Commission proposals lack ambition

Later today the European Commission will present its proposals for changes to the Common Agricultural Policy – for so long an emblem of bureaucracy, waste and injustice. This will be the first reform since details began to emerge from top secret government files about exactly who gets what from the €55 billion Europe spends each year on farm subsidies. After a landmark FOI case by The Guardian in 2005, revelations about farm subsidies paid to the Queen (£466,667 in 2005), the Duke of Westminster (£526,136) and Sir Richard Sutton (£917,650) hit the headlines across Europe. Since then, some eighteen European countries are now releasing at least partial data. Among the continental farm subsidy fat cats are the Duchess of Alba, Prince Albert of Monaco, and the fabulously named Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius, Prince of Liechtenstein and therefore not even an EU citizen. But that does not stop him from getting €1.7 million in European farm subsidies for his Austrian estate. Alongside Madrid’s many wealthy ‘agricolturas de sofa’, the Spanish rich list is dominated by large tobacco and alcohol companies and subsidised irrigation projects (many illegal) that suck Spain’s rivers dry.

All this is hugely embarrassing for the EU and in response the Commission will propose new limiting on the very largest payments. For payments of over half a million pounds this could mean a cut of close to 40 per cent. The British government continues to oppose payment limits, even though all the money saved is ring-fenced for rural business development and conservation. This support for the farm subsidy fat cats cuts against the grain of Gordon Brown’s belief in targeting welfare state benefits on the people in greatest need.

As symbolically potent as they are, the payment limits proposed would touch less than two per cent of CAP spending and crafty lawyers would soon find ways to avoid them by subdividing large holdings into smaller legal entities, as already happens in France. Unchanged would be the fact that 18 per cent of Europe’s seven million farms get 85 per cent of the subsidies, and that the inequality is increasing each year. It will take more than payment limits to redress the three fundamental flaws at the heart of the system.

First, the CAP favours landowners over farmer-operators. For decades Europe had chronic agricultural surpluses: the famous butter mountains and wine lakes. Policymakers responded by breaking the link between what a farmer is paid in subsidy and what he or she produces. Farmers no longer have to grow any crops or raise any livestock to get their handouts. For farmers in the developing world who no longer have our surpluses dumped on their markets, this is probably a good thing. But the downside is that ‘decoupled payments’ favor landowners over those actually working the land. Landowners can keep the subsidy for themselves and rent out their land to tenant farmers, who get no state support. Last week, the European Court of Auditors reported on some curious recipients of farm subsidies: golf courses, pony clubs and railways.

Second, the CAP favours the industrial over the pastoral and the big over the small. The CAP funnels money into the highly mechanized farms on the most productive land such as the Paris Basin and East Anglia. The county of Lincolnshire – in many parts a flat arable desert of a landscape – gets three times the combined farm subsidies of Cheshire, Cumbria and Lancashire, which boast so many areas of outstanding countryside.

Third, the CAP favours rich countries over poor. Between them, just four countries (France, Spain, Germany and Italy) get 60 per cent of farm subsidy money. Poland, Slovakia, Romania and Bulgaria all have large rural populations and high rural unemployment rates. The most basic rationale for spending public money at an EU level is that investment can help bring poorer countries up to the level of the European average, even beyond it: just look at Ireland. By funneling money to highly efficient mechanized farming in richer EU countries, the CAP does precisely the opposite.

With many farmers making big profits from the boom in grain prices, the time has never been better to push through reform. Even President Sarkozy is talking about the need for a radical break with the past in farm policy.

The Commission’s widely leaked proposals are notable only for their lack of ambition. This is real strategic error on the part of Agricultural Commissioner Mariann Fischer Boel. By shying away from the radical changes needed to make farm payments acceptable to a public that can finally see where its money is going, she has played into the hands of those who would scrap the CAP altogether.

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2 Responses to “Commission proposals lack ambition”

  1. John Martin
    November 20, 2007 at 23:46 #

    I am a livestock farmer running a 160 acre family farm, who has not made a profit in many years. The recently published Northern Ireland Red Meat Strategy showed that the beef and sheep producers in Northern Ireland losing £180 million / year, while processors and supermarkets make a profit of £20 million each / year. It doesn’t matter how the profit is split the supply chain cannot be profitable without a significant increase in consumer price. The current price for home produced from quality suckler cows is worth 206 pence / kilo of carcase whereas the most optomistic breakeven point is 320 pence / kilo. Without farm subsidy payments there is no future for livestock production in the UK and Ireland unless there is a concentration in huge factory units where there is some economy of scale.
    Consumers need to decide what type of countryside they want. If they desire agriculture which is profitable and stand alone without subsidy they cannot complain about what the agricultural industry does to survive. There is criticism of the move to grow fuel crops, which have become profitable this year, because of the impact on biodiversity of such monoculture. But society can’t reduce financial support and expect agriculture to survive with a high level of restriction as to the type of landuse it will permit.
    We have established 40 acres of short rotation coppiced willow for biomass for local heat generation. Additionally effluent from waste water treatment works can be filtered by the willow crop, reducing the discharge into coastal waters.
    The difficulty is trying to persuade end users to adopt the principle of locally grown fuel as a replacement to fossil fuel, and pay a realistic price to cover production costs. Consumers have become so used to receiving subsidised agricultural products. I
    I am attempting to develop a profitable diversified farm business which will be profitable without subsidy. I feel no obligation to produce beef and lamb any longer if supermarkets will not even pay to cover the costs of production. I am currently using my farm subsidy to invest in processing and drying facilities for the woodchip.
    Before you criticise agriculture you need to recognise that we manage 80% of the UK land area. Never have world food stocks been so low and the UK so reliant on imported food. There is a huge food security issue for this country, with the risk of being held to ransome by other sovereign states over whom we have no control and they no sense of loyalty.

  2. John Martin
    November 20, 2007 at 23:49 #

    I am a livestock farmer running a 160 acre family farm, who has not made a profit in many years. The recently published Northern Ireland Red Meat Strategy showed that the beef and sheep producers in Northern Ireland losing £180 million / year, while processors and supermarkets make a profit of £20 million each / year. It doesn’t matter how the profit is split the supply chain cannot be profitable without a significant increase in consumer price. The current price for home produced beef from quality suckler cows is worth 206 pence / kilo of carcase whereas the most optomistic breakeven point is 320 pence / kilo. Without farm subsidy payments there is no future for livestock production in the UK and Ireland unless there is a concentration in huge factory units where there is some economy of scale.
    Consumers need to decide what type of countryside they want. If they desire agriculture which is profitable and stand alone without subsidy they cannot complain about what the agricultural industry does to survive. There is criticism of the move to grow fuel crops, which have become profitable this year, because of the impact on biodiversity of such monoculture. But society can’t reduce financial support and expect agriculture to survive with a high level of restriction as to the type of landuse it will permit.
    We have established 40 acres of short rotation coppiced willow for biomass for local heat generation. Additionally effluent from waste water treatment works can be filtered by the willow crop, reducing the discharge into coastal waters.
    The difficulty is trying to persuade end users to adopt the principle of locally grown fuel as a replacement to fossil fuel, and pay a realistic price to cover production costs. Consumers have become so used to receiving subsidised agricultural products. I
    I am attempting to develop a profitable diversified farm business which will be profitable without subsidy. I feel no obligation to produce beef and lamb any longer if supermarkets will not even pay to cover the costs of production. I am currently using my farm subsidy to invest in processing and drying facilities for the woodchip.
    Before you criticise agriculture you need to recognise that we manage 80% of the UK land area. Never have world food stocks been so low and the UK so reliant on imported food. There is a huge food security issue for this country, with the risk of being held to ransome by other sovereign states over whom we have no control and they no sense of loyalty.