The EU spends around 30 billion euros each year on the single payment scheme, by far the largest of the myriad schemes and programmes that together comprise the 54 billion euro budget of the Common Agriculture Policy. The scheme was first introduced in 2005 but it is hard to see it surviving in its current form beyond the end of the EU’s 2007-13 financial perspective. Here are five reasons why the single payment scheme is not politically sustainable. Five more will follow tomorrow.
1. A TRANSITION WITHOUT END. The SPS is the direct descendent of the compensatory payments introduced in the 1990s while the EU was reducing the high price guarantees that had led to overproduction and the notorious butter mountains and wine lakes. The compensatory payments were meant to help farmers adapt to the realities of market prices. But almost two decades later, they’re still with us, and by 2012 the cost will have risen to 40 billion euros a year. Worse, recent rises in global food prices mean that for some commodities market prices are now higher than the prices guaranteed under the old CAP. Yet farmers continue to receive their transitionary compensation payments. It’s heads farmers win, tails taxpayers lose.
2. TO THOSE THAT HAVE, SO SHALL IT BE GIVEN: 85 per cent of the SPS goes to the biggest 17 per cent of recipients – the richest farmers with biggest farms and the best land. The Queen of England receives more than half a million pounds, Prince Hans Adam II of Liechtenstein gets close to a million euros – and he’s not even an EU citizen. Small farmers barely get a look-in and the EU is now eliminating entitlements of less than 250 euros while doing little to reduce payments at the top of the scale. One of the objectives of the CAP is to maintain farm incomes, but it it a perverse policy that focuses resources on maintaining the incomes of the richest, not the poorest farmers.
3. ENRICHES LANDOWNERS, NOT WORKING FARMERS: It is becoming increasingly common for non-farming landowners to scoop up the benefits of the SPS, not the working farmer. This can be done in two ways: by renting out land while retaining the SPS payments or by incorporating the value of SPS payments into the rent charged to a tenant farmer. Around half of EU land is tenanted and land ownership is concentrated in the hands of a relatively small number of large landowners.
4. UNEQUAL TREATMENT. As well as discriminating in favour of the largest farms on the most productive land, the SPS discriminates against certain types of farm. Poultry and pig farmers and horticulture growers never received farm subsidies and don’t qualify for the SPS. Yet there are plenty of cases of non-farmers receiving SPS: railways, water utilities, golf clubs and pony clubs, according to farmsubsidy.org which pushes for more transparency in the system.
5. MONEY FOR NOTHING: The SPS is sometimes justified as payment for the ‘environmental services’ provided by farmers as land managers. But there is only a tenuous connection between how much subsidy a farmer receives and the value of the environmental services provided. The farmers that the get the biggest subsidy per hectare are sometimes the ones providing the least in the way of environmental services, since the most heavily subsidised farms are often the most intensively managed farms, with greater application of fertilizers and pesticides. In a report on ‘cross compliance’ (the requirement farmers must meet to qualify for SPS) the European Court of Auditors concluded that
“the objectives of this policy have not been defined in a specific, measurable, relevant, and realistic way, and that at farm level many obligations are still only for form’s sake and therefore have little chance of leading to the expected changes, whether reducing the size of payments or modifying farming practices.”
Check back tomorrow for five more reasons why the SPS is not politically sustainable.