EU Commission proposes €100,000 cap on farm subsidies ahead of autumn negotiations

The European Commission has fired the starting gun on what promises to be a bruising autumn negotiation over the next seven-year Common Agricultural Policy, proposing a hard ceiling of €100,000 a year on the area-based payments any single farmer can receive. The move, unveiled by Agriculture Commissioner Christophe Hansen during a committee hearing in Strasbourg, revives a policy instrument, known in Brussels jargon as capping and degressivity, that has twice before been beaten back by a coalition of large member states and farm lobby groups.

Hansen did not pretend the reception would be warm. "I know that certain member states will not like it. Certain regions in the European Union will not like it. But if we have to deal with the same amount of money and we want to better support young farmers, new farmers, small farmers, well, we have to take it from somewhere," he told MEPs. The blunt acknowledgement sets the tone for talks that will begin in earnest once the summer recess ends, pitting the Commission and the European Parliament against a Council of the EU where several capitals have already signalled resistance.

How the new formula would work

Under the proposal, member states would set a national average payment between €130 and €240 per hectare for decoupled income support, the basic per-hectare payment that makes up the bulk of the CAP budget. No individual farmer could receive more than €100,000 annually from that pot. Below the ceiling, a degressivity ladder would apply: a 25% reduction on the tranche between €20,000 and €50,000, and a 50% reduction on the tranche between €50,000 and €70,000. Payments above €70,000 would be capped entirely at the €100,000 ceiling.

The mechanics are designed to squeeze the top end of the distribution without touching the majority of beneficiaries. In the 2023 financial year, the latest complete data set, covering the 2022 claim year, over 90% of EU farmers received less than €20,000 in decoupled payments. They would see no direct change. The Commission's impact assessment suggests the redirected funds could be channelled into the complementary redistributive income support for sustainability (CRISS), which targets smaller and medium-sized farms, and into the young farmer scheme.

Concentration at the top

The numbers illustrate why the Commission believes there is money to be moved. In 2023, 20% of farms collected 80% of direct payments across the Union. Because decoupled payments are area-based, the distribution mirrors land concentration: large farms of 50 hectares or more work roughly two-thirds of the EU's utilised agricultural area. Over 54% of all decoupled payment spending went to recipients above the €20,000 threshold, meaning more than half the budget would have been subject to degressivity had the new rules been in force.

That average masks enormous national variation. In Slovakia and Czechia, large farms account for over 90% of the utilised agricultural area, and more than 85% of decoupled payment spending flowed to beneficiaries above €20,000. At the other extreme, Greece directed 90% of its decoupled money to farmers below the €20,000 line, so only a tenth of its envelope would be touched. France and Luxembourg sit in an intermediate zone: around 40% of decoupled payment beneficiaries in each country receive more than €20,000, exposing a significant slice of their farm sectors to the new taper. In every other member state, the share of affected beneficiaries stays below 25%.

Eastern exposure

The geography of the impact explains much of the political faultline. Slovakia and Czechia, where post-communist restitution and consolidation created a sector dominated by very large corporate farms, stand to lose the most absolute funding. Both governments have historically opposed capping, arguing that their large units are internationally competitive and that per-hectare payments should not be penalised for scale. Poland, Romania and Hungary, where large farms also dominate the land base but smallholder numbers remain high, have in previous rounds formed a blocking minority with the Czechs and Slovaks. Whether that coalition holds this time is the first test for the new Commission.

France presents a different calculus. The French farm ministry has long defended the current model, but the domestic politics have shifted. The 2023 agricultural census showed a continuing decline in farm numbers, and the government has made generational renewal a flagship policy. Paris may calculate that a capped system with a generous national average, closer to €240 than €130 per hectare, could actually free up money for its own young farmer instalment premiums, provided the degressivity thresholds are not set so low as to hit medium-sized family farms that are the backbone of the French model.

Industry and environment talk past each other

The reaction from organised interests followed predictable lines. Farm Europe, a think tank close to the large-farm lobby, argued the rules would "hit hardest those farmers who are currently the backbone of European production" and dismissed the proposal as a cost-cutting exercise dressed up as fairness. The organisation's analysis contends that large farms achieve lower production costs per tonne and that capping payments undermines the EU's food security objectives at a time of volatile global markets.

Environmental groups see the same mechanism as a down payment on a different transition. Théo Paquet, senior policy officer for agriculture at the European Environmental Bureau, welcomed the proposal as a first step toward "real redistribution" and the eventual phasing out of area-based income support that is not linked to any environmental results. "We are facing a lot of environmental impacts on the agricultural sector and there needs to be money made available for that. And for us, this is clearly where the money needs to be made available," he said. The EEB and its network want the next CAP to make the bulk of direct payments conditional on measurable climate and biodiversity outcomes, a position the Commission has sympathised with but not yet legislated for.

A third attempt, same obstacles

This is the third time the Commission has put capping and degressivity on the table. The 2013 reform introduced a voluntary capping mechanism at €300,000, which only a handful of member states activated. The 2021-2027 regulation lowered the voluntary ceiling to €100,000 and made degressivity mandatory above €60,000, but allowed countries to offset the reductions by shifting money into coupled payments, effectively neutralising the redistribution. The current proposal tries to close that loophole by applying the taper to the whole decoupled envelope and limiting the scope for coupled payment increases.

The legal basis has also shifted. The 2021-2027 CAP gave member states unprecedented flexibility through national strategic plans, a concession to subsidiarity that made EU-wide caps politically toxic. The new proposal, which will form part of the post-2027 legislative package, signals a return to stronger central parameters. Whether the Parliament, where the agriculture committee has historically been dominated by centre-right and liberal MEPs aligned with the large-farm lobby, will back the Commission is an open question. The committee's rapporteur on the next CAP has not yet been appointed.

Data caveats and the negotiation calendar

The Commission's impact figures come with a health warning. The 2023 financial data still includes payment types, notably the greening payment, that were abolished in the 2023-2027 reform. The distribution of payments under the new architecture, with its eco-schemes and enhanced conditionality, may differ. The Commission assumes the broad concentration pattern persists, but the exact euro amounts subject to capping will change once the 2024 and 2025 claim years are finalised.

Negotiations between the three institutions are scheduled to begin in September, with the Council's agriculture configuration meeting on 22-23 September as the first formal opportunity for ministers to stake out positions. The Parliament's agriculture committee aims to adopt its position by early 2026. A final agreement is unlikely before the second half of 2026, assuming the usual trilogue timeline. The next multiannual financial framework, which sets the overall CAP budget, must also be agreed before the payment parameters can be locked in.