December 3, 2012
So, predictably, the EU budget wrangle drags on. Equally predictably, spending on the cash-guzzling agricultural budget is at the heart of the argument. However the negotiations end up the annual spending on agriculture policy will still remain close to 40 per cent of the Union’s total spending. It doesn’t really matter whose version of the budget is agreed – Van Rompuy’s, the Commission’s, the European Parliament’s or, almost certainly, the inevitably awful compromise which will ultimately be agreed by the European Council, the result will not advance the cause of CAP reform by one hectare of endangered habitat.
Under the last compromise tabled, the total farm budget for the 2014-2020 MFF would have been reduced to €361.52 billion ? a €17bn (or 4.5 per cent) reduction on the Commission’s original €378.52bn. This would be less than the €25bn reduction proposed by President Van Rompuy. The reason why this bundle would do nothing to advance the CAP reform is that all of the money restored from the Commission’s original proposal would be for the increasingly irrelevant €40 billion a year direct subsidy budget – while leaving rural development short of €8 billion over the MFF period.
The Council’s current draft compromise text would mean €277.85bn for Pillar One (P1 income payments and market support), a cut of less than €1 billion a year(€5.2bn for the MFF), and Pillar Two (P2 rural development), at €83.67bn, an €8.3bn cut. Rural development spending would thus be left unchanged at around €12 billion a year – or little more than a quarter of the €40 billion a year squandered on increasingly unnecessary income subsidies. Were this spending plan to be agreed, there would be no pressure on the Council to seek any improvement in the operation of the CAP.
What is frustrating for proponents of reform is the gay abandon with which funds are chopped off measures that matter and conserved for those that don’t. The only way that the economic, environmental and financial efficiency of the CAP will be improved is to slash spending on direct subsidies and market support and put more money into rural development. As world market agricultural commodity prices rise the need for direct subsidies to boost the incomes of the 20 per cent of the EU’s largest farmers, who draw 80 per cent of the subsidies, becomes more and more unnecessary. As I argue in my latest book, even if part of the money saved were to be paid to the small landholders who cannot survive in any market – supported or not – and also concentrated on much needed targeted environmental protection measures, savings of more than 50 per cent could be achieved. It would also provide more cash for the cohesion funds, where more, not less, spending is needed.
Some activists argue that the best out-turn would be for the MFF not to be agreed, so that current levels of spending could continue. But this would be just about the worst result. It would provide the perfect excuse not to make any improvement in the operation of the EU’s agricultural and rural policies. <03/12/2012}