EU Budget Dispute Pits Northern Countries Against Major Olive Oil Producers
Germany and five other EU countries are pushing for a smaller budget, while 17 member states warn that further reductions in agricultural funding would threaten farmers.
The European Union’s next long-term budget, initially proposed at just under €2 trillion, faces significant cuts that could further reduce funding for the bloc’s farmers.
Following pressure from Germany and other EU member states, Ireland, which currently holds the bloc’s rotating presidency, has proposed reducing expenditures for 2028 to 2034 by €159 billion, or nearly eight percent.
This is not a time for Europe to lower its ambitions.
The proposed reductions could also affect funding for farmers under the EU’s next Common Agricultural Policy (CAP), adding to concerns over declining agricultural support.
Germany leads a coalition of six countries known as the “frugals,” which also includes Denmark, Sweden, the Netherlands, Austria and Finland. Together, the six countries contribute about 40 percent of the EU’s budget.
In a letter to the Irish government, the six countries’ leaders argued that the next EU budget should be set at a level that “can realistically be financed.”
They also called for funding to be redirected from traditional spending areas, including cohesion and agriculture, toward other priorities across the 27-member bloc.
“The funding should be focused on common investment in security and defense, competitiveness, innovation and the fight against irregular migration,” the letter said.
Under the proposed 2028–2034 EU budget, agricultural funding would be incorporated into a broader National and Regional Partnership (NRP) Fund worth €865 billion.
Of that amount, €295.7 billion would be earmarked for direct payments to farmers, substantially less than the €386.6 billion allocated to agricultural subsidies under the current 2021–2027 CAP.
If the proposed eight-percent reduction in the overall EU budget is adopted, agricultural funding is expected to fall by nearly three percent, continuing a decades-long decline in the CAP’s share of EU spending.
In the 1980s, agricultural spending accounted for about 70 percent of the bloc’s budget. That share has since fallen to approximately 30 percent.
The proposed cuts have also exposed divisions between northern EU countries seeking to restrain spending and southern and eastern member states seeking to preserve agricultural and regional development funding.
A group of 17 southern and eastern member states, including Spain, Italy, Greece and Portugal — the EU’s largest olive oil producers — has opposed the reductions advocated by the frugal countries.
Known as the “Friends of Cohesion,” the group has urged Ireland’s EU presidency to maintain agricultural funding under the next CAP.
“This is not a time for Europe to lower its ambitions,” the countries wrote in a joint letter to the Irish government. “Cohesion Policy and the Common Agricultural Policy are long-standing policies, but their objectives are as relevant as ever.”
The group’s position was also outlined in a statement published by the Slovenian government.
European Commission President Ursula von der Leyen has also cautioned against substantial reductions to the bloc’s next long-term budget.
“I would like to caution against large cuts,” von der Leyen said in an address to the European Parliament in Strasbourg. “It would risk cutting deep into critical priorities that we all together have agreed on.”
The budget debate comes as European farmers face growing pressure from declining agricultural prices and rising production costs.
According to Eurostat, prices received by farmers for agricultural products fell by 5.8 percent in the second quarter of 2026 compared with the same period a year earlier, marking the third consecutive quarter of year-on-year declines.
Meanwhile, average prices for agricultural inputs, including energy, animal feed and fertilizers, rose by 4.7 percent over the same period, further squeezing farm margins.
Political analysts have suggested that EU officials are seeking to finalize an agreement on the next long-term budget before the end of the year, ahead of elections scheduled in several member states in 2027.
“They want to make the deal before the presidential election [in France] because they know that something might be changing,” an official from France’s far-right opposition National Rally party said.