These are tough financial times in agriculture, so imagine this situation. The bank statement has just arrived, price prospects are decidedly discouraging, your cash flow for the winter and well into 2015 is a sea of negative numbers. As you ponder what to do there’s a knock at the door. Someone is there making a case for a charity you know nothing about with an uncertain project needing help. There and then you decide that since you still have a few pounds in the bank account, you will give them the lot. This would clearly be a very worthy decision, but not one you would take in the face of the deep financial crisis facing your business – and not one you could easily explain to your bank manager. Yet this is exactly what the European Commission did, and it took a long time for farm ministers to challenge the decision.
Even for an organisation not known for financial rectitude, this was a truly bad decision. It should perhaps have come as no surprise, given that for the past 19 years the European Commission’s financial watchdog, the Court of Auditors, has been unable to sign off its accounts. The decision the Commission took related to unspent funds left in the 2014 CAP budget. With the Russian food import ban putting enormous pressure on the CAP crisis reserve the expectation was that some or all of these funds would be transferred to the 2015 reserve. However instead the Commission decided the lot should go to overseas aid projects. This was despite a large share of the unspent funds having come from farmers in the shape of dairy superlevies, and if ever there was a case for an industry needing these funds back, it is there now.
How this can happen is complex. The CAP financial year runs from mid-October to mid-October. Spending for 2015 is now under way. For 2015 the CAP has a crisis reserve for emergencies of around 430 million. This is down on 2014, and already around 350m has been allocated for spending related to the Russian import ban. If more is needed it would have to come from reducing Single Payments across the board in 2015, as part of the financial discipline measures.
When the Russian ban was imposed in August the suggestion was that if additional funds were needed they would be made available, since agriculture was being drawn into a fight not of its own making. Instead it was the result of the stand taken against Russian actions in Ukraine by the EU and individual Member States. Delivery, however, has not happened, and now the chance to do so has been, quite literally, given away by diverting funds from agriculture to overseas projects.
At the end of the 2014 CAP financial year in October there were unspent funds – around 450m, which ironically was just about the size of the crisis reserve. The expectation was that these would be used to bolster the crisis reserve for 2015. Instead agriculture was left with a depleted crisis reserve when the industry is facing major and deepening problems. This was agreed by a majority of Member States, and it was only when MEPs and farm lobby organisations questioned this that it moved onto the political agenda of farm ministers.
There is a sense that the new farm commissioner, Phil Hogan, sympathises with those seeking a review of a bad decision for agriculture and the European economy. He cannot easily come out publicly to take on the budget commissioner, but thanks to MEPs, the farming lobby, and, belatedly, farm ministers, this is at least firmly back on the political agenda in Brussels.