The European Commission has proposed, as part of the Multiannual Financial Framework (MFF) 2021 – 2027, that funding for the next Common Agricultural Policy (CAP) post-2020 should be set at €365 billion. This equates to a cut of approximately 5% to the overall CAP budget, representing a cut of 3.9% to Pillar 1, Direct Payments and 15% to Pillar 2, Rural Development. At least 5% of Rural Development funds are to be ring-fenced for LEADER.
I have been very firm in my view that I do not accept the proposed 5% cut to the CAP budget post-2020, and there is strong consensus on this issue amongst my Member State colleagues. I have been strongly advocating for the CAP budget to be restored to current levels for the EU 27 for the next programming period, and I will continue to work towards achieving this objective until agreement on the MFF post 2020 proposals has been reached. In addition, my colleague Minister Michael Ring, whose Department has overall responsibility for the LEADER programme, continues to strongly defend the LEADER budget as the MFF post-2020 negotiations progress. The retention of an adequate budget for the CAP post-2020 is a key priority for Ireland.
The negotiations on the EU's Multiannual Financial Framework (MFF) for the period 2021-2027 are ongoing, and are running in parallel with the negotiations on the CAP post-2020. It is worth pointing out that agreement on the budgetary allocations under the next MFF is ultimately decided by Ministers for Finance and Heads of State and Government. A decision on the MFF proposals is not expected to be reached until Autumn 2019 at the earliest.
With regard to the co-financing rates, the total allocation for the LEADER 2014–2020 Programme is €250 million. The EU portion of this funding is provided under the European Agricultural Fund for Rural Development (EAFRD) at the rate of 62.8% of total costs (€157 million). The remaining 37.2% (€93 million) in matching funding is provided by the Exchequer.
Under the current EU Regulations, the maximum permitted contribution to LEADER expenditure from the EAFRD is 80%. The European Commission has proposed to leave this percentage unchanged under the proposals published for the 2021-2027 period.
Until the MFF proposals are agreed, it will not be clear what the precise financial implications for the CAP and the Rural Development Programme will be. Based on the proposals, and this has been publically indicated by Commissioner Hogan, some €47 million per annum in additional national funding would be required for Ireland to make up the proposed shortfall under Pillar II funding, and my Department would concur with that estimate.