National co-financing of CAP direct payments

Summary:

The idea of national co-financing of the EU’s income support to farmers was introduced into the debate on the next Multi-Annual Financial Framework (MFF) in June 2017. The European Commission mentioned the idea only in passing and it was immediately rejected by Agriculture Ministers, a stance that can be understood on political economy grounds.

This paper makes four arguments in favour of this policy instrument – for example that it would make better value-for-money choices in the CAP more likely – while also responding to some of the criticisms of the proposal. CAP Pillar 1 direct payments are unique among the major EU spending programmes in being 100% financed from the EU budget. This is the anomaly that must be explained and justified, rather than the case for national co financing.

The paper concludes by recommending that national co-financing of CAP Pillar 1 direct payments should be included in the Commission’s MFF proposal in May 2018, and the European Council should endorse it as part of its MFF conclusions in due course.

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