ELO hosts conference on the future of direct payments in the CAP
As the DG AGRI prepares to unveil its Vision for Agriculture and Food, the European Landowners’ Organization (ELO) and the European Economic and Social Committee (EESC) hosted a high-level conference on February 6 2025, to debate the future of direct payments and CAP reform. Featuring Commissioner Christophe HANSEN, MEP Paulo DO NASCIMENTO, Stoyan TCHOUKANOV, Prof. Alan MATTHEWS, Tassos HANIOTIS, and other experts, the event explored how to make CAP more targeted, resilient, and effective in the next funding period.
Author: Wallerand VAN OUTRYVE D’YDEWALLE, ELO
From the Commissioner: Strengthening Farmers’ Incomes and Market Power
Jurgen TACK, Secretary General of ELO, opened the event by reflecting on the turbulent years farmers and land managers have faced, adapting to new CAP rules and market pressures. He emphasised the need for a simpler, more targeted CAP that balances economic, environmental, and social objectives. He highlighted the importance of direct payments as the cornerstone of the policy but called for a reimagined approach to ensure they meet the needs of a rapidly changing agricultural landscape.
In a video message addressed to the audience, Commissioner Christophe HANSEN first underscored the need to strengthen farm incomes, accelerate generational renewal, and enhance sustainability in EU agriculture. He reiterated the central role of direct payments in income stabilisation but acknowledged their current limitations in redistributive efficiency, stressing the necessity for a more precise and impact-driven support model for the post-2027 period. Commissioner HANSEN then linked competitiveness in agriculture to the broader Competitiveness Compass and advocated for targeted investments in innovation, market resilience, and entrepreneurship. Addressing the sector’s exposure to climate risks, the Commissioner underlined the meaning of aligning CAP instruments with sustainability transitions while at the same time, ensuring food security and fair value distribution across the food chain. He also pointed to recent revisions in the Common Market Organisation regulation as part of a broader effort to reinforce farmers’ bargaining power and correct structural discrepancies, reaffirming the Commission’s commitment to a CAP that is both simplified and more attuned to the realities of the whole sector.
Rethinking CAP for a Resilient Agriculture
Paulo DO NASCIMENTO, Portuguese MEP and member of the Committee on Agriculture and Rural Development, underscored the pivotal role of direct payments in the CAP, highlighting their function in stabilising farm incomes, safeguarding food security, and promoting environmental sustainability. However, he warned that disparities in dependency levels across Member States and shrinking CAP budgets require a more targeted and strategic approach. The MEP stressed that the CAP budget, once the EU’s largest, has now been surpassed by cohesion policy which to him, raises concerns about its future role in European agriculture. Acknowledging the growing public resistance to higher food prices, he reminded participants that direct payments keep food affordable but despite this, the EU has lost 37% of its farms in recent years. DO NASCIMENTO called for a stronger link between agriculture and security policy and suggested that funds from the EU’s security and defence budget should be allocated to food security, highlighting the notion that a Europe unable to feed itself cannot claim true sovereignty. Looking ahead, he outlined three key priorities for reform: better targeting of small and medium-sized farms, maintaining coupled support for vulnerable sectors, and leveraging innovation and digitalisation to drive agricultural modernisation.
Adapting Direct Payments to a Changing Agricultural Landscape
EESC Member and farmer Stoyan TCHOUKANOV first took the chance to emphasise on the urgent need to rethink the role of direct payments in the ever changing agricultural landscape. He highlighted that climate change, economic pressures, and rural depopulation are reshaping the sector, requiring a shift in CAP instruments toward resilience and adaptation. With 6,400 farms disappearing weekly, he argued that business-as-usual policies are no longer viable and called for stronger support mechanisms that address market volatility and environmental risks. TCHOUKANOV stressed that direct payments should better reflect the real challenges farmers face, including increasing climate-related disruptions such as droughts and wildfires. He also pointed to the need for regulatory flexibility and noted that certain CAP rules—such as those restricting tree cover on grazing land—do not always align with sustainable farming realities. Looking ahead, he called for a more strategic use of direct payments, ensuring they support climate adaptation, market resilience, and long-term sustainability rather than simply serving as income stabilisation tools.
Rethinking CAP to Support Farmers and Sustainability
Professor Alan MATTHEWS first took a hard look at the efficiency of direct payments in the CAP. While acknowledging their role in stabilising farm incomes, he argued that the current system often benefits large farms that don’t necessarily need income support, while failing to target funds where they could have the most impact. With small farms disappearing at an alarming rate, he questioned whether simply increasing payments to them is the right solution, suggesting that support should focus on helping farmers transition to more sustainable and competitive practices. Alan MATTHEWS proposed capping payments to larger farms and redirecting funds toward environmental measures, ensuring that CAP resources contribute to climate resilience and long-term viability rather than just income stabilisation. He also stressed the need for a stable policy, cautioning against frequent changes to the CAP. Instead, he advocated for small adjustments that would improve efficiency and deliver better results.
Soil Health as the Backbone of CAP Reform
Tassos HANIOTIS, former Director at the European Commission and an advisor for the Forum, made a strong case for a fundamental shift in the CAP’s approach to direct payments. Rather than maintaining the current system, he proposed linking support directly to soil health, arguing that economic and environmental objectives must go hand in hand. He criticised the tendency to separate productivity and sustainability, stressing that both are essential for the long-term viability of European agriculture. HANIOTIS advocated for a performance-based model with multi-annual contracts, rewarding farmers for measurable improvements in soil quality rather than maintaining rigid area-based payments. He emphasized that policy simplification must focus on results, not just reducing paperwork, and warned against short-term political fixes that overlook long-term agricultural resilience. His proposal aligns with the growing recognition that soil health is at the heart of food security, climate resilience, and sustainable productivity—a direction he believes CAP should fully embrace.
Supporting Regenerative Agriculture
Meghan SAPP from the European Alliance for Regenerative Agriculture highlighted the role of regenerative agriculture in addressing both environmental and economic challenges. She accentuated the need for a transition in direct payments to support practices that improve soil health, biodiversity, and carbon sequestration. She stressed the importance of peer-to-peer learning and knowledge exchange, arguing that farmers need to work together to adapt to environmental changes and develop resilient agri food systems. She also pointed out that while small farms often struggle financially, regenerative practices can increase profitability through cost reductions and improved soil health.
Balancing Direct Payments with simplification and Structural reform
Rudolf MÖGELE, former Deputy Director-General at DG AGRI and Honorary Professor at the University of Würzburg, brought a pragmatic perspective to the discussion, highlighting budgetary constraints, structural adjustment, and the need for genuine simplification. Professor MÖGELE stressed that the future of direct payments must align with very clear objectives and warned against policies that slow down necessary structural changes in the European agriculture system. He supported an improved targeting of funds, not simply shifting payments from large to small farms but also ensuring that they support resilience and long-term competitiveness. He also questioned whether income support and environmental measures should be separated, suggesting that shifting green incentives to the second pillar could restructure policy and reduce administrative complexity. On simplification, Professor MÖGELE drew from his extensive experience in EU policy, arguing that true reform is not about removing rules for political convenience but about making CAP more transparent and functional for both farmers and national administrations. He emphasised that without structural changes, direct payments risk losing both economic efficiency and public legitimacy.
The Need for Result-Based Indicators
Théo PAQUET echoed the importance of result-based indicators in CAP reform. He argued that current payments do not sufficiently reward environmental improvements and emphasised the importance of multi-annual contracts to support sustainable farming practices. PAQUET also highlighted the diversity of European farms, noting that while soil is a key indicator for some, water pollution and other environmental factors should be considered for more intensive farming sectors such as livestock production. He finally stressed the need for longer-term policies that allow farms to adapt to sustainable practices over time.
Overall, the discussions held at the EESC made clear that while direct payments remain essential, their structure must evolve to reflect new agricultural and environmental realities. Whether through soil-based indicators, multi-annual contracts, or a shift to performance-based incentives, the CAP must ensure that European farming remains both competitive and sustainable.
