EU allocates just over €40 billion for direct payments for 2021

The European Commission will appropriate some €40 billion for the European Agriculture Guarantee Fund for 2021, the pot of funds which is used to make Pillar I payments (direct payments) under the Common Agricultural Policy (CAP).

The commission has decided to allocate €55.8 billion altogether to its agriculture and maritime policy. In addition to this (under the budget heading of Natural Resources and Environment), the commission will allocate €429.3 million for environment and climate action.

This will be reinforced by around €7.3 billion from the EU’s new recovery instrument, ‘Next Generation EU’. This gives a total funding figure for Natural Resources and Environment of €63.5 billion, with some €55 billion going to CAP payments.

The figure allocated to direct payments (Pillar I) for 2021 is €40.1 billion. Meanwhile, the total figure for the European Agricultural Fund for Rural Development (which funds Pillar II payments), has been set at €14.7 billion for 2021.

Crisis reserve

The €40.1 billion figure for direct payments does not include the funding needs for the ‘Reserve for Crises for the Agriculture Sector’.

This will be entered as a separate item on the budget under direct payments. This reserve is set to be funded to the tune of €487.6 million.

The appropriations for the crisis reserve are intended to provide additional support to finance measures necessary to address major crises affecting agricultural production or distribution.

Unused appropriations of the crisis reserve in the 2020 Budget will be carried over to the 2021 Budget.

Overall, the fund for direct payments is 8.4% lower than for 2020. This is mainly linked to the withdrawal of the UK from the EU.

Total budget

The commission is proposing a total budget for 2021 of €166.7 billion, to be complemented by €211 billion in grants and approximately €133 billion in loans under ‘Next Generation’.

This is the first annual budget of the EU’s Multiannual Financial Framework (MFF) for 2021 to 2027 – the overall figure for which is yet to be agreed by member states, with CAP proving to be a sticking point in negotiations.

Speaking this week, Johannes Hahn, the Commissioner for Budget and Administration, argued: “In these extraordinary times, the European Commission’s proposal mobilises unprecedented support.

“The annual Budget 2021 will help hundreds of thousands of people, companies and regions to overcome the crisis and emerge stronger than before,” the commissioner added.