Innovation as a Cornerstone of the Next Common Agricultural Policy

The forthcoming reform of the Common Agricultural Policy (CAP) signals a further shift in how innovation is conceived, financed, and governed within EU agricultural and rural policy. Innovation is a central lever to enhance competitiveness, sustainability, resilience, and fairness across the agri-food system. This shift is reflected both in the proposed budgetary architecture of the next Multiannual Financial Framework (MFF)[1] and in the integration of the CAP within the new National and Regional Partnership Plans (NRPPs)[2].

Budget for CAP post 2028

The proposed National and Regional Partnership Fund will amount to EUR 865 billion.

At least EUR 293.7 billion will be dedicated to support farmers’ incomes. About EUR 453 billion will be dedicated to strengthen income support measures, innovation, and rural initiatives such as LEADER and local cooperation. EUR 6.3 billion will be available, through the Unity Safety Net, to handle market crises.

The proposed MFF allocates EUR 409 billion to competitiveness, including EUR 234.3 billion for the new European Competitiveness Fund (ECF)[3] and EUR 175 billion for the next Horizon Europe programme—almost double its current budget[4]. The tight linkage between Horizon Europe and the ECF marks a structural innovation in EU policymaking: research, innovation, scale-up, manufacturing, and market deployment are designed as a continuous investment journey. This approach directly addresses long-standing gaps between research outcomes and real-world uptake, which have traditionally constrained innovation in agriculture and rural areas.

The ECF and the competitiveness component of Pillar II of the next Horizon Program will be defined along found strategic policy windows, respectively dedicated to I) Clean Transition and Industrial Decarbonisation; II) Health, Biotech, Agriculture and Bioeconomy; III) Digital Leadership; IV) Resilience and Security, Defence Industry, and Space. As for agriculture and the agri-food sector, the policy window “Health, Biotech, Agriculture and Bioeconomy” is of particular relevance. With a combined allocation of EUR 40 billion, split almost evenly between Horizon Europe and the ECF, this window prioritizes technologies, services, and business models that can strengthen farm competitiveness, reduce environmental pressures, and enhance food security. The flexibility embedded in the ECF allows rapid responses to emerging risks, technological opportunities, and market disruptions—an essential feature in a sector increasingly exposed to climate, geopolitical, and economic uncertainty[5]. Within this framework, the European Competitiveness Fund introduces new instruments with direct relevance for agri-food innovation.

These include support for scaling up single market value chains, backing EU tech frontrunners and their SME suppliers, financing production ramp-up actions, and providing top-ups for Important Projects of Common European Interest [6](IPCEIs). Through the InvestEU portal[7] that is connecting investors and project promoters and organizing the info in an EU-wide database of investment opportunities available within the EU, the ECF will also support start-ups and scale-ups in agriculture, forestry, and food systems. The continued role of the European Investment Bank further reinforces the capacity to crowd in private capital and retain high-potential innovations within Europe.

CAP itself remains a major anchor of stability

Under the NRPP proposal, EUR 293.7 billion remain ringfenced for farmers’ income support, while Member States gain access to substantial non-ringfenced resources—EUR 453 billion—to address CAP priorities through integrated programming. Additional flexibility, including early access to mid-term review funds and a strengthened Unity Safety Net, enhances the capacity to support innovation-oriented investments in times of crisis[8]. The Commission proposed amending the NRP Regulation to introduce a dedicated rural target, requiring at least 10% of NRP funding (after deducting CAP income support) to be allocated to rural areas, creating space for territorially coordinated innovation in infrastructure, services, and value chains. This is likely to have very diverse impacts across Member States, with gains more pronounced for recently acceded countries (e.g. Slovakia, Poland and Hungary) and smaller increases for the older MSs[9].

CAP, Horizon Europe, and the European Competitiveness Fund

Another important aspect of the new CAP will be the exploitation of synergies between CAP, Horizon Europe, and the European Competitiveness Fund. For example, research funded under Horizon Europe can deliver climate-resilient crops, digital decision-support tools, precision farming technologies, or low-input production systems. Synergically, the ECF can support their testing, industrial scaling, and market deployment, while NRPPs and CAP measures enable local uptake and diffusion. These integrated territorial approaches will align farm-level support with wider economic, environmental, and social objectives.

The proposed changes foster new forms of cooperation, governance, financing, and skills development. By embedding innovation and leveraging a more integrated EU budget, the future CAP has the potential to move beyond incremental adjustment and become a strategic driver of structural change in European agriculture and rural areas.

[1] Details are provided on the website of the EU commission: https://commission.europa.eu/strategy-and-policy/eu-budget/long-term-eu-budget/eu-budget-2028-2034_en

[2] Interested readers may delve on the proposal put forward by the Commission: https://www.europarl.europa.eu/thinktank/it/document/EPRS_BRI(2026)782606

[3] Details available here: https://commission.europa.eu/publications/european-competitiveness-fund_en

[4] More details here: https://research-and-innovation.ec.europa.eu/news/all-research-and-innovation-news/horizon-europe-2028-2034-twice-bigger-simpler-faster-and-more-impactful-2025-07-16_en

[5] Comparisons could and should be done with programs developed in other advanced economies to avoid drawbacks that are repeatedly shaping the evolution of publicly-supported risk management programs.

Santeramo, F. G., & Ford Ramsey, A. (2017). Crop Insurance in the EU: Lessons and Caution from the US. EuroChoices, 16(3), 34-39.

Cordier, J., & Santeramo, F. (2020). Mutual funds and the Income Stabilisation Tool in the EU: Retrospect and Prospects. EuroChoices, 19(1), 53-58.

[6] The IPCEIs may represent a significant contribution to competitiveness for the European Union as it connects knowledge, expertise, financial resources, and economic actors, enhancing positive spillovers. More details on IPCEI are provided by the Commission: https://competition-policy.ec.europa.eu/state-aid/ipcei_en

[7] The portal is accessible at this link: https://investeu.europa.eu/investeu-programme/investeu-portal_en

[8] Importantly, the Unity Safety Net will be devoted to stabilizing agricultural markets in times of market disturbances, while it will not compensate for direct losses suffered by farmers due to natural disasters. The effects of natural disasters. As established in the Article 34 of the European Fund Regulation, Member States will be allowed to amend their NRP Plans to provide support in response to natural disasters. Further details are explained in this blog post: https://capreform.eu/changes-proposed-to-the-management-of-agricultural-crises/

[9] Alan Matthews, member of the FSR Advisory Board, offers interesting insights on these aspects in one of his recent blog posts: https://capreform.eu/potential-increase-in-cap-funding-in-next-mff/