Minister of Agriculture says he is not satisfied with the architecture of the next EU framework, although he acknowledges that there have been improvements.
Negotiations between the Portuguese Government and the European Commission regarding the next EU support framework are already beginning to bear fruit. In an interview on the “ECO dos Fundos” podcast, the Minister of Agriculture revealed that, in nominal terms, Portuguese farmers will not lose money.
Of the €31.6 billion financial envelope that Portugal has already secured, €7.4 billion will be dedicated to farmers’ incomes, the traditional first pillar of the Common Agricultural Policy (CAP), to which will be added a further €2.5 billion, around 10% of the envelope, for rural development.
“If we add this up, we already have an equivalent amount, even with a 2% deflator”, stresses José Manuel Fernandes in “ECO dos Fundos”, ECO’s fortnightly podcast on European funds. On the other hand, it is now possible to bring forward €2.4 billion so that it can start to be used as early as 2028.
However, the minister points out that he is not satisfied with the architecture of the next Community support framework, although he acknowledges that there have been improvements, because Portugal was losing “around €3.4 billion”. “Today, in nominal terms, we are no longer losing out”, he assures us.
For the official, it is also essential to guarantee access to the European Competitiveness Fund and prevent it from being captured by the more developed countries of central Europe, advocates of a two-speed continent. “Calling into question the success [of the CAP] is an absolute mistake. That’s what they did with industry”, José Manuel Fernandes warns.
We are facing the negotiation of a new financial framework, which is very revolutionary compared to the traditional logic we had before. A new fund has been created that combines agriculture and cohesion. Are you satisfied with this new architecture?
No, I am not. I am not satisfied, even though there have been major improvements. For example, at the beginning, in relation to agriculture, we were losing around €3.4 billion. Today, in nominal terms, we no longer lose out.
If we combine Cohesion and Agriculture, would the fund be even more generous?
No, it wouldn’t. We lose around €7 billion overall in our envelope. Often, the [European] Commission’s strategy is: Cohesion Policy is not delivering, so you [Agriculture] will have access to more money. But then they come to Cohesion and say, “Agriculture is not implementing, so you can have more money”.
What has been done for agriculture – and this is not yet finalised, negotiations are still ongoing – is that we have secured €7.4 billion in support for farmers. Of the €31.6 billion envelope that Portugal has for the plan, which includes the Common Agricultural Policy and Cohesion Policy, €7.4 billion is for income. But then there is an amount of around €2.5 billion, which corresponds to 10% of the envelope, minus the €7.4 billion, which is for rural development. If we add this up, we already have an equivalent value, even with a 2% deflator.
There is another new development, which is the possibility – and this resulted from a meeting we had on 7 January – of bringing forward an amount that would only be available halfway through, which corresponds, in European terms, to €45 billion for agriculture, and in the case of Portugal, €2.4 billion. We may also have this amount.
But that amount would be withdrawn…
That amount is always within the €31.6 billion envelope.
But why don’t you like this new architecture?
Firstly, because we need to provide predictability and stability. And we are always changing.
But doesn’t the guarantee of these amounts provide that predictability?
With these amounts, we have started to have virtual pillars. I defend the pillars of the CAP: the first is income and the second is rural development. And with this 10%, plus those 7.4 billion euros, you start to have security here and, ultimately, pillars, even if they are virtual.
But then there are additional problems here. The European Commission tells Member States: ‘if you want, you can go into debt and increase the amounts for the Common Agricultural Policy’. State aid, which can be provided in this way, means that richer states can put in more money and poorer states cannot. This leads to unfair competition. It basically leads to a renationalisation of the Common Agricultural Policy.
If there is one policy that has worked well, it is the Common Agricultural Policy. It places enormous demands on farmers. They should have much higher incomes than they do, and often the support they receive is seen as subsidies for them, when in fact they are indirect subsidies for every European citizen who buys high-quality food that meets the highest environmental standards and also benefits from a strong welfare state such as that which exists in each Member State. And farmers have less than 40% of the income, on average, of other professions. But this Common Agricultural Policy has enabled this success. And now, for example, there is an annual agri-food surplus of around €64 billion.
Now, because of this success, there is sometimes the idea that we can cut back here. That is a complete mistake. That is what they did with industry — they deindustrialised the European Union and now they are saying, ‘Oh, we need to industrialise again’. And then there are risks with a two-speed Europe and with countries such as Germany proposing that, together with France, Spain, Italy, Poland and the Netherlands, they join forces to set up a task force to create a two-speed European Union. They have taken this on board. And perhaps to go to the €400 billion European Competitiveness Fund. We have these risks here that we should not allow. One of the most serious situations is precisely the possibility of a renationalisation of the Common Agricultural Policy.
Another negative point is that they have forgotten about POSEI. We have Article 349 of the Treaty on the Functioning of the European Union, which basically requires that the outermost regions be treated differently because of their geographical situation. POSEI 2021-2027 is a €700 million programme for the Azores and Madeira. With the 2% update, it would be €900 million. POSEI has been forgotten. This is unacceptable.
This will also lead to something else: unnecessary conflicts. Because each Member State will have tension between agriculture and cohesion policy. Cohesion policy will start looking at agriculture and saying: ‘they already have some money here, which is fine, and we don’t have any yet, so we won’t give them anything else’. The regions will start saying that they also need resources for agriculture… And that’s true, because in a country like Portugal, particularly in the interior, if there are projects that help territorial cohesion and competitiveness, they are agricultural projects and where agribusiness is also present.
Does that mean that the Minister of Agriculture has to have much greater political weight in the Executive to ensure that there is no loss of income for farmers?
Fortunately, we have a Prime Minister who believes that agriculture is strategic and fundamental, and who knows the country well. It was very positive that, before becoming Prime Minister, he visited all 308 municipalities. Basically, he knows everything and understands this reality well. Therefore, regardless of the influence of the Minister of Agriculture, the Prime Minister, Luís Montenegro, rightly considers, and has proven, that agriculture is strategic and fundamental. In European terms, food security, as I often say, food on the plate, defence and energy are three essential pillars for our strategic autonomy and our security at all levels.
But with the growing concern about affordable housing, for example, there is an additional element of pressure, given that it will fit within the same fund.
Yes. But affordable housing can also have, and we already have, presumably this month, financial instruments. We will have public credit lines, which will work well through Banco Português de Fomento and InvestEU. This year, we will have €700 million in credit lines for agriculture, forestry and fisheries. And €300 million will have a zero interest rate. Why? Because in the reprogramming of the PEPAC, one of the things we did was to put €50 million towards paying interest. So we will have €300 million for investment at zero interest rates and with a maturity of 12 years.
For agricultural investment?
Agricultural investment, but also in forestry and fisheries. We have to get used to having a vision where we have the funds, but we also have financial instruments. And that is where Banco Português de Fomento begins to have muscle; it is also extremely important and essential for this objective. For agriculture and forestry, we have €50 million, which will enable these €300 million at zero interest rates, but we will also have, through MAR 2030, the payment of interest for a line that will also be created for this objective, within the €700 million.
Are you confident that Portugal will be able to reach a successful conclusion in the negotiations and secure some more funds?
Take a good look at the work we have already done. At the beginning, there was no protection for farmers. Now there is €7.4 billion in income support. There was no obligation to use 10% of the amount for rural development. That is now in place too. Now there is even the possibility of bringing forward those €45 billion, which for Portugal amounts to €2.4 billion, so that they can start to be used as early as 2028.
There are also financial instruments, in terms of the 27, of €150 billion that can be used. And then we must not forget the European Competitiveness Fund. I mentioned the issue of vaccines and investments in that area. But we are also looking for another eligibility: irrigation, which is also competitiveness. In other words, that Water Unites can be included in the European Competitiveness Fund.
Do you think you can do it?
We have already sent it to my colleagues, regardless of their political affiliation, but the European Parliament and the European Parliament’s Committee on Agriculture are also committed to this goal.