27 March 2023
Share on

The agricultural sector plays an important role in reaching the European Union’s green and social ambitions. Apart from generating wealth and employment in Member States, the sector is key to a sustainable economy and the development of rural regions across Europe.

For this matter, a wide range of European grants and subsidies are currently available to improve the competitiveness of agricultural activities, increase productivity and efficiency, promote sustainable agriculture, and support rural development.

How are agricultural funds allocated?

These grants work as financial mechanisms of the Common Agricultural Policy (CAP), the main instrument of the EU for supporting the agricultural sector. Overall, CAP allocations for the period 2021-27 amount to €386.6 billion, summing up the initial EU budget for that period and the later injection under NextGenerationEU, the instrument adopted in 2020 for the recovery from the COVID-19 crisis.

This amount is distributed among the two pillars of the CAP: the European Agricultural Guarantee Fund (EAGF) and the European Agricultural Fund for Rural Development (EAFRD).

Sources of CAP allocations for 2021-27
Source: European Commission

Since the beginning of 2023, new CAP strategic plans are being implemented to allow a greater degree of flexibility between the EAGF and EAFRD funds, as well as to reflect the ambitions of the European Green Deal, with 40% of the total CAP expenditure being dedicated to climate action.

€95 billion to the European Agricultural Fund for Rural Development (EAFRD)

The European Agricultural Fund for Rural Development (EAFRD) counts on €95.5 billion to reinforce the EAGF measures by strengthening the social, environmental and economic sustainability of rural areas.

It ultimately aims to foster agriculture’s contribution to the EU’s rural development objectives, including improving the competitiveness of agriculture, encouraging sustainable management of natural resources and climate action, and achieving a balanced territorial development of rural economies and communities.

To that end, the EAFRD co-finances national and regional rural development programmes (RDPs), together with the national budgets of Member States. Moreover, the EAFRD also provides investment support for rural enterprises and projects through a variety of financial instruments, such as loans, guarantees or equity. The selected projects must improve the economic, social and environmental conditions in rural areas by:

  • Making the agriculture and agri-food sectors the progress needed for the European Green Deal to achieve ambitious targets in line with the new Biodiversity and Farm to Fork strategies.
  • Growing non-agricultural businesses that diversify rural economies, such as rural tourism, artisanal production, and renewable energy projects.
  • Generating local food systems that promote the production and consumption of high-quality, locally-produced food.
  • Developing conservation projects, agroforestry, and organic farming, as well as renewable energy projects that promote the use of clean and sustainable energy sources in rural areas.

€291 billion to the European Agricultural Guarantee Fund (EAGF)

With a €291.1 billion budget, the European Agricultural Guarantee Fund (EAGF) provides financial assistance to rural development projects and to farmers, while also promoting sustainable agriculture practices.

It supports a range of activities, including crop production, livestock farming, and forestry, as well as investments in the modernization and diversification of agricultural activities, and the development of rural tourism and agro-food businesses.

The funds will be distributed as follows:

  • €21 billion will fund measures to support and stabilise agricultural markets, following the guidelines of the Common Market Organisation (CMO). This includes intervention buying, private storage grants, sector-specific supports, and exceptional market disturbance measures, as well as the EU school fruit, vegetables and milk scheme.
  • €270 billion will be provided to farmers for income support schemes, including a basic payment scheme, a payment for sustainable farming methods and a payment for young farmers, all subject to compliance with EU rules on food safety, environmental protection, and animal welfare.

FI Group has 20 years of experience and wants to accompany you on the new NextGenerationEU path. Our experts are at your disposal to analyse how your project fits into the NextGenerationEU European recovery fund and to take the next steps together with you. Contact us.

Marina Marcos

× How can I help you?