The European Commission has unveiled a draft for the 2027‑2033 Common Agricultural Policy that would introduce a maximum limit of €100,000 per year on direct payments to the largest agricultural operators. Under the proposal any applicant receiving more than that amount would see its subsidy reduced to the ceiling, while lower bands would face percentage cuts.

How the degressivity would work

The draft splits direct payments into four tiers. Payments up to €20,000 would be paid in full. Those between €20,000 and €50,000 would be cut by 25 per cent, between €50,000 and €75,000 by 50 per cent, and between €75,000 and €100,000 by 75 per cent. Any amount above €100,000 would be excluded entirely.

Impact on the biggest recipients

Agrofert, the Czech agribusiness owned by former prime minister Andrej Babiš, currently receives more than CZK 1.5 billion – roughly €62 million – in direct payments each year. If the ceiling is adopted the company’s subsidy would be reduced to €100,000, a cut of more than 99 per cent.

Agrofert was moved into a trust fund at the end of February to separate it from Babiš’s personal assets while he remains in office. The move has drawn attention as the Czech Republic prepares to hold the rotating presidency of the Council of the European Union in the second half of 2024.

Czech government’s stance

Martin Šebestyán, the Czech agriculture minister, has signalled that his government will oppose a compulsory degressivity system. He argues that a single cap does not reflect the structural differences between member states and that cutting subsidies could push food prices higher, especially because the majority of Czech milk is produced on farms larger than 1,000 ha. Šebestyán, who previously led a lobby group for large Czech agribusinesses, warned that the proposal would damage the competitiveness of Czech farms.

The minister’s position is backed by the Czech agricultural lobby, which insists that any reduction should be voluntary for each member state rather than imposed centrally.

Reactions from Brussels and the wider sector

Supporters of the draft argue that the scheme would free billions of euros for younger farmers and for measures that improve climate resilience, aligning with EU sustainability goals. They also contend that concentrating subsidies on a few large firms runs counter to the aim of a diversified, low‑carbon agricultural sector.

Large agribusiness associations across Europe have expressed strong opposition, saying the ceiling would penalise efficiency and hinder investment in modernisation. The European Federation of Farmers’ Associations (COPA‑COGECA) welcomed the emphasis on generational renewal and suggested the proposal could help close the gap between smallholders and corporate farms, noting that the current system inflates land prices and makes entry for newcomers more difficult.

Political dynamics ahead of the summit

The European Parliament’s Committee on Agriculture and Rural Development has called for a stricter degressivity schedule and suggested that the €100,000 ceiling could be lowered further. The draft will be examined at an upcoming CAP reform summit in Brussels, where the Council of Ministers, the European Parliament and the Commission must reach an agreement before the new budget period is set.

Former prime minister Andrej Babiš has allied with five other agriculture ministers to block the reform, arguing that the Czech model of large‑scale dairy production would be especially vulnerable. Babiš is keen to protect the profitability of his former agribusiness while influencing EU policy.

If the ceiling is adopted, large agribusinesses such as Agrofert may need to adjust their strategies, possibly scaling back expansion or seeking private financing to replace lost public funds. The outcome could reshape the competitive environment for Czech farmers, potentially giving smaller producers greater access to funds while pressuring large firms to diversify away from intensive livestock operations.

The debate highlights the broader challenge of balancing efficiency, food security and social equity in EU agricultural policy, with stakeholders monitoring the negotiations closely because the final CAP will affect farm incomes, rural jobs, land prices and climate targets.