Croatia to Receive 4.5 Billion Euro from EU Common Agricultural Policy

By 2 June 2018

ZAGREB, June 2, 2018 - In the EU's next seven-year budget, Croatia is expected to get, as part of the EU's common agricultural policy (CAP), 4.0345 billion euro, expressed in prices from 2018, or 4.544 billion euro expressed in current prices that take into account projected inflation, with slightly more funds for direct payments to farmers and less funds for rural development.

The European Commission on Friday published a draft regulation on CAP for the period 2021-2027, envisaging 365 billion euro for 27 member states.

The CAP has two pillars – direct payments to farmers and rural development. Under the present multiannual financial framework, Croatia has access to two billion euro for rural development and 1.48 billion for direct payments, expressed in prices from 2014.

In the next multiannual framework, the EC proposes that Croatia should have at its disposal 4.0345 billion euro expressed in fixed prices from 2018 or 4.5446 billion euro, expressed in current prices (taking into account projected inflation until 2027). Of that amount, 2.2077 billion euro (expressed in fixed prices from 2018), or 2.489 billion euro expressed in current prices, is to be allocated for direct payments. Rural development is to be financed with 1.7501 billion euro (fixed prices) or 1.9694 billion in current prices. Market support measures total 76.7 million euro in fixed prices or 86.3 million in current prices. Those payments account for less than 10% of the CAP.

In the present multiannual framework, Croatia has slightly less than 3.5 billion euro at its disposal for direct payments and rural development, and for the next multiannual financial framework the EC proposes slightly more than four billion in fixed prices or slightly more than 4.5 billion euro in current prices.

However, the amount of 3.5 billion euro for the present multiannual financial framework is expressed in fixed prices from 2014 while the amount expressed in prices from 2018 is not available so a comparison of allocations from the two multiannual financial frameworks does not show the real gain or loss of funding as 3.5 billion euro is not of the same value in 2014 and 2018.

Many stakeholders have accused the EC of manipulating the figures by not stating the amounts in prices for 2018 in the present multiannual financial framework, thus preventing a precise comparison.

With regard to cohesion policy, the EC has been pressured into giving amounts both in fixed and current prices for both budgets, which enables a more precise calculation of how much more or less money a country has been given.

Under the EC daft proposal, Croatia will get less for rural development even in the nominal amount of 1.750 billion euro in fixed prices from 2018 as against two billion euro in prices from 2014.

The nominal amount for direct payments is slightly bigger – 2.207 billion euro, expressed in prices from 2018 as against 1.48 billion, but the reasons for this are different.

As was the case with other new member states, Croatia too was granted a transitional period of ten years during which the share of EU funds in the established annual limit for the financing of direct payments is gradually increased.

Over that ten-year period, the difference up to the established limit is covered from the Croatian budget, and as of 2023 the entire amount will be provided from the EU budget, with EU funds for direct payments consequently increasing.

Cohesion and agricultural policies account for almost two-thirds of the EU budget.

Two days ago, the EC published a proposal for cohesion policy under which in the 2021-27 financial period Croatia would get around six percent less money in real terms than in the present budget, but it continues to be among the countries that receive the most in terms of per capita allocations.

Croatia is expected to be allocated 8.767 billion euro under cohesion policy for the period 2021-2027, or 9.888 billion euro if inflation is taken into account, the European Commission said on Tuesday.

In the present multiannual financial period 2014-2020, Croatia has 8.6 billion euro at its disposal, expressed in prices from 2014. If inflation is taken into account, Croatia has 9.3 billion euro at its disposal in the 2014-2020 multiannual framework. This means that in the 2021-2027 financial framework, it has been given 500 million euro or 5.5% less than in the present financial period.

In the period from 2021 to 2027, Croatia should have at its disposal under cohesion and agricultural policies 12.8 billion euro, expressed in fixed prices, or 14.4 billion expressed in current prices.

The draft multiannual budget, as well as the accompanying sectoral legislative proposals, are only the first step in the process of negotiating the final budget and figures from the EC draft should therefore be taken with reservation as changes are certain to happen in negotiations among member states.

The multiannual financial framework should be supported unanimously by all member states and the European Parliament and as in previous years, each budgetary item is expected to be fought over intensively.