Tag: MFF

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Commission proposes European Recovery Fund as part of revised 2021-2017 MFF

The stakes for the European Union have never been higher. In a year when the latest Commission economic forecasts project a 8% decline in GDP as a result of the measures taken to contain the spread of the coronavirus, the question is whether the European Union can provide a response that is macroeconomically significant and builds on the principles of solidarity inherent in the concept of a common citizenship. If it fails to deliver, we can say good-bye to the European Union and prepare to take our chances in an unforgiving geo-political world where the only other leaders are an increasingly authoritarian and self-centred China and an increasingly unpredictable and self-centred America.

The Commission has done its homework. Building on a Franco-German initiative the previous week, it put forward on 27 May 2020 a proposal for a recovery plan instrument and a reinforced Multi-annual Financial Framework (MFF) that is innovative, ambitious, and worthy of support.… Read the rest

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Financing emergency aid to address market disruption due to COVID-19

There has been strong pressure on Commissioner Wojciechowski to get the Commission to do more to protect farmers and agricultural markets from the adverse effects of the lock-down responses to the coronavirus pandemic.

The Commissioner has argued that there is no funding available for these measures in the EU budget. In this post, I assess the funding that may be available to the Commissioner. I conclude that available funding is limited but not exhausted. It now seems time to make use of the crisis reserve that was put in place for exactly this eventuality as well as unused margins under the European Agricultural Guarantee Fund (EAGF) in the EU budget.

The EU budget is a very complex entity, and it is not easy for an outsider to have a complete understanding of how it works. There may well be errors in the following account, and if so, I would be grateful to have them pointed out.… Read the rest

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External convergence debate continues to simmer

One of the many issues that will need to be resolved when Heads of State and Government get around to once again considering the Multi-annual Financial Framework (MFF) 2021-2027 is what position to take on the external convergence of CAP direct payments.

The Commission has proposed a further narrowing of the differences in the average value of direct payments per hectare between Member States in the post-2020 CAP framework. For a number of countries from Central and Eastern Europe nothing less than full equality by the end of the MFF period will be acceptable. There is equally strong push-back from another group of Member States that argue there should be no further reductions in the CAP joint pillar allocations for the purpose of redistribution among Member States.

The call for the harmonisation of payments per hectare across Member States (external convergence) began in the run-up to the 2013 CAP reform. The phasing-in of direct payments following the enlargement to include 10 Central and Eastern European countries in 2004 was completed for these countries in 2013, yet significant differences in average payment levels per hectare persisted.… Read the rest

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Coronavirus uncertainty as CAP decisions are postponed

There is increasing focus on how the coronavirus pandemic is likely to affect agricultural markets, food supply chains and farm incomes (for example, the series of IFPRI Resources and Analyses on COVID-19). Panic buying of long-life staples – as well as toilet roll, of course – led to temporary shortages on supermarket shelves but supplies were very quickly replenished.

In the medium-term, there are concerns that labour shortages, logistical difficulties in transporting goods across borders and falling export demand have the potential to cause disruption. The various actors in the European food chain issued a statement on 19 March calling attention to likely operational difficulties and asking the Commission to ensure that free movement of goods within the single market can continue, including through managing ‘green lanes’ at borders, to allow the food chain to function effectively.

The European Milk Board has called on the Commission to start preparing the launch of a voluntary milk supply reduction scheme as it expects processing capacity will not be sufficient to handle the volume of milk farmers are able to produce.… Read the rest

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President Michel’s solution to the MFF conundrum

In my previous post I discussed the challenges facing European Council President Charles Michel as he took over responsibility from the Finnish Presidency to prepare the draft conclusions on the Multi-annual Financial Framework for the coming meeting of the European Council on 20 February next.

The Finnish Presidency proposal had been attacked on all sides as unsatisfactory. Yet, in that previous post, I speculated that Mr Michel was unlikely to hear anything very different to what the Finnish Presidency had heard when charged with forwarding the ‘negotiating box with figures’ to the December 2019 meeting of the European Council. Thus, I did not expect Michel’s draft conclusions to be dramatically different to the figures in the Finnish Presidency’s December proposal.

On the other hand, I noted that the new Commission’s flagship proposal for the European Green Deal had been published after the Finnish Presidency had prepared its final draft of the negotiating box, and I wondered if this might be sufficient to reframe the conversation between the ‘frugal Five’ and net recipients on the overall size of the EU budget.… Read the rest

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Charles Michel’s MFF juggling act

During the past few weeks, the President of the European Council Charles Michel has been meeting national sherpas to sound out Member State positions regarding the Commission’s proposal for the next Multiannual Financial Framework (MFF) for the period 2021-2027. In the next few weeks he will be meeting national leaders face-to-face.

He has called a special European Council meeting which, ominously for national leaders who value their beauty sleep, is scheduled to start on 20 February but which notably has no termination date or time.  Mr Michel may plan to take a leaf out of the Saudi Crown Prince Mohammed bin Salman’s playbook who famously kept the rich elite of Saudi Arabia under lock and key in a luxury hotel until they agreed to part with some of their money.

… Read the rest
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What explains the differential cuts in CAP P1 and P2 spending in the Commission’s MFF proposal?

As I discussed in this post, the Finnish Presidency has been tasked with presenting a first draft of the MFF ‘negotiating box’ with numbers prior to the next European Council meeting 12-13 December 2019. This will be no mean feat given the wide differences of opinion between the ‘frugal five’ Member States – Austria, Denmark, Germany, the Netherlands and Sweden – that want overall a smaller budget than what the Commission has proposed, and other Member States that want to reverse some of the Commission’s cuts in cohesion and agricultural spending (Politico’s Lily Bayer goes through the different alliances in this article published today).

The agricultural Ministers of seventeen Member States circulated a statement at the last AGRIFISH Council in October 2019 calling for the CAP budget to be maintained at its current level in nominal terms.  Austria manages to be both a member of the ‘frugal five’ in the General Council while at the same time calling for increased CAP spending in the AGRIFISH Council, which suggests statements of agriculture ministers may be meant more for domestic consumption rather than reflecting the views of their governments.… Read the rest

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Commission publishes CAP transition regulations recognising implementation of new CAP will be delayed

DG AGRI and the Commission have now officially recognised that, in view of the present state of play in both the Parliament and the Council, the basic acts governing the CAP post 2020 and the ensuing delegated and implementing acts will not be formally adopted by January 2020 and that, therefore, it will be necessary to plan for a transitional period. The new legal framework will now begin from 1 January 2022.

Although the current CAP Regulations continue in force until they are repealed, they need amendment to ensure that there is a legal basis for making payments to farmers in 2021. This is the purpose of the two draft Regulations published yesterday, one laying down transitional provisions in 2021 (including annexes) and the other extending the financial discipline provisions as well as the possibility to shift funds between the two Pillars of the CAP (including annexes).

This post examines the implications of the Commission’s proposals for Member States and farmers.… Read the rest

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MFF discussions pushing small increase in CAP budget compared to Commission proposal

The European Council leaders at their meeting on 17-18 October 2019 failed to make progress in advancing discussions on the next Multi-annual Financial Framework (MFF) due to start on 1 January 2021. The Council’s conclusions noted that: “Further to a presentation by the Presidency, the European Council exchanged views on key issues of the next Multiannual Financial Framework such as the overall level, the volumes of the main policy areas, the financing, including revenues and corrections, as well as the conditionalities and incentives. In the light of this discussion, it calls on the Presidency to submit a Negotiating Box with figures ahead of the European Council in December 2019”.

The European Council’s conclusions in June 2019 had anticipated a more ambitious timetable. At that meeting, it called on Finland’s Presidency “to pursue the work [done under the Romanian Presidency] and to develop the Negotiating Box. On that basis the European Council will hold an exchange of views in October 2019, aiming for an agreement before the end of the year.… Read the rest

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Member State CAP allocations and progress on the MFF

The Commission’s presentation of its CAP legislative proposals in June 2018 includes Annexes setting out the Member State allocations both for Pillar 1 direct payments (Annex IV of the draft CAP Strategic Plan Regulation) and Pillar 2 rural development (Annex IX of the same draft Regulation). In its draft legislative proposals for the 2013 CAP reform, the Commission had also included an Annex setting out the Pillar 1 Member State allocations (based on the external convergence formula that it had put forward in its MFF proposal a couple of months previously).

But this was not the case for Pillar 2 allocations. Here, the draft Regulation specified that the annual breakdown by Member State would be decided by the Commission by means of an implementing act taking into account (a) objective criteria linked to the three objectives for rural development policy set out in the draft Regulation, namely, competitiveness of agriculture, sustainable management of natural resources, and climate action; and balanced territorial development of rural areas; and (b) past performance.… Read the rest