EU leaders agreed a new budget of over one trillion euros along with a €750bn COVID-19 recovery package on Tuesday, but European farmers will be left feeling underwhelmed at agriculture’s share.

Just under one-third of the total budget will be allocated to CAP. Farmers will receive €336.4bn, based on 2018 prices, over the next seven years compared to €383bn in the last CAP.

A total of 12% of the funding has been cut from Pillar I, which is used to finance direct payments. It will provide some €258.6bn in income support to farmers across the EU from 2021 to 2027.

The greatest cut has come in Pillar II, from which rural development schemes such as GLAS and ANC are financed. It has been reduced by 19% to €77.9bn.

This cut will be marginally offset by an additional €7.5bn from the COVID-19 recovery fund. However, this farm-focused payment was slashed in the most recent round of negotiations.

Just under one-third of the total budget will be allocated to CAP

It was halved from €15bn as the leaders wrestled to compromise between what became known as the frugal group (Netherlands, Austria, Sweden, Denmark and Finland), who wanted a smaller budget and less contributions from themselves, and Mediterranean countries who wanted increased expenditure to assist their recovery from COVID-19.

Ireland is one of a number of EU countries that will receive a top-up payment for Pillar II environmental expenditure where there are “particular structural challenges” or where there has “already been heavy investment in Pillar II expenditure”.

It remains to be seen under which category Ireland falls. Either way, there will be an extra €300m to spend.

Ireland is one of a number of EU countries that will receive a top-up payment for Pillar II environmental expenditure

There is also a €5bn Brexit fund for countries that are most severely affected by the UK’s departure from the EU. Given the Irish agriculture’s reliance on exports to the UK, particularly in the beef sector, it will be among those vying for compensation.

Notably, EU leaders agreed that 40% of all CAP expenditure should be dedicated to climate and environment measures. This will be across both direct payments and rural development schemes.

Taoiseach Micheál Martin welcomed the overall deal. On CAP, he said: “We are particularly happy that there is significant funding to protect the Common Agricultural Policy, which has always been a significant factor in Ireland’s negotiations with Brussels.”