UPDATED: EU strikes deal on huge farm subsidies, ending three years of negotiations

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European Union negotiators struck a deal on reforms to the bloc’s huge farming subsidy programme on Friday, introducing new measures aimed at protecting small farms and curbing agriculture’s environmental impact.

The deal ends a near three-year struggle over the future of the EU Common Agricultural Policy, which will suck up around a third of the EU’s 2021-2027 budget, spending 387 billion euros on payments to farmers and support for rural development.

Representatives from EU member states and European Parliament clinched the agreement, which aims to shift money from intensive farming practices to protecting nature, and rein in the 10% of EU greenhouse gases emitted by agriculture.

The new CAP rules apply from 2023 and do not cover Britain following its exit from the EU.

“On some points we may have wished for a different outcome but overall I think we can be content with the agreement we have achieved,” EU agriculture commissioner Janusz Wojciechowski said in a tweet.

Campaigners and some lawmakers said the deal failed to align farming with EU goals to fight climate change, warning that many of the green measures were weak or made it optional for member states to require farmers to shift to environmentally friendly methods.

The deal would require countries to spend 20% of payments to farmers from 2023-2024, rising to 25% of payments between 2025-2027, on “eco-schemes” that protect the environment, according to a draft agreement seen by Reuters. The final agreement was not published.

Examples could include restoring wetlands to absorb CO2, or organic farming, although the rules did not define what would count as an eco-scheme.

Any funds below those limits that are not spent on eco-schemes must be spent on green measures in other areas instead.

Other agreements included rules requiring EU countries to redistribute at least 10% of CAP funds to smaller farms. Countries could dodge this requirement if they use other methods to distribute the funds fairly.

All farmers’ payments would be tied to complying with environmental rules, such as setting aside 4% of arable land for areas where nature can thrive, or rotating crops annually to boost soil health.

EU auditors this week said the current CAP was failing to reduce emissions. EU agriculture emissions, half of which come from livestock, have not decreased since 2010.

European Parliament and EU member states must both formally approve the agreement.

European Union negotiators clinched a deal on Friday to reform the bloc’s huge farming subsidy programme, aiming to make it greener and support smaller farms.

The Common Agricultural Policy (CAP), worth around a third of the EU’s 2021-2027 budget, will spend 387 billion euros ($474 billion) on payments to farmers and support for rural development. The new rules will apply from 2023.

Farming accounts for 10% of EU greenhouse gas emissions, but the 27 EU member states and the European Parliament have squabbled for three years over what to do about it.

Roughly 80% of CAP payments go to 20% of the beneficiaries, mostly big landowners and agro-industrial firms, and the reform is also intended to route more money to smaller farms.

Here are the key parts of the deal:

ECO-SCHEMES, GREEN STANDARDS

The new CAP would require countries to spend 20% of payments to farmers from 2023-2024, and 25% between 2025-2027, on “eco-schemes” that protect the environment, according to a draft agreement seen by Reuters on Friday. The final deal was not published.

Any funds below those limits that are not spent on eco-schemes must be spent on green measures in other areas. Eco-schemes could, for instance, mean restoring wetlands to absorb CO2, or organic farming.

Parliament had wanted a 30% share, while member states’ starting point was 20%.

All payments would be tied to minimum environmental rules, such as farmers setting aside at least 4% of arable land for areas where nature can thrive, or rotating crops annually to boost soil health.

Some EU lawmakers said the rules contained loopholes that failed to align farming with the EU’s climate targets. Campaigners said the deal lacked a clear definition of an “eco-scheme”, thus failing to ensure that money would not go to more polluting farming practices.

NATIONAL PLANS

Each country must submit a plan for spending its share of the CAP to the European Commission, which will assess whether it meets legally-binding EU targets.

These could include the bloc’s aim to cut net greenhouse gas emissions 55% from 1990 levels by 2030, but are unlikely to include targets that are not yet legally binding, such as halving the use of chemical pesticides by 2030.

SMALLER FARMS

A major goal is to stop the decline of Europe’s small farms.

The draft agreement would oblige each EU country to redistribute a minimum 10% of payments to farmers to smaller farms.

Countries could dodge this requirement if they use other methods to distribute the funds fairly – something member states had pushed for in the talks.

Parliament had pushed, unsuccessfully, for an annual cap of 100,000 euros per beneficiary.

WHO COUNTS AS A FARMER?

The new CAP will limit who is defined as an “active farmer” and can receive subsidies – another attempt to stop large businesses and landowners sucking up money.

Parliament sought a definition that would exclude large-scale processors of agricultural products, and stop funds going to non-agricultural businesses such as waterworks or railway services.

Negotiators had also considered a requirement for countries to hand roughly 3% of farm payments to young farmers, to help attract new talent. A final agreement on this was not confirmed.

Also under discussion were standards for working conditions in farming and a crisis fund in case agricultural markets are disrupted by an emergency such as a pandemic.