow significant increase in CAP basic payments in many countries

Initial reactions to the publication of the Commission’s proposals for the next CAP and their budgetary implications focused on the overall reduction in the CAP budget for income support (the minimum €296 billion ring-fenced within the National and Regional Partnership Fund). In a previous post, I calculated this reduction to be 15% on a like-for-like basis compared to the current income support under the CAP in current prices. Making a comparison with the current total CAP budget will depend, in addition, on how much Member States will allocate to the non-income support elements of the CAP (including, for example, Co-operation projects (LEADER, EIPs) as well as Knowledge Exchange (AKIS)), which cannot be known at this stage.

However, a deeper dive into the provisions of the relevant Regulations suggests that things are not so simple. Commissioners Serafin and Hansen have promised that farmers can continue to receive the same money under the proposed CAP as they do at present.… Read the rest

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The distribution of direct payments in calendar year 2022

One of the striking proposals in the Commission’s CAP Regulation is the introduction of a much sharper degressivity in area-based income support payments starting with payments above €20,000 and with a ceiling of €100,000. It is thus appropriate that DG AGRI released its annual report on the distribution of CAP direct payments for the financial year 2023 just two days before the CAP proposal was announced as part of the 2028-2034 MFF package (in addition, the detailed figures are found in the Annex available here). It appears that the report was completed by October 2024. It is striking that the date of publication of these annual reports has been gradually slipping over time (the full set of reports with date of publication is available on the Commission web page on income support) which obviously limits their usefulness.

Although the report relates to the financial year 2023, I have deliberately titled this post as referring to the calendar year 2022 to emphasise that the figures refer to payments made to farmers in claim year (or calendar year) 2022.… Read the rest

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Which countries gain or lose from the National and Regional Partnership Fund?

This is a revised version of the original post, to take account of the very helpful comment below which pointed out an error in my original Table 1. This is the strength of blog posting and I am very happy to make the correction.

One of the ideas stressed in the Commission’s presentation of the CAP budget proposal in the next MFF is that the €296 billion ring-fenced for CAP income support and some fisheries expenditure is a minimum amount. Member States will be able to add to that from their overall ceilings in the National and Regional Partnership Fund (NRPF) when they design their National and Regional Partnership Plans. While correct in theory, there will also be huge demands for these resources from other priorities. In this post, I assess the likelihood that Member States might be willing to top up the minimum amounts for CAP income support from their overall NRPF allocation.… Read the rest

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The Commission’s CAP budget proposal in the next MFF

Please note that I have updated and revised some of the commentary in this post in a later one here. This later post gives a a more optimistic view of the likely size of the CAP budget though still with caveats. I would urge readers to also read this later post in conjunction with this one. I have left this post online for the record.

The publication of the Commission’s MFF proposals and related legislative proposals on Wednesday 16 July was chaotic, in part it seems because negotiations within the Commission went down to the wire right up to the afternoon of the day of publication. Publication of the key texts was delayed, and indeed the NPRF Regulation (see below) only became available on the EU Register of Commission Documents early morning Friday 18 July.

As far as concerns the CAP proposal in the MFF, this chaotic delivery led to a bit of a communications disaster.… Read the rest

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Navigating EU fertiliser policy through turbulent times

The governance of nitrogen fertiliser markets in the European Union has long been shaped by a fundamental and persistent tension between the competing interests of farmers and domestic fertiliser producers. On one side, European farmers advocate for unfettered access to nitrogenous fertilisers at the lowest possible prices—inputs that are critical to their productivity and competitiveness. On the other side, EU-based fertiliser manufacturers have lobbied for trade protection to shield themselves from what they view as unfair competition—particularly low-cost imports of ammonia and nitrogen fertilisers often linked to price dumping or state subsidies in exporting countries.

This traditional conflict has become significantly more complex in recent years, as new forces reshape the political economy of fertiliser trade. The Russian invasion of Ukraine in 2022 dramatically altered global energy markets, sending natural gas prices—the main feedstock for synthetic nitrogen fertilisers—soaring across Europe. This not only undermined the cost competitiveness of EU fertiliser producers but also exposed vulnerabilities in the Union’s supply chains, especially its reliance on imports from geopolitically sensitive suppliers such as Russia (see my previous post detailing trends in import sourcing of nitrogenous fertilisers to the EU).… Read the rest

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Import dependence for nitrogen supply

Nitrogen is a critical input to agricultural production. In the EU, approximately half of this nutrient is supplied from organic livestock-derived sources while the other half comes from mineral nitrogen (specifically in 2023, organic nitrogen supplied amounted to 8.3 million tonnes and mineral nitrogen 8.7 million tonnes across the EU27, UK, Switzerland and Norway, source Fertilizers Europe 2024).

A significant share of this mineral nitrogen (either directly or in the form of ammonia which is the main feedstock) is imported, which can be a significant source of vulnerability. In this post we examine the extent of this vulnerability in terms of the dependence on nitrogen imports and the main sources of import supply.

Nitrogen use and import dependency

The introduction of the Nitrates Directive in 1991, of the national action programmes for designated nitrate vulnerable zones and the CAP reforms decoupling payments from production levels, all led to steep declines in the use of nitrogenous fertilisers in the 1990s and early 2000s (DG AGRI, 2019) shown in the first figure below.… Read the rest