Cuts in EU Agricultural Subsidies Long Overdue

Subsidies for European farmers from EU resources should be reduced after 2020. A total of more than 400 billion euros – over one third of the EU budget – is allocated to the agricultural sector within the current Multiannual Financial Framework. This allocation of the budget is no longer adequate to meet current challenges. Instead, the EU should devote more resources to new policy areas which actually provide European added value, such as defence, migration and foreign policy. These are the results of a study carried out by the Centre for European Economic Research (ZEW), Mannheim, at the initiative and on behalf of the Bertelsmann Foundation.

“EU agricultural policy seems anachronistic. There is no justification for its dominant position in the EU budget,” says Professor Friedrich Heinemann, head of ZEW’s Research Department “Corporate Taxation and Public Finance” and author of the study. Furthermore, agricultural subsidies have a very poor precision in supporting poor farmers. Very rich farmers also benefit from income support, despite the fact that their income levels exceed the eligibility thresholds in the individual national welfare states.

For this reason, the study recommends reducing the costs of agricultural subsidies through significant national contributions to agricultural support. “If the Member States wish to privilege their farmers over other economic sectors, they should do so without passing the burden onto European taxpayers,” explains Friedrich Heinemann. On 28 June 2017, EU Commissioner for Budget and Human Resources Günther Oettinger proposed the introduction of a “national co-financing scheme” in agricultural policy. “Oettinger’s proposal is a first step in the right direction,” explains Heinemann, “If the Member States are required to participate in the financing of this questionable subsidy policy, this could increase pressure for reform in agricultural policy.”

For further information please contact:

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