The term of office of the previous Commissioner for Agriculture Janusz Wojciechowski 2019-2024 was dominated by crises, including the COVID pandemic, the impacts of the Russian invasion of Ukraine on energy and fertiliser prices, and the impacts of Ukrainian exports of grains and oilseeds on the markets of neighbouring countries. Following the announcement to launch a Strategic Dialogue on the Future of Agriculture in December 2023, it was thus not surprising that Wojciechowski speculated on the need for a common crisis intervention instrument in the future CAP with a reinforced budget, proposing that this should form a “third pillar” of the CAP.
Since then, the Commission has proposed a new architecture for crisis management in the CAP, first in its legislative proposal on CAP simplification in May 2025 and, more recently, in its legislative proposal for the European Fund accompanying its MFF proposal published in July 2025. This post reviews the Commission proposals highlighting the main innovations and assesses the likely performance of the proposed new architecture.
Experience with the use of the agricultural crisis reserve
The EU’s toolbox to respond to crises is set out in the Common Market Organisation Regulation (EU) 1308/2013 and is quite comprehensive. The Regulation provides for market intervention measures (public intervention and private storage aid) to stabilise prices for farmers, as well as provisions to manage crises through sectoral interventions that may be programmed in national CAP Strategic Plans (for example, in the fruit and vegetable sector). In addition, the Commission has broad powers under Articles 219 to 222 of the CMO Regulation to take exceptional measures, as follows:
- market disturbance (Article 219);
- animal diseases, plant pests, and the loss of consumer confidence due to risks to public, animal or plant health (Article 220);
- specific problems (Article 221);
- severe imbalance in markets (Article 222).
Prior to 2023, when financing of these measures was needed, support could be mobilised by using financial resources under the ‘reserve for crises in the agricultural sector’. This funding mechanism required corresponding cuts in direct payments to farmers and its use required a transfer decision by the Council and European Parliament. This reserve was never used until March 2022, when exceptional adjustment aid to producers affected by the consequences of the war in Ukraine was adopted. The support package amounted to EUR 500 million, EUR 350 million of which was financed from the 2022 crisis reserve. Previously, in all other cases, funding for exceptional measures was made available from other resources under the European Agricultural Guarantee Fund (EAGF) sub-ceiling, without the activation of the crisis reserve.
Starting in 2023, the CAP Horizontal Regulation (EU) 2021/2116 established an agricultural reserve of at least EUR 450 million which was set up at the beginning of each year of the period 2023-2027. Specifically, Article 16(1) provides for a Union reserve “to provide additional support for the agricultural sector for the purpose of market management or stabilisation and to respond promptly in the case of crises affecting the agricultural production or distribution.” The amount for the agricultural reserve is entered directly in the EU budget, making funds from the reserve directly available. A higher amount may be set in the EU budget. This reserve is used to finance both market intervention measures as well as exceptional measures. The agricultural reserve is established by first using the remaining availabilities from the previous year’s reserve not used and carried over, then availabilities under the EAGF sub-ceiling and, if needed, and only as a last resort, by applying financial discipline.
The Commission published a report on The use of crisis measures adopted pursuant to Articles 219 to 222 of the CMO Regulation in January 2024. Between January 2014 and the end of 2023, the Commission reports that 63 exceptional measures were adopted. It noted that exceptional measures were mainly used to help farmers in relation to the damages they suffer as a consequence of market disturbances or issues with animal or plant health. They also, albeit less frequently, helped farmers to address the negative impacts of extreme adverse weather events on their economic returns.
In addition to these EU measures, natural disaster aid can be provided by Member States through state aids. A characteristic of natural disasters is that they tend to be regionally specific. The Agricultural Block Exemption Regulation lays down the conditions under which Member States can provide aid to make good the damage caused by adverse climatic events which can be assimilated to a natural disaster (Article 25) and aid for the costs of prevention and eradication of animal diseases or plant pests and aid to make good the damage caused by animal diseases or plant pests (Article 26). For natural disasters due to adverse climatic events, it is sufficient that the competent authority of the Member State declares a natural disaster and there is a direct link with the damage suffered by farmers, and aid should be limited to compensating for the loss of income and the cost of material damage. Aid to compensate for losses due to animal or plant diseases is intended to cover the loss of income due to quarantine restrictions or to compensate for the value of animals slaughtered or culled or that have died, or plants destroyed, due to the disease or pest or control and eradication measures.
The CAP Simplification Regulation May 2025
Despite the conclusion in its 2024 report on the use of crisis measures, the Commission took a different line in its CAP Simplification proposal in May 2025. It now argues, perhaps based on its experience in 2024, that crisis payments experience had shown that the agricultural reserve is predominantly used to address natural disasters and adverse climate events, although its primary objective is to help farmers in case of market disturbance.
As set out in Recital (61) to the draft Simplification Regulation:
Experience with the implementation of the agricultural reserve has shown that it is valuable in case of crisis in order to offer support to farmers affected and to contribute to the return of markets to a better balance. However, in the past years it was increasingly used for alleviating the situation of the farmers suffering direct losses due to natural disasters, adverse climatic events or catastrophic events although its intended original purpose as financing market instrument was to focus on compensating and mitigating the impacts of market disturbances. In view of the mounting challenges faced by the Union agricultural sector, including trade tensions, geopolitical uncertainty and increased indirect impact of animal health issues on market balance, it appears justified to refocus the reserve on its original purpose. Compensations to farmers for direct effects of natural disasters, adverse climate events or catastrophic events, such as those resulting in physical losses of plants, animals and products thereof should be addressed by Member States who are in charge of developing robust risk and crisis management strategies with the financial support of their CAP Strategic Plans including the new instruments established by this Regulation. Measures to balance the negative impact on farmers generated by market disturbance such as those affecting prices, costs or sales, also when they are generated as indirect effects of natural disasters, adverse climate events or catastrophic events, should continue to be financed by the agricultural reserve. (bolding added)
The Commission therefore proposed to clearly limit the use of the agricultural reserve by amending Article 16(1) of the Horizontal Regulation (EU) 2021/2116. The proposed amendment would add to this Article “The reserve shall not be used for measures providing support to farmers affected by natural disasters, adverse climatic events or catastrophic events. However, the reserve can be used for measures addressing market disturbance caused by natural disasters, adverse climatic events or catastrophic events including measures adopted pursuant to Articles 219 and 220 of Regulation (EU) No 1308/2013”-
Instead, the draft Regulation proposes to introduce a new intervention of complementary crisis payments to farmers. Complementary crisis payments are defined as “direct payments to farmers following natural disasters, adverse climatic events or catastrophic events” (Amendment 7 to the CAP Strategic Plans Regulation (EU) 2021/2115). They are specified in two new Articles 41a and 78a to be added to the CAP Strategic Plans Regulation (Amendment 11). Article 41a permits crisis payments to farmers following natural disasters using direct payments while Article 78a grants the same permission using EAFRD funds. Their purpose is to allow Member States to reserve a certain share of both direct payments and EAFRD funding for these complementary crisis payments.
The Articles can be triggered when a Member State formally recognises that a natural disaster, adverse climatic event or catastrophic event has occurred and that these events have caused damage resulting in the destruction of at least 30% of the average annual production of the farmer in the preceding three-year period, or a three-year average in the preceding five-year period, excluding the highest or lowest entry. Losses can be calculated at the holding level, at the level of the holding’s activity in the sector concerned or in relation to the specific area concerned.
To ensure that sufficient financing remains available to deliver on the other CAP priorities, this share is limited to a maximum annual amount available per Member State corresponding to 3% of the total of direct payments and EAFRD funding per year. In order to incentivise Member States to privilege the use of the direct payments instrument in Article 41a, the maximum annual amount that can be reserved by a Member State for this type of intervention can correspond to 4% of the total of direct payments and EAFRD funding per year, if the Member State decides not to provide support for crisis payments using EAFRD funding under Article 78a of that Regulation. The maximum amounts that can be allocated are set out in an Annex to the draft proposal. The new rules would apply to financial years 2026 and 2027.
The attitude of the co-legislature to these proposals is not yet clear. The Council discussions on the topic are not yet available to the public, while in the Parliament COMAGRI only appointed its rapporteur for the file in June.
The Unity Safety Net proposed as part of the EU Facility
Nonetheless, the distinction between the two types of crisis payments is now carried into the new CAP proposal (although the relevant Articles are included in the draft European Fund Regulation). There will be separate provisions for market crises (which will be addressed by the Unity Safety Net), on the one hand, and extreme weather crises (natural disasters more generally, including pest and animal disease losses), on the other hand.
The idea of a Unity Safety Net was proposed in the Commission’s Vision for Agriculture and Food in the following terms:
Where our trade partners resort to unfair competition and unilateral actions that unlawfully target our agri-food sector or that of individual Member States with the aim to divide us as a Union, the EU will use all protective tools at its disposal. The Union will develop (in 2025) an ambitious Unity Safety Net for the EU agri-food sector.
The Unity Safety Net was then launched in the Commission’s legislative proposal for the European Fund, the National and Regional Partnership Fund. Its rationale was set out in Recital 41 in that Regulation.
(41) A Unity Safety Net should be established to stabilize agricultural markets in times of market disturbances. It should be used to address periods and threats of market imbalance, including those caused by issues related to animal or plant health, which impact the prices of agricultural products and the costs of inputs in the whole or part of the internal market. In order to safeguard the Union’s strategic autonomy in food supply and ensure food security, the funding allocated for market support through the Unity Safety Net should take into account mounting uncertainties in agricultural markets and increased indirect impact of animal health issues on market balance. The Union safety net does not aim to compensate for direct losses suffered by farmers due to natural disasters. (my bolding).
(I note in passing that calling it the Union Safety Net rather than the Unity Safety Net makes much more sense, and one wonders if this was a misprint in the Vision Paper where the fund was first mentioned. This is surely something that the legislative process could rectify!)
Article 26 of the European Fund Regulation provides that the Unity Safety Net will be financed from the new EU Facility which is one of the three pillars of the new European Fund. The rationale for the EU Facility is to increase flexibility and to cater for unforeseen crises, as well as to support projects with a transnational dimension with a high Union added value. According to Part 3 of the proposal addressing financial aspects, expenditure under the EU Facility is divided into five budget lines, as shown in Table 1. Union actions are assigned €63.2 billion while the budget cushion for emerging challenges and priorities is assigned €8.7 billion over the MFF period. Making provision for support for the accession of new Member States is one of the new priorities that is specifically mentioned for the budget cushion.
The Union actions that can be financed are set out in Annex XV to the draft Regulation. There are fourteen in all: from an agricultural perspective, they include support for measures to eradicate, control and monitor animal diseases, zoonoses and plant pests; measures aiming to address antimicrobial resistance; measures to promote sustainable food production and consumption (all combined in one action); support for collecting farm-level data under the Farm Sustainability Data Network Regulation as well as financing information and promotion measures for agricultural products (both combined in another action). In addition, support for LIFE actions including strategic nature projects and implementation and enforcement of environmental and climate legislation and policies, is a separate action. This includes support and empowerment of networks and civil society organisations as well as other projects of Union interest contributing to the implementation of environmental law and policies. These actions will compete with others listed in Annex XV for the limited budget commitment under the ‘Other Union actions’ heading.
Source: Extracted from Commission, Proposal for a Regulation establishing the European Fund COM(2025) 565.
Three of the fourteen Union actions have their own specific budget lines. €25.3 billion is allocated to migration, border management, visa and internal security, which complements the minimum ring-fenced amount of at least €34.2 billion for these objectives which Member States must allocate from the amounts they receive for their National and Regional Partnership Plans. The European Union Solidarity fund is allocated €20.1 billion intended to complement Member State resources in dealing with catastrophes and natural disasters. Specifically, action (i) in Annex XV is intended to “address urgent and specific needs as a response to a crisis situation such as major or regional natural disaster, and foster repair and recovery in view of increasing resilience following a crisis”.
Finally, €6.3 billion (€0.9 billion annually) is allocated to the Unity Safety Net to deal with the fallout from disruptions to agricultural markets under action (j) “to respond to market disturbances and stabilise agricultural markets through measures adopted pursuant to Articles 8 to 21 of Regulation (EU) No. 1308/2013 and exceptional measures adopted pursuant to Articles 219 to 222 of that Regulation”. This is vastly greater than the sum available at EU level to address agricultural market crises under the current CAP as the annual allocation cumulates over time if it is not used. In the current CAP, the obligation is to ensure that the amount of €450 million (in 2018 prices) is available in the budget at the beginning of each year. Readers with a long memory will recall the promise made by Commissioner Hogan in June 2019 when EU Commissioner for Agriculture to make available a €1 billion transition fund for European farmers to help adjust to market changes caused by the Mercosur trade deal. The Unity Safety Net delivers on this and more.
The impact of natural disasters
While EU funding for market crises has received a marked increase, what is now proposed for natural disasters which are excluded from financing from the Unity Safety Net? Here we can distinguish between the impacts of slow-onset climate change due to shifts in average temperature and precipitation conditions, and the impact of climate change in modifying the intensity, frequency, and distribution of extreme events.
Floods are the most common natural disasters in Europe (EEA), but for agriculture the biggest threats come first from droughts, which drive more than 50% of climate risk across the EU, followed by excessive rainfall and frost/hail events contributing roughly equal losses. (DG AGRI and EIB, 2025). Drought, which is often accompanied by heatwaves, is a particularly prominent source of yield losses in southern and central Europe, but it is also significant in northern and maritime western regions. By 2050, the most severe increase in drought risk is expected in Spain, Italy and Greece with more than nine times as many days of severe drought conditions each year, under the SSP2-4.5 warming scenario compared to 1990. Up-to-date information on drought conditions is provided monthly by the JRC European Drought Observatory.
The EEA calculates annual economic losses caused by weather- and climate-related extreme events in EU Member States (Figure 1). The data are classified by type of event (meteorological events such as storms and hail, hydrological events such as floods, and climatological events such as droughts, heatwaves and forest fires). The data come from the CATDAT database maintained by the private research company RiskLayer and it is not possible from the published data to construct a similar chart just for agricultural losses alone.
Source: EEA 2025
The data show a steady increase in the value of economic losses over time (see Kron et al, 2019 for a similar conclusion using the Munich Re NatCatSERVICE database). This also resonates with recent agricultural experience. Brás et al. (2021) show that the severity of heatwave and drought impacts on EU crop production has roughly tripled over the last 50 years, from -2.2% (1964–1990) to -7.3% (1991–2015). The trend in drought conditions defined as the annual deficit in soil moisture due to precipitation shortages can be followed in the EEA’s drought indicator (Figure 2). While the 2018 drought was seen as a wake-up call, this was followed by the mega-drought and extreme heatwave in 2022 and more drought conditions in 2023 particularly in the Baltic states, Poland and Spain. Floods, while often more localised, have also caused catastrophic damage in specific regions (2021 Germany/Benelux, 2023 Slovenia and central Greece).
Source: EEA, 2024.
The DG AGRI and EIB (2025) study on insurance and risk management tools for EU agriculture estimates likely economic losses from climate-related agricultural risks. It calculates two indicators. One is the Annual Average Loss (AAL) which the report estimates currently at €28.3 billion or around 6% of annual EU crop and livestock production. This figure includes all losses and is the average of many years with relatively low losses, the few years with severe losses and the infrequent years with catastrophic losses. It also calculates that the Probable Maximum Loss for the EU in a catastrophic year (2% probability) could amount to €57.5 billion (€35.1 billion for crops and €22.4 billion for livestock). It compares this to the estimated losses for crops only in the 2022 mega-drought year of between €25-30 billion. Based on its climate modelling, the report estimates that the AAL could increase by 40% by 2050 to reach €40.1 billion while the PML for crops alone could increase from €35.1 billion to €51.0 billion in its SSP2-4.5 scenario (the report also includes numbers for a SSP2-8.5 scenario which it describes as a business-as-usual scenario which it definitely is not, and I do not reproduce those figures here).
How does the MFF proposal address natural disaster risks in agriculture?
The proposed provisions to assist Member States to respond to crises due to natural disasters are set out in Article 34 of the European Fund Regulation. This Article allows Member States to amend their NRP Plans to provide support in response to natural disasters [measures of a similar nature to those referred to in paragraph 1 point (i) of Annex XV which sets out the fourteen actions that can be supported by the EU Facility]. It also allows Member States to provide crisis payments to farmers that are affected by natural disasters and to support investments in the restoration of agricultural potential, provided that they were recognised as such by a competent public authority of the Member State. There are further provisions regarding crisis aid to farmers in Article 38 of the Regulation.
To understand this Article we must also take note of Article 14 on Budgetary Commitments which introduces a flexibility resource which plays a crucial role. We should also recall that the EU Facility contains a stand-alone budget line for the European Solidary Fund (see above) with a commitments appropriation of €20.1 billion intended to complement Member State resources in dealing with catastrophes and natural disasters.
Article 14 first sets out a progressive and front-loaded allocation of funds for Member State Partnership Plans throughout the programming period (starting at 15.8% of the total in 2028 and ending with 11.7% of the total in 2034). As something new, 25% of a country’s total allocation is assigned to a flexibility reserve (however, CAP income support interventions apart from investment aids are excluded from this amount). There are specific limitations on how the flexibility amount can be programmed. Up to one-fifth can be requested by a Member State to address natural disasters including those affecting farmers in the first three or so years with any balance to be programmed as part of the Plan’s mid-term review. Another three-fifths can also be programmed as part of the Plan’s mid-term review and can be used if necessary to address new priorities. The final one-fifth can only be requested by Member States as of 2031 to address natural disasters in the following three years, with any unprogrammed amount by June 2033 then available for any amendment of the Plan.
We can make some back-of-the envelope estimates of the potential funds that could be made available by Member States under the flexibility mechanism for interventions to address natural disasters. My reading of Article 14 is that CAP income support (apart from investment aids) and Interreg funding is excluded from the calculation of the flexibility amount. Article 10 of the European Fund Regulation sets out that the total resources of the Fund should be €782.9 billion while the minimum ring-fenced amount for CAP income support (excluding fisheries) is €294 billion, thus leaving €489 billion. We assume that one quarter of this is allocated to the flexibility amount over the 7-year period or €122 billion. This is a significant tranche of the Fund that cannot be programmed at the outset to address cohesion, social, rural and security objectives.
One-fifth of this amount, or €24.5 billion, is withheld to be used only to address crisis situations in the first three or so years of the MFF, with any unused amounts then available for programming if necessary for new priorities at the mid-term review in 2031. At that point, another one-fifth, or €24.5 billion, can then only be called down by Member States to address natural disasters until June 2033, when any unused amounts can be reprogrammed for any amendment to the Plan.
We now turn to Article 34 to see how Member States can access these funds as well as the amount made available in the European Solidarity Fund in the EU Facility. This Article deals with how Member States may request to amend their Plans in case of crisis situations. Essentially, it proposes a layered approach. When a natural disaster occurs, Member States should first seek to amend their NRP Plan to free up resources to deal with it. Where the request for amendment exceeds 1% of the Union financial contribution under the Plan, the Member State may, in addition, request to programme up to 2.5% of the EU allocation to their Plan from their unprogrammed flexibility amount within the limits we have just described. Where the amount requested and available is not sufficient to cover the needs, then the Member State may request additional support from the European Solidarity Fund subject to the availability of funding. If the amount so made available is still insufficient to cover the needs, as a final step the Member State may receive additional support from the ‘budget cushion’ in the EU Facility subject to the availability of funding.
These are also the steps to be followed if a Member State wishes to provide crisis payments to farmers that are affected by natural disasters. However, steps 3 and 4 (i.e., recourse to the Solidarity Fund and the budget cushion in the EU Facility) are not available to fund crisis payments to farmers (Article 34(9)). Effectively, crisis payments to farmers are funded by the Member State itself from its European Fund allocation, first, by freeing up resources by amending its NRP Plan or, in a second step, by digging into its flexibility amount.
Article 38 sets out some additional conditions that must be met to trigger crisis payments to farmers following natural disasters and adverse climatic events. These effectively replicate the conditions proposed for the complementary crisis payments in the CAP Simplification Regulation proposed in May 2025. There must be formal recognition by a competent authority that a natural disaster or adverse climatic event (as defined by the Member State) has occurred, and that the event (or eligible measures to address animal or plant diseases or pests) have caused the destruction of at least 30% of the annual production of the farmer with various ways to calculate this loss allowed.
Conclusions
In this post, I have explored the evolution of Commission thinking around the funding of agricultural crisis measures for farmers. Currently, these consist of two instruments: the (limited) agricultural crisis reserve financed by the EU budget intended to fund measures to address market disruption under the Common Market Organisation Regulation, and the possibility for Member States to provide state aid from their own resources to address natural disasters and adverse climatic events. However, the Commission has become concerned that the agricultural reserve is increasingly being used to provide support to farmers in the aftermath of natural disasters.
It thus proposed in its CAP Simplification Regulation to restore the clear distinction between market crises and natural disasters. The agricultural reserve for the remaining years of this CAP (2026 and 2027) would only be used to address market disruption. However, some flexibility would be given to Member States to use some of their existing CAP budget, either for direct payments or rural development, to make crisis payments to farmers in response to natural disasters.
This philosophy has now been carried over to the European Fund Regulation. Payments to stabilise markets will be financed by the Unity Safety Net with a greatly increased budget compared to the agricultural reserve. The Commission’s Fact Sheet on the CAP suggests that the crisis reserve is doubled from €450 million to €900 million annually, but this seems to ignore that commitment appropriations for the Unity Safety Net that are not used are carried forward so that they add up to €6.3 billion over the MFF period (Article 31(9)), whereas it is sufficient to have €450 million or thereabouts in the reserve at the beginning of each financial year under the current CAP regime.
The Unity Safety Net is part of the EU Facility and will be implemented under shared management where it concerns the adoption of delegated or implementing acts under the CMO Regulation (Article 31(2)). A later paragraph in this article (Article 31(6) states that “Where the Union action is implemented in shared management, the Member State shall receive Union support for the implementation of that action, in addition to its financial contribution under Article 10 [Budget].”
This raises a problem for me. With the existing agricultural reserve, there is no requirement for a Member State contribution although Member States are usually permitted to add up to 200% to the EU contribution. But there is no obligation that this top-up should be taken from their CAP budget. The wording of Article 31(6) suggests that support from the Unity Safety Net will only be in addition to a financial contribution the Member State will make from its NRPF allocation. But while there is detailed guidance on how this should work in the case of natural disaster crises, there is no mention elsewhere that the Member State should contribute to market stabilisation. I am left with a question: are Member States expected to use their NRP funds if they want to request assistance from the Unity Safety Net? Is this why in Article 5 of the draft CAP Regulation the list of CAP interventions is extended to include ‘(s) crisis payments for farmers’, although this intervention is absent from the otherwise similar list of CAP interventions in Article 35 of the European Fund Regulation?
In the post, we also documented that natural disaster crises in agriculture are growing in importance driven by the increased frequency and intensity of climate-related events. Here the European Fund Regulation confirms the direction taken in the CAP Simplification Regulation that there will be no direct support from the EU budget to respond to these crises. Instead, the use of EU funds will be at best indirect, in that Member States are given the option of amending their NRP Plans to free up funds for crisis payments to farmers in the event of natural disasters. However, as using these funds for crisis payments has an opportunity cost for Member States (they are taken from other interventions that could have been financed under the NRP Plan), it is as good as saying that Member States are on their own when it comes to compensating farmers for natural disasters.
Given the frequency with which Member States have turned to help from the Commission from the agricultural reserve to help deal with natural disaster crises, I wonder if this division of responsibility will pass muster with the co-legislature? On the one hand, we have this enormous increase in the EU budget to finance measures to deal with market disruption (which may or may not also require national contributions in addition). On the other hand, the proposal says it is up to Member States themselves to compensate farmers for losses due to increasingly frequent natural disasters and adverse climatic events. I wonder if this will fly?
This post was written by Alan Matthews.
Photo credit: Flooded plains by the Storm Daniel near the town of Palamas, Thessaly, Greece © Makis Theodorou licensed under the Creative Commons Attribution-Share Alike 3.0 Unported, 2.5 Generic, 2.0 Generic and 1.0 Generic license.
O artigo foi publicado originalmente em CAP Reform.