Friday, June 5, 2020

EU adopts proposal to reduce support for farmers for the financial year 2019 to finance crisis reserve

The European Commission has adopted a proposal to reduce spending on support for farmers for the financial year 2019 to finance the crisis reserve.

Direct payments are funded by the European Agricultural Guarantee Fund (EAGF). The financial discipline proposal is made each year and reduces spending under the Common Agricultural Policy (CAP), in order to set aside EUR 400 million (in 2011 prices) to cover potential crises in agricultural markets.

The proposal for 2019 aims to reduce CAP direct payments in excess of EUR 2,000 by 1.422184%.

In addition to creating the crisis reserve each year, the financial discipline mechanism can also be used to ensure that EAGF expenditure stays within the annual limits agreed as part of the overall seven-year EU financial framework (the so-called MFF).

However, current estimates for direct payments and market related expenditure for 2019 suggest that they will be within the agreed limit and therefore the present financial discipline proposal does not foresee any reduction for that purpose.

According to CAP legislation, amounts generated by financial discipline which remain available in the EAGF budget at the end of the financial year, including those of the crisis reserve, have to be reimbursed to farmers. Since the establishment of the crisis reserve in 2014, it has never had to be used, and the money set aside each year has been made available again to farmers.

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