EU Agricultural Payments Are an Anachronism

Both German and French agricultural ministers have spoken out against reducing EU agricultural spending and called for the agricultural budget to be maintained at its current level. In a joint study conducted by the Centre for European Economic Research (ZEW), Mannheim, and the Bertelsmann Stiftung, researchers have found that the EU’s common agricultural policy (CAP) provides only limited added value to the EU, and recommend a comprehensive redistribution of funds in favour of other policy areas. Professor Friedrich Heinemann, head of the ZEW Research Department “Corporation Taxation and Public Finance” comments on the Franco-German policy statement:

“The Franco-German statement on the CAP comes as a bitter disappointment to all EU reformers. The fact that annual payments of over 50 billion euros – almost 40 per cent of the EU budget – are still being made to farmers is an anachronism that is no longer adequate to meet current challenges. The arguments brought forward by the agricultural ministers in favour of maintaining the current subsidy level are not convincing.

Agricultural subsidies to European farmers entail problematic distributional effects in favour of large landowners. What is more, the subsidies are currently neither making a noteworthy contribution towards a more secure food supply nor to more environmentally friendly production methods. Recently, the European Court of Auditors has shown that environmental conditions that are bound to payments remain largely ineffective and create deadweight effects. This being the case, it is difficult to understand why the German agricultural minister would align herself with the defenders of the status quo.

If the EU fails to reduce the CAP’s share of the EU budget, it will continue to satisfy the needs of agricultural lobbies, instead of working towards creating real added value for Europe. The German Federal Government contradicts itself when it calls for a European solution for refugee policy while defending the allocation of 300 billion euros in the next financial framework for subsidies that often benefit wealthy farmers. Instead, German policymakers should rather criticise the European Commission for not laying down plans to cut agricultural subsidies more drastically. This would be a landmark contribution to the negotiations surrounding the EU budget.”

Click here and here to download related studies to this topic.

For further information please contact:

Prof. Dr. Friedrich Heinemann, Phone +49 (0)621/1235-149, E-mail friedrich.heinemann@zew.de