No. 34 The future of the Common Agricultural Policy 16 ANALYSIS AND PROSPECTIVE STUDIES CULTIVAR has proposed to some of the CAP tools. For reasons of space, this discussion of tools is confined to direct payments and the green architecture. Other important initiatives, such as to promote innovation, generational renewal, territorial and rural development, or preparedness for crises, are not addressed. Governance issues raise new concerns The rationales for merging shared management funds were the budgetary arguments for flexibility, simplicity and synergies. The Commission argued that the multiplicity of funds made it difficult to redeploy funds quickly in response to new crises. It argued that fewer funds would simplify access to funding for beneficiaries and reduce the workload for national administrations. Requiring governments to plan the different funds together would encourage the exploitation of synergies. These are good arguments for much of the MFF but are hardly persuasive when it comes to agriculture. For much of the MFF, which consists of support for investments, one can foresee that investments can be shifted during a programming period in response to new priorities. Moving payments to farmers, whether direct payments or payments for environmental actions, to other sectors within a programming period, seems much less likely. The argument that aid applications by farmers would be simplified by being part of a single fund does not seem convincing. Also, apart from rural development measures where there has always been a debate whether they belong in Pillar 2 of the CAP or regional policy, it is hard to see where possible synergies between regional and social investments and direct and environmental payments will arise. As against these budgetary considerations, there is an important argument in favour of maintaining stability. The 2021 CAP reform introduced a New Delivery Model. This extended the idea of strategic planning from Pillar 2 to the whole CAP and required considerable adjustments in Member States. Because of delays in agreeing the CAP budget, the process of preparing and approving CAP Strategic Plans was rushed. There are good arguments that this governance process should be kept in place for a further programming period to bed down the process and to build on the experiences from its introduction. Developing the CAP chapter in the NRP Plan will in many ways be similar to the process of preparing the current CAP Strategic Plans (requiring a partnership process, the setting of targets, the allocation of resources in line with identified needs). But the Commission proposal will add a new level of negotiation, as agricultural ministries will need to coordinate and negotiate not only with the Commission but with other national ministries. A risk is that the CAP budget in the national Plans will be more heterogeneous than before as a result. nate and negotiate not only with the Commission but with other national ministries. A risk is that the CAP budget in the national Plans will be more heterogeneous than before as a result. Budget issues remain crucial Questions about the future governance of the CAP mainly concern the EU institutions and national administrations. What matters for farmers is the overall budget and the design of individual schemes which influence the ease with which they can access funding. The Commission has proposed a significantly higher MFF budget in absolute terms (almost €2 trillion over 2028–2034 in current prices). Some analysts point out that the increase is less significant as a percentage of GNI (if we ignore the repayment of NGEU borrowing, MFF expenditure is projected to be equivalent to 1.15% of EU GNI as compared to a planned 1.13% when the current MFF was agreed in 2020). This comparison overlooks the fact that, as a result of higher inflation in recent years, which was not reflected in the annual inflation adjustment to the EU budget, the contribution of Member States has fallen to 1.01% of GNI in 2027. The Commission proposal would thus require a significant increase in practice in contributions from Member States in the next programming period. The Commission has allocated much of the increased budget to new priorities such as competitiveness, defence and management of migration. For the traditional priorities of agriculture and regional spending, the budget allocates exactly the same amount (in current prices) in the NRP Fund in the next programming period as for all shared management funds in the current period (€749 billion). In principle, therefore, it would seem possible to maintain spending on both agriculture and cohesion at current levels in current prices. The Commission emphasises that the ring-fenced amount for CAP income support is just a minimum. It can be topped up from unearmarked resources in the NRP Fund (the other major tranche of funding that is earmarked is for less developed regions in those Member States with such regions). However, the scope for adding to the CAP budget will differ greatly between Member States. First, a new formula allocates the overall budget differently across Member States. Some countries will gain, while others will lose. The allocation formula contains a safety net and a ceiling to limit the extent of this redistribution, but some redistribution will occur.
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