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Brexit threatens to prune 100m euros in annual subsidies from Finnish farmers

The Finnish agricultural sector could lose as much as 100 million euros in aid every year when the UK leaves the EU. According to Agriculture Minister Jari Leppä, it’s too early to say how government will plug any post-Brexit funding gap.

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Image: Kira Hagsröm

The UK’s exit from the European Union could gouge a deep hole in agricultural subsidies Finnish farmers receive from the EU. According to Agriculture and Forestry Minister Jari Leppä, the annual support paid to Finland could plummet by as much as 100 million euros.

Leppä stressed that this is just an initial estimate of the Brexit impact. The UK has only just started negotiations on leaving the EU and the final price tag will only be known after the outcome of the talks. It now seems likely that the UK will finally leave the bloc in March 2019.

"We are talking about a very significant sum. Finnish farmers cannot be made to pay for the UK’s exit from the EU," the minister told Yle.

If agricultural subsidies were to shrink by 100 million euros it would cause a dramatic change in farmers’ fortunes.  According to the Agency for Rural Affairs, last year the EU paid out some 890 million euros in subsidies in Finland. The government coughed up another 1.5 billion or so in national support.

"Every euro to be cut also has a direct impact on the livelihoods of Finnish farmers and on agricultural profitability, which is already low now," Leppä noted.

Heavier burden for member states?

The level of agricultural subsidies was on the agenda last week when the European Commission presented its views on the impact of Brexit on the EU budget.

According to budget Commissioner Günther Oettinger Brexit will cause an annual budget shortfall of 10 or 11 billion euros. The total EU budget for last year was around 150 billion euros.

As a result of the UK’s departure from the bloc, EU officials will have to revisit agricultural subsidies – agriculture accounts for a 40-percent slice of the total EU budget.

The Commission believes that one option to plug the hole in its budget would be to shift a greater share of the burden for paying agricultural support to member states.

The agricultural sector lobby group MTK described the Commission’s suggestion as no more than a trial balloon, but very worrying nonetheless.

"It wouldn’t be a very reasonable solution for us. We thought that it was good to have a strong common agricultural policy and that means that funding should come from the EU budget," insisted MTK agricultural director Johan Åberg.

In the past, farmers were among those most fiercely opposed to Finland’s EU membership. However the MTK now says it believes that the level of agricultural support would be more predictable if it came from the EU budget than if it were to come from the Finnish government.

After years of economic downturn, the government has tightened its purse strings and there is no lack of candidates apart from farmers queuing for state subventions.

The situation is much the same across the EU. In the years ahead the bloc will face major spending outlays on areas such as terrorism prevention, migration and a common defence policy. The next budgetary period begins in 2021 and budget talks are already due to begin next winter.

Minister: Too early to comment

Minister Leppä said that it is too early to speculate about where the money will come from if government finds it has to boost spending on agricultural subsidies.

He added that government would first need information about the real impact of Brexit before planning negotiations about funding for the agricultural sector. Whatever comes out of the Brexit talks, Finland will need a plan premised on a cut in EU support.

"We will go through different alternatives but we have not made any decisions," the minister commented.

The MTK noted that agricultural funding from the EU is offset by the fact that Finland gets back some of its EU membership dues from the subsidies.

"Agricultural subsidies and agricultural development are the channels by which [Finland] gets back most of its membership dues. It’s difficult to see any other way to get that back. Membership fees will hardly fall," Åberg remarked.

Finland is already one of the EU’s net contributors -- member states that pay more to the union in membership than they get back. In January Finance Minister Petteri Orpo told Yle that Finland’s net payments must not increase as a result of Brexit.

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