Agriculture may be hit in upcoming EU budget

BIRMINGHAM, U.K. (Reuters) – The need to tackle massive budget deficits looks set to result in agricultural spending cuts by the British government and the European Union.

“Make no mistake about it, the CAP (Common Agricultural Policy) will not remain unchanged,” Hilary Benn, the cabinet minister responsible for the Department of Environment, Food and Rural Affairs (DEFRA). told the National Farmers Union annual conference.

“The state of public finances right across Europe and the need to get the world trading its way out of recession are going to have a huge impact.”

Benn’s Labour Party faces a general election in the next three or four months and is trailing the opposition Conservative Party in the polls.

“Whichever government comes to power after the next election is going to have to deal with a deficit and learn to live within its means,” said Nick Herbert, Conservative Party shadow minister for the environment, food and rural affairs.

“Whichever government comes to power will have to cut DEFRA’s budget. Europe’s leaders and finance ministers will look to cut the costs of the EU budget, and the CAP can’t be exempt.”

Britain posted its first budget deficit on record for January after government spending shot up and tax receipts fell following the worst recession in decades.

Many other EU governments also face substantial budget shortfalls with countries such as Greece under growing pressure to cut their huge fiscal deficits.

Farmers receive support from the EU and national governments in a variety of forms, including an annual payment, tariff protection and payments for providing environmental benefits.

The CAP budget will remain intact until 2013 and the debate on potential post-2013 reforms is already underway.

New EU farm commissioner Dacian Ciolos said in a recorded address to the NFU conference that the debate was still at an early stage and he would be “very much in listening mode until June or July.”

NFU president Peter Kendall made a plea for direct payments to farmers to be maintained to help protect them as prices for their products become increasingly volatile.

“The volatility in the markets over the last two years have demonstrated just how vital direct support is,” Kendall said.

“To those who are set on eliminating direct support and channeling all funding to the delivery of environmental public goods, I’d say that agriculture is too strategic to be seen as simply as instrument for environmental delivery. We need productive farming from the uplands of Cumbria and Snowdonia to the flatlands of the fens.”

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