Published by Global Banking & Finance Review®
Posted on July 14, 2025
2 min readLast updated: January 22, 2026
Add as preferred source on GoogleThe EU proposes capping farming subsidies to support smaller farmers, redistributing funds to promote sustainability. Approval is required from EU countries and Parliament.
By Kate Abnett
BRUSSELS (Reuters) -Brussels is set to propose capping the EU subsidies a single farmer can receive each year, in an attempt to redistribute the bloc's massive farming subsidies in favour of smaller businesses, a draft European Commission proposal seen by Reuters, showed.
The document is part of the Commission's proposal for the European Union's next budget, due to be published on Wednesday. The EU's mammoth Common Agricultural Policy (CAP) of farming subsidies is today worth around 387 billion euros ($451 billion), or a third of the bloc's entire budget for 2021-2027.
The Commission proposal would attempt to redistribute more subsidies to smaller farmers, by capping at 100,000 euros per year the area-based income support they can receive, the draft said.
It would also progressively reduce the amount paid out per hectare, for those receiving the most.
For example, farmers receiving area-based income support above 20,000 euros per year would have their subsidies above this level cut by 25%, payments above 50,000 euros per year would be cut by 50%, and payments above 75,000 euros by 75%, the draft said.
This is not the first time Brussels has attempted to cap subsidies, to limit payouts to big landowners and agro-industrial firms. In the previous CAP, roughly 80% of payments went to 20% of the beneficiaries.
Past proposals to do this were rejected by EU governments concerned about their farming industries. EU countries and the European Parliament must approve the new budget for 2028-2034.
A Commission spokesperson did not immediately respond to a request for comment on the draft, which could change before it is published.
The draft would set overarching EU-wide green targets that farmers must meet to receive subsidies, while obliging countries to set additional, locally-tailored conditions.
"The new CAP is to be a simpler and more targeted Union common policy, with more flexibility for farmers and a shift from requirements to incentives," the draft said.
The draft did not confirm the size of the new CAP. Its core would still be direct income support for farmers, which would be "ring-fenced" - meaning it cannot be spent on anything else.
The proposal would merge the CAP's current two-pillar structure into one overarching fund - a move opposed by the influential European farmers' lobby COPA-COGECA.
($1 = 0.8574 euros)
(Reporting by Kate AbnettEditing by Tomasz Janowski)
The proposal suggests capping the EU subsidies a single farmer can receive at 100,000 euros per year for area-based income support.
Farmers receiving more than 20,000 euros per year would see a 25% cut on amounts above that level, while those over 50,000 euros would face a 50% reduction.
The goal is to redistribute subsidies in favor of smaller farmers and limit payouts to large landowners and agro-industrial firms.
The new budget proposal for 2028-2034 must be approved by EU countries and the European Parliament.
The new CAP aims to be simpler and more targeted, merging its current two-pillar structure into one overarching fund.
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