The EU’s new agriculture commissioner, Christophe Hansen, is advocating for a shift in how the European Union distributes its agricultural subsidies, with a focus on supporting small farmers rather than large agribusinesses. Hansen, who took office on December 1, has expressed the need to reform the Common Agricultural Policy (CAP) to better target financial aid to those in greater need. He acknowledged that while the overall CAP budget is unlikely to increase, the funds should be allocated more equitably, with a particular emphasis on low-income and smaller farms.
The CAP, which represents a significant portion of the EU’s annual budget, has traditionally favored the largest farms, with the bulk of the subsidies going to a small percentage of landowners. A 2022 study by the Institute for European Environmental Policy found that about 80% of direct payments are received by only 20% of farms. The CAP system has long been criticized for its inefficiencies and its tendency to favor wealthy landowners, leaving smaller, less profitable farms struggling.
In light of these issues, Hansen is pushing for a change that would prioritize small-scale farms in the distribution of subsidies, but he insists that his reform would not constitute a radical overhaul. He has emphasized that while the CAP would not entirely abandon hectare-based payments, changes to the allocation of funds would be one of the most significant reforms since the policy’s inception 62 years ago.
The discussions around the CAP’s future are further complicated by broader geopolitical concerns. The EU’s budget for the next decade is being heavily influenced by the increased emphasis on defense spending following Russia’s invasion of Ukraine and the potential threat of the US pulling out of NATO under a more isolationist administration. As a result, any reduction in CAP funds will likely face significant opposition from farming groups, who have already demonstrated their discontent through protests against environmental regulations and market pressures.
Christophe Hansen’s vision for the future of farming in the EU includes encouraging farmers to diversify their sources of income. While traditional farming remains important, Hansen believes that farmers can become less vulnerable to market fluctuations by branching out into alternative income streams. These could include growing crops for biofuels, using farmland for solar panel installations, or exploring new markets for carbon credits through tree planting initiatives.
Hansen is also proposing changes to the retail sector, which he argues often exploits farmers’ weak position in the supply chain. To address this, he suggests making written contracts between farmers and food companies mandatory and fostering greater cooperation between national authorities to resolve cross-border disputes. Additionally, Hansen advocates for easing competition rules to promote products from young farmers and introducing greater transparency in retail pricing, which would allow consumers to better understand the pricing structure that affects the farm-to-table process.
However, these proposals have drawn criticism from the retail sector. Christel Delberghe, director-general of EuroCommerce, a trade group representing retailers, warned that stricter pricing regulations could lead to inflation, which would ultimately harm consumers. She also expressed concerns that the revision of unfair trading rules could lead to conflicts between EU member states, as countries might attempt to enforce their own national laws in violation of the single market.
One of the key challenges facing the CAP in the coming years is the potential inclusion of Ukraine as an EU member. Ukraine, a major agricultural producer, has a farming output that exceeds that of France and Germany combined. Hansen sees Ukraine’s inclusion as both a challenge and an opportunity, as it could help the EU reduce its reliance on South America for certain agricultural products, such as soy. This, he believes, could position the EU as a leading global player in agriculture.
The EU’s recently signed free trade agreement with the Mercosur countries in South America has already sparked significant opposition from farming groups. The deal could lead to an influx of low-cost agricultural products, including beef, poultry, sugar, and rice, potentially driving down prices and threatening the income of European farmers. The EU’s largest farming lobby group, Copa Cogeca, has expressed strong concerns over the risks of market saturation and income loss resulting from the deal.
