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Putting a Cap on Farm Subsidies

Nailing down the EU budget means tackling farm subsidies – a difficult task due to competing needs of farmers, the quest for carbon neutrality, and long-standing issues of corruption

Late last year, a New York Times investigation blew the cover on how EU farming subsidies, known as the Common Agricultural Policy (CAP), were misused. This year, the EU’s top agricultural official, Commissioner Janusz Wojciechowski, is seeking change.

The subsidy programme is one of the largest in the world and a major item in the European budget, accounting for 40 percent of total expenditure. But the use and misuse of the union’s farm-related support are opaque, complicated, and unlikely to be hotly contested. Wojciechowski’s recent declaration to the EU Parliament of his intention to restructure the CAP remained short on specifics – including on how an overhaul of the programme would dovetail with Europe’s Green Deal.

Many European lawmakers who penned the CAP benefit from it, and it is unlikely that they will back any reforms Wojciechowski proposes. So far, the commissioner has reiterated support for subsidy caps, which help to limit incentives for farmers to gobble up more land in an attempt to increase their take of aid offered. Approximately 80 percent of subsidies currently go to the wealthiest 20 percent of recipients.

“I think large farms — at some level this is more of an enterprise than a farm, so financing such holdings should be limited”, Wojciechowski said. “Whether it happens or not, that’s up to member states.”

How the Programme Works for Oligarchs

As it now stands, the CAP – which spends about 60 billion euros a year – is based on how much land is owned. This means farmers have incentives to grow their holdings in order to increase their subsidy take, which is devastating to smaller enterprises.

In addition, it has been revealed that populist far-right politicians in central and eastern Europe have used the programme to enrich both themselves and their political allies – again at the expense of small farmers, as well as political opponents.

In Hungary, for example, political leaders allied with Prime Minister Viktor Orban have handed out large tracts of government-owned farmland, enabling these new owners to become eligible for EU subsidies. Similarly, in Bulgaria, a majority of support goes to a small class of grain barons, comprising an estimated 100 entities. Slovakian farmers have reported being beaten and extorted for farmland, and a top prosecutor has admitted the existence of an ”agricultural mafia”.

Earlier this month, Italian officials arrested 94 people suspected of being involved in a scheme to make millions from European farm subsidies. Italian prosecutors claimed the Sicilian-based Cosa Nostra members had fraudulently received more than 10 million euros since 2010, including funds for large tracts of “ghost” farmland in the east of Sicily that was either non-existent or owned by the Italian state or regional government.

In the Czech Republic, the highest-profile subsidy recipient is billionaire Prime Minister Andrej Babis. The New York Times investigation revealed that his companies had collected more than 38 million euros in agricultural subsidies during 2018. Meanwhile, the Czech government has legislated new rules that allow for big companies – like those owned by the Prime Minister – to receive even more subsidies. Babis, perhaps not coincidentally, is currently also subject to two conflict-of-interest-audits.

It is up to national governments to police these abuses, but because the exploitation is often closely linked to ruling political parties, misuse frequently goes unchecked.

“It’s an absolutely corrupt system”, said Jozsef Angyan, who once served as Orban’s undersecretary for rural development. The Hungarian Prime Minister has managed to use the subsidy system to enrich his allies, family, and friends, some of whom have become the wealthiest landowners in the entire country.

“The European Union is paying so much money to an oligarch who’s also a politician”, said Lukas Wagenknecht, a Czech senator and economist who used to work for Babis. “And what’s the result? You have the most powerful politician in the Czech Republic, and he’s completely supported by the European Union.

The New York Times also revealed that misuse of support has contributed to major environmental problems, such as increased greenhouse gas emissions, polluted rivers, and the collapse of local wildlife, which includes drastic reductions in bird populations.


The subsidy programme is one of the largest in the world, but its use and misuse has been largely contested. Hungarian Prime Minister Viktor Orban is one individual who has benefited greatly from the EU’s farm subsidies, and has been accused of using the system to enrich his allies, family, and friends, some of whom have become the wealthiest landowners in the entire country. Copyright: Dark Moon Pictures / Shutterstock.com

Change is Difficult to Envision

Challenging the programme – originally envisioned as a means to provide public welfare and help farmers stabilise Europe’s food supply – means confronting one of the mechanisms that helps hold the union together.

Not everyone is willing to acknowledge the scope of the problem, and many also downplay the extend of fraud. European officials dismissed a 2015 report that recommended tightening rules against land-grabbing, and parliament rejected a bill that would have banned politicians from benefiting from the subsidies.

While audits can catch incidents of outright fraud, rooting out legalised corruption on such a large scale is much more difficult, especially because the EU defers to elected leaders regarding a nation’s affairs. Though deference to national governments is the norm, it also keeps the bloc’s hands from confronting leaders that undermine the union and its aims. Tomás García Azcárate, a former European agriculture official, noted that “The European Union has very limited instruments for dealing with gangster member states. It’s true on policy, on agriculture, on immigration. It’s a real problem”.

Some EU officials, however, disagree. “We are not here to replace national governments”, Mina Andreeva, a spokeswoman for the European Commission said in November last year. “We have an almost watertight system”, said Rudolf Mögele, one of Europe’s top agricultural officials, in an interview in 2019.

Even when national leaders are brazen about their activities, it is difficult for the union to bring them to a halt. Eurosceptic leaders like Orban self-deal in the open, but in rallies back home rely on the false but popular narrative that Brussels wishes to take away farm subsidies to enable migrants to take their place, and that they alone can put a stop to these nefarious plans. Farmers who criticise these leaders are likely to be denied grants or may face surprise audits and inspections as a punishment via intimidation campaigns.

“It’s not like when a car comes for you at night and takes you away”, said Istvan Teichel, who farms a small plot in Hungary. “This is deeper.

This is a crony economy, where friends and political allies get special treatment”, said Gyorgy Rasko, a former Hungarian agriculture minister, referencing life in Communist eastern Europe. “Orban didn’t invent the system. He’s just running it more efficiently.”

Going Green and Keeping Free Trade

Complicating matters further are current union efforts to revive a July 2018 trade deal with the United States to avert potentially disastrous tit-for-tat tariffs. So far, EU farm ministers have not signalled a willingness to meet US demands on loosening the bloc’s stringent food safety rules, such as longstanding bans on hormone-treated beef and “chlorinated” chicken, or speeding up the slow approval processes for genetically modified foods.

“We expect that importers into the EU meet our high standards”, Wojciechowski said. “We will enforce these rules.

Those standards also involve new environmental aspirations that may be difficult for farmers to meet. In order to go fully carbon neutral by 2050, the von der Leyen Commission’s new Farm to Fork strategy aims to tackle sustainability at every stage of food production.

“Nowadays, if a high-value product does not have some sustainable aspects, it cannot be considered as such”, said Italian MEP Herbert Dorfmann of the centre-right European People’s Party (EPP), speaking with EURACTIV.com.

“I fully share the concerns of the MEPs and agriculture needs to contribute to the EU climate objectives towards 2050 and should be part of the solution”, Croatia’s Agriculture Minister Marija Vučković also told EURACTIV. “At the same time let’s not forget the key role of European farmers to provide food security. We need a balanced approach.”

Agriculture ministers across Europe hope that future CAP subsidies will be used to help incentivise European farmers to transition carbon neutral operations and production methods. The topic was discussed late last month at the EU AGRIFISH Council, where officials conferred on aligning subsidy reform with achieving carbon neutrality.

“Let me be clear, this is not about amending the proposal”, Wojciechowski told the assembled ministers. “It is to understand how to position ourselves in the negotiations to ensure that our ambition is achieved.”

To that end, the European Commission proposed to increase the proportion of the next CAP expenditure dedicated to climate action to 40 percent – up from the current 30 percent. However, many farmers remain unclear on how to integrate the Farm to Fork strategy properly, just as the EU stands unsure on how to tackle legalised corruption and the siphoning of funds.

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B. Lana Guggenheim

Lana is a freelance journalist based in New York City. She has a M.Sc. in International Conflict from the London School of Economics and Political Science. She has worked as an analyst, reporter, and editor, covering extremism, culture, economics, and democracy.

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