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Leaked proposals on subsidy payment limits: first analysis

Analysis of the Commission’s leaked proposals for the CAP Health Check show that the payment limitations proposal is significantly less ambitious than the proposal made during the Agenda 2000 (1999) and Mid-Term Review (2003) reforms of the CAP.

Based on analysis of the Commission’s own figures on the distribution of farm payments in the EU-25 in 2005 (the most recent year for which data has been made available), my analysis shows that the Commission’s leaked proposals would affect just 1.7 per cent of CAP spending on direct aids to producers. The payment limitations proposal made by Franz Fischler in 2003 would have saved 2.3 per cent of CAP farm subsidy spending.

According to the leak, which is been widely accepted as an accurate representation of the Commission’s current thinking on CAP reform, the payment limitations proposal would involve three bands:

  • Payments between €100,000 and €200,000 would be subject to a 10 per cent reduction.
  • Payments between €200,000 and €300,000 would be subject to a 25 per cent reduction.
  • Payments above €300,000 would be subject to a 45 per cent reduction.
  • Taken together, these payment limitations would affect 23,505 recipients of farm payments (around 0.3 per cent of the total). The amount of subsidy cut would be €554 million (around 1.7 per cent of all payments). By contrast, the Fischler proposal of a hard ceiling of €300,000 would have affected 2,795 recipients and would have cut payments by €750 million (2.3 per cent of the total amount spent on direct payments to farmers).

    The Commission’s current proposals fall hardest on Germany, which has a large number of very large farms in the areas of former East Germany, where agriculture was collectivised under Communist rule. 5,310 German farms would be affected (1.6 per cent of the total) and total subsidies would be cut by €270 million (5.4 per cent). Other countries that would be impacted most heavily are the Netherlands, the United Kingdom, Italy and Spain. See table below.

    This proposal will do very little to curtail the very largest and most egregious payments made to some of Europe’s richest individuals such as Queen Elizabeth II, Albert Prince of Monaco and the Duchess of Alba. This new and watered-down proposal is is consistent with a broader lowering of ambitions on the part of the current Agriculture Commissioner Mariann Fischer Boel.

    She has consistently said that now is not the time for radical reforms of the Common Agricultural Policy – though this has not stopped her rushing through major policy changes when swept along by the biofuels bandwagon, for instance, the recent decision to suspend compulsory set aside.

    Country Recipients affected Percentage Savings (€millions) Percentage
    Belgium 95 0.2% <1 0.1%
    Czech Rep 540 2.9% 4.4 2.1%
    Denmark 680 1.3% 14.4 1.6%
    Germany 5310 1.6% 269.9 5.4%
    Estonia 10 <0.1% <1 <0.1%
    Greece 50 <0.1% 1.0 <0.1%
    Spain 2720 0.3% 55.7 1.2%
    France 3560 0.8% 16.4 0.2%
    Ireland 310 0.2% 1.6 0.1%
    Italy 2290 0.2% 62.5 1.7%
    Cyprus 0
    Latvia 0
    Lithuania 10 <0.1% <1 <0.1%
    Luxembourg 0
    Hungary 380 0.2% 5.0 1.6%
    Malta 0
    Netherlands 140 0.1% 23.5 4.3%
    Austria 60 <0.1% 3.4 0.5%
    Poland 100 <0.1% 2.3 0.3%
    Portugal 590 0.3% 6.0 1.1%
    Slovenia 0
    Slovakia 170 1.4% 1.4 1.7%
    Finland 20 <0.1% <1 <0.1%
    Sweden 370 0.6% 6.6 1.1%
    UK 6100 3.8% 78.5 2.3%
    EU-25 23500 0.32% 554.3 1.71%

    Farmsubsidy.org calculations by Jack Thurston based on European Commission’s indicative figures on the distribution of farm payments.

    Do not use without attribution

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