European farmers are to be reimbursed €686 million following a decision by the European Commission to return money that was deducted from their direct payments during the 2021 budget year.

Irish farmers are set to receive in excess of €21 million, the Commission has confirmed.

During 2021, €879.8 million was deducted from direct payments under the Common Agricultural Policy (CAP) to finance the agricultural crisis reserve.

The money was also deducted to ensure that the overall ceiling of the European agricultural guarantee fund (EAGF) was not overrun, the Commission said.

However, the crisis reserve of €487.6 million was not used in 2021 and, together with some "additional appropriations" available for reimbursement, a "large share of the amounts deducted from direct payments this year will be reimbursed" according to the Commission.

What is the EAGF? The EAGF helps Europe's farmers to provide a secure supply of safe, healthy and affordable food. Through this, EU countries must offer:1. A basic payment scheme for farmers;2. Green direct payments (for sustainable farming methods);3. A payment for young farmers.

These reimbursements commence from today (December 1, 2021).

The concept of the agricultural crisis reserve and its reimbursement mechanism was agreed in the 2013 CAP reform and was applied for the first time in the 2014 budget year.

Under the new CAP, changes will be made to the existing income support system, with measures being taken to ensure a fairer distribution of financial support for farmers and workers across the EU.

Until 2023, current income support measures will continue, in line with the provisions of the CAP transitional regulation.

The Commission points to a number of reasons:

These business uncertainties in agriculture justify the important role the public sector plays in ensuring a safety net for farmers’ income, it said.

The Commission says that income support benefits nearly 6.3 million farms throughout the EU, often representing an important share of agricultural income.

On average, over the last 10 years, income support represented nearly half of farmers’ income.