Brian Gardner's Blog

For farmer’s organisations and a majority of European Union member state governments radical change of the common agricultural policy is unthinkable. Any moves towards a more rational payment of income subsidies, let alone their phasing out, would inevitably mean a tectonic shift in the balance of payments to particular groups of farmers and in the Brussels contributions to national governments. The obdurate opposition to any such move was made plain by a majority of European parliamentarians on July 8.

A majority voted for the resolution that “Since the CAP will have to confront many challenges and pursue broader objectives after 2013, it is essential that the budget … is at least maintained at current levels,”. For these people their is no likelihood that the rural sector should be excluded from the stringency currently affecting all other sections of the European economy.

The implications of application of a more rational policy were recently spelt out in an economist’s report to the Parliament. Working on the assumption that large arable and livestock farmers do not need state support, it proposed that the emphasis be switched to supporting extensive livestock farmers and other ‘environmentally necessary’ landholders and to subsidising environmental activities not supported by the market. The report also suggested a cap on the amount of subsidiary to be drawn by larger farmers.

The introduction of a subsidy celling for each farm of €15,000 per worker employed -,as suggested – would cut payments for farms receiving annual subsidies above €200,000 by between 27 and 33 per cent. In MS with large agricultural sectors, such as Denmark, Germany, Italy and France, there would be reductions in gross payments from the Brussels farm fund of 14% to 20% .

Such a revolution could be sure of major opposition. Recent farm income reductions have convinced even the more liberal farming groups that income support schemes and market protection have to be maintained. Much the same goes for a majority of member state governments. Most of the farm groups would however, willingly swap farm income payments for more official support of markets and greater protection against ‘cheap’ imports. What they would like most is adoption of the most important element of current American agricultural policy: the countercyclical payment scheme. This evens out incomes by paying subsidies in the bad years financed from revenue skimmed off the subsidy bill in the good years.

From both a policy efficiency and an international point of view, this is a highly dangerous idea since It would convert the support system back to product specific payments, stimulate overproduction and make EU policy less acceptable in international trade negotiations.

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