The Post 2013 Budget - A Sneak Preview

Speculation surrounding the future of a post 2013 EU budget was fuelled last week with the leaking of a first draft of the Commission’s paper emanating from the 2008/2009 EU Budget Review. While the document contains no figures, it sets out the main elements of the next financial framework envisioning “a major refocusing of EU spending priorities”. Inevitably this will have considerable implications for the agricultural budget, whose share of the overall EU Budget is likely to be significantly reduced.

The paper stresses the need for a future Common Agricultural Policy to ‘modernise’, and for it to develop into a policy that enables it to ‘respond to new challenges, concentrating spending where it adds most value’. Key amongst these challenges is climate change, although safeguarding food quality as well ensuring the ongoing supply of public goods such as biodiversity, water availability and animal welfare are all seen as important issues that future agricultural policy needs to address.

Income Support

It is suggested that elements of the current decoupled direct payments under Pillar 1 could be maintained, but that these should no longer be based on historic production levels. Instead, the Commission presents public goods as a new focus for support, proposing that payments could target “non-compulsory environmental services, sustainable farming practices and improving the countryside in high nature value areas”.

The Commission presents public goods as a new focus for support...

In general the Communication expects Member States to take responsibility for a larger proportion of CAP spending in the future, with the option of direct aids being nationally co-funded being mooted, something that has been vigorously resisted by the Commission previously.

Pillar 2 and Rural Development

Rural development and the second pillar of the CAP are highlighted as continuing to have an important role to play in achieving the ‘new challenges’ of biodiversity, water management, renewable energy and climate change identified as part of the Health Check. Continuing to increase rates of compulsory modulation is raised as a possible option to allow sufficient funding to be made available for these priorities. Additionally, it is suggested that rural development needs to evolve as an instrument to better provide for a diversification of economic activities and increase in employment opportunities in rural areas. It is suggested that more of these funds should be directed towards non-agricultural and environmental activities, particularly those with cross-border impacts, to increase the added value of EU spending. However, this then raises questions about whether such measures should sit within the framework of the CAP or cohesion policy and what the relationship between these two instruments should be.

Climate Change

The need for agriculture to contribute more to climate change mitigation actions while maintaining its competitiveness and viability was specifically highlighted. To achieve this, the paper suggests the creation of a ‘third pillar’ of the CAP to focus spending on measures to contribute to reducing agriculture’s greenhouse gas emissions and to develop the use of land as a carbon sink. However, it is acknowledged that any funding dedicated to climate change through the CAP would need to operate as part of a broader suite of climate and energy measures. In this respect innovation and joint research were recognised as key areas of spending.

The Commission’s formal Communication is expected at the end of November this year, with the presentation of legislative proposals for the next Financial Perspective planned ‘in principle in the first half of 2011’

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29 Oct 2009




The Institute for European Environmental Policy coordinates CAP2020. It is an independent not for profit institute which undertakes research in a number of policy areas including agriculture and rural development.