Brian Gardner's Blog

French President Nicolas Sarkozy believes that a reversion to a traditional CAP based on market manipulation and frontier protection would cost the EU budget less than the current direct subsidy based system, The President told French farm industry leaders on March 6 that in upcoming CAP reform negotiations France would be prepared to trade budget cuts for more market protection.

As far as the President is concerned, direct subsidies are not an adequate replacement for market support. He told the farm leaders that it was a major error for the EU to have “swapped prices for subsidies”, according to an Agra Europe report. Seen from the point of view of budgetary cost and national advantage, Sarkozy is probably right. He is also giving voice to the general fear in the agricultural community that having scaled down market protection and replaced it with subsidies, the next stage will be to scale down the subsidies leaving farmers with a great deal less.

But there is another important facet to the French Government’s position on CAP development. It has little to do with maintaining the incomes of small, poverty stricken peasants and all to do with maintaining the income of France’s large agribusiness industry. France has the largest share of the EU’s agricultural GDP – probably still more than 20 per cent even after recent EU enlargement. In income terms it is dominated not by the small peasant of popular myth, but by large scale cereal, dairy and beef farmers.

Prior to the Fischler reforms of 2003, France was not only a net beneficiary of the EU budget, but also drew the lion’s share of payments for market interventions and export subsidisation. Since the switch to direct subsidies, this share has declined and France has been nudged into being a net contributor to Brussels funds. Declining direct subsidies would worsen the situation further, Maintenance of market intervention and community preference would however guarantee the incomes of France’s large and nationally important farm industry while at the same time minimising the country’s contribution to CAP running costs.

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