EU reform plans target fairer farm subsidies

The EU's executive has proposed making farm subsidies fairer and more environmentally friendly, in a bid to win support for keeping EU agricultural spending at €55bn-a-year up to 2020


Critics of the bloc’s common agricultural policy (CAP) had urged the European Commission European Commission to take advantage of high global food prices and cut the huge subsidies it pays to farmers in a reform of the policy from 2014.

But against a backdrop of increasing market volatility, resource scarcity and climate change, the Commission had already rejected calls for subsidy cuts, and said the reform should refocus spending on the threats facing EU farmers.

“The next decades will be crucial for laying the foundations of a strong agricultural sector that can cope with climate change and international competition. “Europe needs its farmers. Farmers need Europe’s support,” EU agriculture chief Dacian Ciolos said in a statement.

The Commission’s desire to keep overall farm spending at more or less its current level until 2020 was confirmed in proposals for the EU’s next long-term budget for 2014-20, announced in June.

The budget stance is supported by pro-farming countries such as France, whose President Nicolas Sarkozy has pledged to defend the CAP with an eye on rural support in next year’s presidential elections.

But the plans will face opposition from other countries such as Britain and Sweden, who want to see a sharp cut in EU farm spending to fund new growth-enhancing measures such as research and innovation.

Under the plans, the bloc will start the process of trying to even out the imbalances in EU aid paid to farmers in western Europe versus less well-off producers in the east.

But Poland said the plans did not go far enough, and criticised the fact that it could take until 2028 until equality was achieved between farmers across the EU.

“This is no reform proposal, but some cosmetic changes that would prolong the status quo as regards the distribution of the EU funds,” Polands farm minister Marek Sawicki told a news conference. “It’s a mockery that the Commission, recognising the need to equalise direct subsidy levels, at the same time proposes to achieve that over 14 years.”

The CAP reform plans must now be jointly approved by EU governments and lawmakers in the European Parliament – a process which is expected to take up to two years to complete.

Ciolos, who is Romanian, said the final shape of the reform would depend on the outcome of linked talks on the overall EU budget, where some large states with high deficits are looking to cut overall spending to ease pressure on public finances.

“We will need favourable political conditions to agree the overall EU budget, on which the CAP budget is dependent, and on which the final shape of the CAP reform is dependent,” he told reporters in a briefing before announcing the proposals.

New elements
At present, farmers in Italy and Greece receive about €400 per hectare on average, compared to less than a hundred euros per hectare in Latvia.

Ciolos said he wanted farmers in all countries to receive at least 90 percent of the average level of direct payments – currently about €270 per hectare – but added that the goal would be only partially implemented by 2020.

To help free up funds for the redistribution, Ciolos said large individual farms would see their subsidies capped at €300,000 a year from 2014.

In future, 30 percent of direct subsidies will be conditional on meeting new environmental criteria, such as forcing arable farmers to grow at least three different crops, and leaving seven percent of farmland fallow.

The plans drew accusations of “greenwash” from environmentalists who wanted the measures to go further, but EU farmers said the requirements would hurt their competitiveness.

“It does not make sense to require every single farm to stop producing on a certain percentage of their land when world food demand is set to rise by 70 percent by 2050,” EU farm union Copa-Cogeca said in a statement.

French farm minister Bruno Le Maire said the Commission’s environmental proposals were too complex.

“In the spirit of innovation, France supports the principle of ‘greening’ the CAP. But it has to be simple and provide incentives, and take account of the budget context. In their current form, the Commission proposals do not meet these objectives,” he said in a statement.

UK Environment Secretary Caroline Spelman said Britain was pleased with proposals to force farmers to do more to help the environment, but questioned the extent of the proposed reform.

“While some of the Commission’s rhetoric is right, overall we’re disappointed, and the proposals as they stand could actually take us backwards,” she said in a statement.

The plans included a proposal to grant EU subsidies only to “active farmers”, and Ciolos said he doubted airports and golf courses needed the EU farm subsidies they currently receive.

The 27-nation bloc should retain its existing market management tools after the reform – including public intervention and private storage aid – to cope with market volatility and future food crises, Ciolos said.

In a last-minute change, the Commission agreed to propose ending the bloc’s system of national sugar production limits and minimum prices from 2015 – not in 2016 as had been suggested in earlier drafts of the reform plans.

The move is designed to avoid a repeat of the current shortage of sugar on the EU market, and will also allow an increase in EU sugar exports, which are capped under world trade rules because of bloc’s quota system.

“This is a direct response to a policy that was formulated without any scarcity of sugar in mind. Changes like this will be needed to make the bloc’s policy efficient in a world where sugar production is tight,” said Keith Flurry, senior soft commodities analyst at Rabobank.