EU Farming Policy Set For Major Revamp
June 26, 2003
EU farming ministers meeting in Luxembourg agreed on a comprehensive reform package for the 15-nation bloc’s agriculture policy on Thursday after a marathon round of negotiations to thrash out the last details. Portugal was the only country to vote against the reform.
The move amounts to the most radical shake-up of the EU’s expensive 45-year-old CAP, which critics have long argued undermines world trade and puts poor countries at a disadvantage. The main thrust of the reforms is to cut back the EU’s program of huge direct subsidies to farmers, which account to about €43 billion ($50 billion) a year -- almost half the entire EU budget.
Crop subsidies eliminated
The chief architect of the reform plan, EU Agricultural Commissioner Franz Fischler, managed to largely salvage the cornerstone of his reform plan -- namely breaking down the traditional link between subsidy and agricultural output, which has been blamed for offering an incentive to farmers to overproduce merely to get more cash from Brussels.
Fischler (photo) said the reforms would shape the future of European farming and end the practice of automatic farm handouts. "This decision marks the beginning of a new era. Our farm policy will fundamentally change.Today, Europe has given itself a new and effective farm policy," he said.
The accord was hailed by leaders from several member countries. "The agreement today delivers what we wanted -- real change," said Britain's Agriculture Minister, Margaret Beckett. "It will give stability and security to farmers in the next decade," said Irish Farm Minister Joe Walsh. German Agricultural Minister Renate Künast described the reform as a big success. "With it we can finally break out of the old agricultural system," she said.
In the future, subsidies from Brussels will be distributed more evenly, rewarding farmers who switch to environmentally-friendly farming methods that promote increased food quality and improved rural management.
The European Commission is also eager to end subsidies prior to 2004 when the agriculturally dependant economies of Eastern Europe join the EU. Critics feared that extending handouts to the new EU countries would only worsen the problem of over-production in Europe.
Agreement expected to revive trade talks
The agreement on EU farm reforms is also seen as essential to kickstart the stalled Doha round of World Trade Organization (WTO) talks. Fischler said the deal would boost the EU’s negotiating position in upcoming trade talks in Mexico in September and appease the United States and Japan, who had criticized the current system of EU farm hand-outs saying it violates WTO rules.
"We’re also sending out a message to the world that we have a more trade-friendly policy. We are saying goodbye to a policy that used to distort trade," Fischler told a news conference on Thursday. "We can go with our heads held high to Cancun," Fischler said.
WTO chief Supachai Panitchpakdi welcomed the deal. "I see that this would have a positive effect on movement in areas, if not all areas of agriculture," Supachai said in Geneva.
Angry farmers
Despite the breakthrough on the reform package, Fischler was forced to compromised on several elements of his original plan under heavy pressure from big farming nations such as France.
France, the largest beneficiary of EU farm aid, had strongly resisted decoupling farm aid from production subsidies. In the latest deal, Fischler compromised by abandoning his plan to cut minimum prices on key grains -- including wheat, barley and maize and by allowing countries a high degree of flexibility over how it may apply decoupling rules for livestock.
But some French farmers were still dissatisfied. "France has badly defended the interests of the CAP and of French farmers," Jerome Despey, head of France’s Young Farmers Organization told Radio France International.
Likewise, farming unions in Germany, one of the EU’s largest contributors to CAP, were also dismayed by the deal. The German Farmers Association (DBV) said farmers in that country would lose between €1.2 and €2 billion as a result of the cuts and warned that the decision would discourage further investment.
"This decision is a major burden for German and European farmers," German Farmers Association President Gerd Sonnleitner told German public radio. "It’s a typical EU compromise which gives and takes a little from everyone and creates terrible difficulties for those who have to implement it," he said.