European Union floats 30 percent cut in ag subsidies

A controversy has erupted in Europe after details emerged of a plan to slash farm subsidies by 30 percent to compensate for the $20.3 billion shortfall after the United Kingdom leaves the European Union.

The U.K. voted to leave the EU in 2016 and has a deadline to quit the union by March 2019.

With the U.K. leaving there would be a deficit in the overall EU budget of around $20.3 billion per year, which has to be replaced to maintain current farm subsidy levels.

There is a new budget cycle coming up in the EU to cover 2021 to 2027, and discussions are ongoing on how the money should be allocated.

Initial solutions included asking the bigger beneficiaries of EU farm subsidies, namely Germany and France, to cough up and pay more into the European money pot but this was met with huge resistance and numerous protests in France.

Now, the plan is to cut farm subsidies by 30 percent, which in turn would see farm incomes across Europe fall by 10 percent.

These cuts would affect the Visegrad states of Czech Republic, Hungary, Poland and Slovakia the most because those nations are home to the majority of the larger farms and attract high subsidy payouts.

In past EU budgets, countries in Eastern Europe have also received high investments to help improve their weaker economies, which also make them a target for future cuts in subsidies.

If the EU goes ahead with farm subsidy cuts, it could further heighten tensions among the remaining 27 member states, potentially setting up a divide between western and eastern EU states.

The Common Agricultural Policy (CAP) currently takes up 41 percent of the EU’s budget which totals around $99 billion.

The proposed cutbacks in farm subsidies came up during talks about the future of the CAP budget in the European Parliament.

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