Next EU Budget: Unlocking Investment in the Agricultural Transition – Key Takeaways from the European Parliament Panel

On October 2, 2025, Soil Capital co-hosted a timely event at the European Parliament in collaboration with the MEP Group on 'Climate Change, Biodiversity, and Sustainable Development'. The panel, "Unlocking investment in the agricultural transition – Aligning economic and environmental performance for farmers," brought together MEPs, European Commission experts, farmers, and industry leaders to discuss how to smarter use EU funds and align investment strategies to support farmers in the shift toward sustainability.

Here are the key takeaways from the discussion, framed for an audience focused on EU public affairs and the agri-food sector:

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1. The Financial Reality: Moving Beyond Subsidies to Incentives

A core theme was the shift required in how the Common Agricultural Policy (CAP) supports farmers. With the backdrop of the Multi-annual Financial Framework (MFF)—the EU’s long-term budget—and budget constraints, the panel stressed that the profitability of farming can't rely solely on subsidies.

• Farmer as Businessman: Farmer Romuald Carrouge highlighted that uncertainty in output and fluctuating input prices make transitioning to sustainable practices challenging. CAP support remains essential, especially for global competitiveness.
• The Commission’s Shift: Ms. Gaëlle Marion (DG AGRI, European Commission) emphasized that economic viability must go hand-in-hand with sustainability. She detailed the Commission's proposal to shift from obligations to incentives, granting Member States greater subsidiarity (flexibility) to design measures suited to local needs.
• Introducing 'Transition Payments': A crucial new concept discussed was “transition payments”. These are proposed as comprehensive, whole-farm support designed to help farmers undertake transformative changes in their production systems. Ms. Marion clarified that while there's no one-size-fits-all, this support must align with clear environmental and climate objectives.

EU Context Specific: The CAP, MFF, and DG AGRI

• CAP (Common Agricultural Policy): The EU’s policy for managing agricultural subsidies and rural development. It is the single largest spending area of the EU budget.
• MFF (Multi-annual Financial Framework): The EU's seven-year budget plan, which sets the limits for the overall spending. Recent budget discussions have brought pressure on all spending areas, including the CAP.
• DG AGRI (Directorate-General for Agriculture and Rural Development): The European Commission department responsible for EU policy on agriculture and rural development, including the management of the CAP.

2. De-Risking the Transition: Unlocking Private Sector Investment

The initial investment and time required for regenerative agriculture practices—such as improving soil health and increasing water retention—were highlighted as major barriers. The conversation quickly moved to how public funds can best de-risk this transition to catalyze private investment.

• Industry Perspective: Bart Vandewaetere (Nestlé Europe) argued the CAP should provide flexible financial support to de-risk upfront costs, complementing private initiatives and cooperatives. Resilience, regulatory compliance, and stakeholder expectations are the main drivers for companies investing in agricultural supply chains.
• Catalyzing Public Funds: Andrew Voysey (Soil Capital) argued that budget cuts demand creative use of public money. He urged for structures where public sector payments are designed to attract equal or greater volumes of value chain payments toward the same effort.

Key Takeaway 1: Pooled Funding for Impact: The most powerful idea for financial constraints is the promotion of pooling public sector payments and value chain payments toward the same objective, maximizing the financial incentive for farmers. This is where companies like Soil Capital are focused on delivering value.

3. Establishing a Common Language: Outcome-Based Metrics

To effectively blend public and private funding, all panelists agreed on the urgent need for a common, outcome-based approach supported by agreed-upon metrics and benchmarks.

• The Need for Benchmarks: Ms. Marion noted that the Commission is working on clear benchmarks to define good environmental and climate performance, which are crucial for guiding both public and private sector engagement.
• From Obligations to Outcomes: Melanie Muro (IEEP) supported moving away from simple area-based payments toward outcome-based payments with clear, binding policy targets that genuinely incentivize desired actions.
• Soil Capital’s Role in Metrics: Mr. Voysey and Mr. Vandewaetere agreed on the necessity of a 'common language.' Tools like the Commission’s proposed carbon certification and the ‘sustainability compass’ were discussed as potential benchmarking tools to measure and reward progress. Mr. Voysey emphasized that Soil Capital's work shows that measuring carbon sequestration holistically requires concurrent improvements in soil health and biodiversity.

Key Takeaway 2: Focus on Outcome-Based Benchmarks: Future policy and investment must prioritize outcome-based schemes that reward measurable sustainability achievements (e.g., improved soil organic carbon, water quality, or biodiversity) rather than merely prescribing a set of practices. This clear measurement is what will unlock private sector confidence.

4. Supporting the Farmer: Advisory and Collaborative Action

Finally, the discussion returned to the farmer's experience, stressing the importance of support, education, and collective action to drive wide-scale change.

• Connecting Farmer to Market: Mr. Carrouge emphasized the importance of reconnecting farmers with the food system to understand how their products are valued. He noted that close cooperation with private partners enables farmers to shape a more sustainable, value-driven future.
• Landscape-Level Solutions: A strong consensus emerged that working at a landscape scale rather than focusing solely on individual farms makes the most sense. Ms. Marion noted the Commission is actively encouraging collective approaches to improve connectivity between landscape features.
• Advisory Services are Key: Ms. Muro stressed the value of a government mechanism to provide advisory services, helping farmers navigate the complex landscape of public and private funding opportunities.

Key Takeaway 3: Support the Transition Holistically: The transition requires strengthened advisory services and a shift toward landscape-level cooperation. This collective and guided approach is vital for supporting farmers through the complexity of adopting regenerative practices and accessing pooled funding opportunities.

Reflecting on the discussion, MEP Elsi Katainen urged for a stronger focus on education, advisory services, and preserving diverse farming systems to ensure competitiveness and food security.

Soil Capital’s Andrew Voysey closed the event by reinforcing the need for different thinking in light of budget cuts—not a change in vision, but a change in execution. Soil Capital remains committed to advancing this conversation by helping to establish the 'common language' and metrics required to define and reward positive impact in European agriculture.

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