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Report: Inflation, EU Green Deal Putting Heavy Strain On CAP Budget

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Inflation, combined with the European Commission’s push to achieve ambitions laid out in the Green Deal, is threatening the budget for the EU’s Common Agricultural Policy (CAP), according to a new report published by the think tank Farm Europe.

Read the original French story here

Record inflation, now 10% compared to the 2% when the CAP budget was set, could lead to a “reduction in the real value of support”, the think tank warned in its report. [bold, links added]

Based on the European Central Bank’s inflation forecasts, the first so-called ‘pillar’ of the CAP, aimed at funding direct payments to farmers, stands to lose €68.6 billion.

The second, which supports rural development, would drop €15.97 billion, making a combined budget decrease of €84.57 billion from 2021 to 2027.

This would create quite a dent in the new CAP budget for 2023-2027, which has been set to a total of €387 billion.

As such, the report, published Thursday (13 October), proposes to reevaluate the CAP budget in real terms, “to adjust it each year according to the level of inflation.

On top of that, Farm Europe also proposes “a real EU investment fund” for strategic sectors in need of transition, such as agriculture and energy.

EU lawmaker and member of the European Parliament’s agriculture committee Anne Sander told EURACTIV that the erosion of this budget “jeopardizes the economic viability of some farms and means less investment in the ecological transition.

It is also worrying news for our food security,” she added.

For Sander, the CAP cannot be used as the “cash cow of European politics,” pointing out that the European Commission proposing to “take money out of the CAP” to help manage the Ukraine and energy crisis.

“Now, either we top it up as we go along, or we make new financial lines available,” she told EURACTIV.

Green Deal threatens CAP budget

Meanwhile, the lighter budget will be stretched even thinner by the EU’s green ambitions, the report warned, criticizing the systematic use of the CAP budget to finance measures in line with the European Green Deal, such as the Commission’s recent proposals for a regulation on the sustainable use of pesticides or with the new RePowerEU on biomethane.

To achieve ambitions in the EU’s flagship food policy, the Farm to Fork strategy, the think tank proposed to find “a new policy path” based on a green growth strategy for the agricultural sector.

It proposes to replace “a regulatory-based strategy aimed at reducing productivity tools” with “an appropriate investment strategy favoring agronomic systems approaches and innovation.

h/t RO

Read rest at EurActiv

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