No. 41




Common Agricultural Policy and EU Budget

10 June 2020


RiTo No. 41, 2020

  • Siim Tiidemann

    Ministry of Rural Affairs, Deputy Secretary General for Fisheries Policy and Foreign Affairs

The Common Agricultural Policy (CAP) is one of the few truly common European Union policies, having a history of more than 50 years. The goals of the CAP have remained the same across decades. In essence, they can be summarized as follows: to produce more food with greater profitability while guaranteeing stable food supply and affordable prices. This means that the underlying principle of the CAP is food security.

However, over decades the means for achieving these goals have changed considerably. As market intervention policies gave way to direct support and rural development measures, the CAP has become more market-oriented and has taken on board new challenges, like climate change and environmental concerns.

When Estonia joined the EU, the compensation levels for direct payments were calculated according to historical references. With a series of reforms, the payments became uncoupled from production, and therefore the arguments for differences of support levels across the Member States weakened considerably.

Thus, Estonia, together with our Baltic neighbours has been arguing for greater external convergence of direct payments. Although the European Commission has proposed some levelling, it would still leave the three Baltic states lagging behind for another seven years. Given the circumstances of the current EU budget negotiations (Brexit, Covid-19), it is not easy to convince other Member States as convergence is largely seen as a zero-sum game. Another polarization of opinions stems from the arguments over whether the costs of fulfilling the tasks set by the CAP, including reaching the goals of the European Green Deal, differ across the countries.

Nevertheless, it is clear that it is in Estonia’s best interests to continue with the CAP, as in case of open competition between the EU member states it would be difficult for Estonia to support its agriculture on the same level as some of the wealthier countries. Therefore, it is important to aim for the best possible solution in the on-going budget negotiations at the European Council level.