With the release yesterday of new figures on EU expenditure in 2007, the Commission has been busy spinning the line that farm subsidies no longer account for the biggest item of Brussels spending. Most news outlets have been swallowing this line without taking a closer look at the figures which show that a full 50 billion euros of EU money was spent on farm-based programmes.
In 2007 the EU spent 42.6 billion euros on the CAP’s first pillar which comprises old style market interventions and direct income support payments to farmers. This is a whisker below the 43.7 billion euros spent on a raft of policies known collectively as ‘sustainable growth’ (what was once known as ‘structural and cohesion’ funds).
What Commission spinmeisters neglect to inform reporters is that close to 80 per cent of the 10.9 billion euros spent by Brussels on ‘rural development’ finds its way into the pockets of European farmers.
First a bit of background on the structure of the rural development budget. There are four ‘axes’ of EU rural development policy:
Axis 1: improving the competitiveness of the agricultural and forestry sector (grants for farm modernisation, grants to young farmers, grants to retiring farmers and the like);
Axis 2: improving the environment and the countryside (this mostly comprises payments to farmers for farmland conservation and subsidies for farmers in ‘less favoured areas’, e.g. mountainous, marshy, arctic and desert regions);
Axis 3: improving the quality of life in rural areas and encouraging diversification of the rural economy;
Axis 4: ‘Leader’ programmes that build local governance and cooperation capacity in rural areas towards the achievement of objectives under axis 1-3.
The IEEP analysis shows that 79 per cent of rural development expenditure goes to the two axes that are devoted to payments to farmers. Axis 3, which is devoted to what most people would regard as real rural development policy (rather than farm subsidies dressed up as rural development) gets just 13 per cent of expenditure.
On the basis of this analysis we can estimate that payments to farmers (or payments designed explicitly to benefit farmers, like export subsidies and other agricultural market interventions) totalled at least 50 billion euros in 2007, out of the total EU budget of 114 billion.
Few would disagree that the ‘rural development’ pillar of the CAP is more targeted and better linked to policy objectives than the first pillar, but it’s important to remember that EU takes a very partial and overwhelmingly farm-based approach to rural development. Whatever the spindoctoring of the Commission may convince gullible journalists, for the next five years Europe’s farmers look secure as the number one beneficiaries of the EU budget.