Who wants to be a farm subsidy millionaire? Quite a few, it turns out.
According to data released by EU governments – and crunched by our sister organisation FarmSubsidy.org – the number of farmers and food companies who received individual payments of more than €1m this year rose by more than 20 percent on the previous year.
Count ‘em up: Germany has 268 millionaire recipients, while France has 174 subsidy millionaires, including several banana-producing companies in French overseas territories. Altogether France’s subsidy millionaires took over €1bn in 2009. Besides the sugar refiners, big payouts went to dairy processors and trading companies, as the EU increased dairy export subsidies in 2009.
As capreform.eu and farmsubsidy.org’s Jack Thurston told The Guardian: “Messing around with agricultural markets helps the big guys who don’t need it. If smaller farmers who struggle to stay competitive need to be supported because they provide social and environmental benefits, they should be paid from social and environmental funds, because ultimately market interventions don’t work.”
Of course, when it comes to farm subsidies, sugar really is sweeter. According to the new data, the EU’s sugar companies were once again among the largest recipients of CAP payments.
In France, three sugar companies received the largest CAP payments (Tereos €178m, St Louis Sucre €144m, and Cristal Union €57m). Across the border, in Spain, the top recipient of subsidies was sugar company Azucarera Ebro, who nabbed €119m. And the second largest recipient in Germany was the world’s largest sugar processor and trader, Sudzucker, who claimed a cushy €42.9m.
And Britain? Alas, with an election taking place last Thursday, British civil servants decided to stop the public from seeing the data, because it might disrupt election campaigning. It would be unfair, Whitehall thought, to ask candidates questions about subsidy payments and better therefore to leave the public in blissful ignorance about the facts.
Unfair to whom exactly? Initial data harvesting by farmsubsidy.org reveals that possibly up to 70 of the 650 Conservative candidates standing at the election could be receiving some sort of subsidy. In a delicious twist, up to half a dozen euro-skeptic UKIP candidates could be receiving EU cash.
While the data does not indicate why these payments to sugar companies were made, it may be assumed they are part of the EU’s complex programme for reducing the capacity of the EU sugar sector, in line with its WTO obligations.
Other top recipients include dairy processing and trading companies that have benefited from the reintroduction of the EU’s export subsidies for milk powder and butter, which enable them to dump excess European milk production on world markets.
Once again, this year’s data has thrown up some peculiarities. The youngest recipient of CAP funds in Sweden is 14 years old, while two Swedish recipients are listed as 100 years old, but are both dead. An ice-skating club in the Netherlands took €162,444, an accordian club in Sweden €59,585. The revelations hit the headlines across the continent.
How did the EU’s farm commissioner Dacian Ciolo? react to all this? “I welcome the transparency initiative, and hope that our work with Member State Ministries of Agriculture in the last 12 months will ensure that the quality of data available is even better than it was last year – the first time that these figures were published.”
Last week also saw Ciolo? speak at a conference on the future of the CAP in Copenhagen. The EU’s farm commissioner stressed the need for “long-term, objective criteria” for direct payments, saying “public funds must be divided up fairly and transparently”. He also argued that a fairer distribution of support does not necessarily mean the “same thing” for all farmers and reiterated the need “to take account of the collapse of farmers’ earnings in 2009”.
Meanwhile, French farm minister Bruno Le Maire refused to accept a lower budget for EU farmers but agreed to link farm aid to the protection of public goods and services such as the environment, energy and water in the future. His Polish counterpart Marek Sawicki echoed this, arguing that the future budget should be “at least on the same level as we have today.” Le Maire also called for stronger market regulation, insurance schemes and increased intervention stocks.
On the other hand, Germany’s farm minister Ilse Aigner called for a clearer distinction between pillar 1 and 2 funds and for a complete decoupling of payments.
Also last week, the EU farm union umbrella group, COPA-COGECA, outlined its position on the future of the CAP. It agreed that direct payments must be maintained to help farmers deal with poor market conditions and market volatility.
Padraig Walsh, COPA president, said adjustments to the CAP post-2013 should focus on increasing market stability and making farming more profitable. He added: “We definitely do no want to see any further renationalisation of the CAP or any increase in co-financing which would lead to distortions of competition and undermine the single market.”
The same day, Britain’s National Farmers Union launched a policy document on the future of the CAP. The NFU believes the CAP should focus on maintaining the UK’s productive capacity in Europe; providing a buffer against the threat posed to farmers by volatile markets; supporting efforts by farmers to become more competitive; and providing incentives to improve environmental performance.
Wyn Grant provides an initial reaction on his blog: “The NFU has been working on this policy statement for some time and as one would expect it is a strategically oriented and sophisticated analysis. Clearly it takes account of the perspectives of farmers, but it is also politically realistic in terms of what can be achieved.”
Greece’s woe continues.
On Tuesday last week, the European Commission said 20 member states must pay back a total of €346.5 million in “unduly spent” farm subsidies. Member states failed to apply proper financial controls and permitted ineligible expenditures.
Greece and Poland account for more than half that sum.
Cash-strapped Athens must pay back €132.6 million – most of which went to cotton farmers who were “overshooting” quotas. Brussels also identified “severe and persistent weaknesses” in Greece’s rural development measures.
Meanwhile, the commission will seek to claw back €92 million from Poland for “acceptance of ineligible land for payments” and “insufficient” checks in regions with high error rates.
Spain took bronze. Madrid must pay back €47.5 million, mostly for including an “ineligible cost of environmental management of packaging” to subsidies given in the fruit and vegetable sector.
Other big beasts of European farming had their knuckles wrapped too.
France is also guilty of ineligible costs, as well as “weak controls” in the environmental standards for animal farms. Paris must return €19.5 million.
And Britain was asked to return €14.2 million for failing to meet statutory deadlines for direct payments and €3.5 million for failing to run the rural development scheme properly.
This week also saw the European Parliament’s Agriculture Committee launch a debate on CAP reform.
At a public hearing of experts, the MEP drafting the EP’s resolution on the future of the CAP, George Lyon, said the CAP “is part of the solution of new challenges”, which has “some of the answers to the questions set out in the EU 2020 strategy.”
He also said the CAP needs to be “fairer, greener and more sustainable”
Most speakers at Wednesday’s public hearing – including MEPs, farmers’ representatives and academics – reportedly advocated keeping the policy at EU level, on the grounds that introducing co-financing could spell the end of the CAP.
Speakers also advocated introducing tools to restrain price volatility, stressing agriculture’s benefits for society as a whole. The majority also agreed that the Single Payment Scheme is unfair in distributing funds, among both member states and farmers.
The eve of the EP debate saw the launch of the “European food declaration” signed by almost 200 European, national & local organizations from 24 member states. They are “concerned with the future of food and agriculture in Europe” and are “actively engaged in building a viable alternative to the current food production, distribution and consumption – from the bottom up.”
Wednesday last week also saw Europe’s environment commissioner, Janez Potocnik, call for a “profound greening” of the CAP. Addressing the third Forum for the Future of Agriculture in Brussels, Potocnik said “we need nothing less than a CAP that respects [soil and water] and promotes practices that use them in a sustainable and resource-efficient way. We also need a CAP that can invest in protecting and restoring them when they have been degraded, contaminated or polluted.”
Moreover, Potocnik sees the existence “somewhere in the future” of a ‘Common Agricultural and Environmental Policy’.
On the capreform.eu blog this week, Valentin Zahrnt discusses the wide range of CAP-related research published by the OECD. After last month’s meeting of OECD agricultural ministers – the first since 1998 – the OECD “issued a communiqué that touches on everything and says close to nothing,” Valentin says.
No matter. For crunchy analysis, just look at its output, like its regular report on the Environmental Performance of Agriculture in OECD countries, its “flagship” country-level analysis of agricultural policies, or its thematic pieces, like a 2009 report that compares the liberalization experience in various OECD countries.
Meanwhile, on his CAP blog, Wyn Grant notes that brokered trade of single farm payment entitlements is almost double that of a year ago with prices noticeably higher than in 2009. English flat area or area-only entitlements are changing hands at about £185 a hectare while a full entitlement is worth £225 a hectare.
Elsewhere this week, ICTSD reported that EU agriculture policies came under scrutiny at the year’s first meeting of the WTO’s regular committee on agriculture, as exporting countries quizzed the EU on its subsidy spending.
Quite a week for Nicolas Sarkozy, then.
After skipping the opening ceremony of the Salon d’Agriculture, the French president wrapped up the show by announcing that France is ready to accept farm budget cuts – but only if EU farmers are given more protection against imports.
Speaking at a debate on Saturday, Sarkozy said Paris would be “supple” about the budget but “rigid” in its demand that agricultural imports be subject to the same standards of production as those adhered to by EU farmers.
“I am ready to accept reducing the share of agricultural spending in the EU budget provided that we use community preference,” Sarkozy said, a reference to the high standard of environmental rules followed by EU producers
This, then, indicates a significant shift in thinking. Only three months ago, Bruno Le Maire, Sarkozy’s agriculture minister, hosted a meeting of 21 other EU nations to defend the agricultural budget beyond 2013.
Even so, Sarkozy echoed calls by Le Maire that EU farm policy should include regulatory instruments to reduce price volatility, and allow farmers to negotiate collectively with retail customers.
He also said Paris would propose tougher regulation of agricultural markets when it takes over the presidency of the G-20 countries in November.
Alan Matthews discusses Sarkozy’s headline-making announcement on the capreform.eu blog this week.
“There are two issues with this argument. The first is whether the argument itself holds up,” Matthews says. “The second issue with the Sarkozy approach is that it would fall foul of WTO trade rules.”
Still, Alan wonders whether Sarkozy’s proposal is “a sign of some new flexibility in French thinking” – and what French farm organizations think of it, of course.
Also discussing Sarkozy’s proposal this week is Wyn Grant. He says the argument that “imported products should be produced to the same standard as in the EU … sounds reasonable enough but in fact is a way of excluding developing country exports altogether.”
Elsewhere on the capreform.eu blog this week, Valentin Zahrnt discusses a bold new declaration by the European Parliament’s Socialists & Democrats that the CAP should be “revolutionized”.
Though Valentin finds fault with the statement – not least its unqualified rejection of national co-financing of CAP subsidies – his overall assessment is “strongly positive”.
The level of change envisioned is “outstanding”, he says, and compared with “the stubborn defense of vested interests that is endemic in the EP Committee on Agriculture, the statement is “a great step forward.”
While Sarkozy was making headlines down at the farm show, the EU’s agriculture commissioner, Dacian Ciolo? announced that the “blueprint” for the future of the CAP post-2013 would be delivered slightly later than planned.
Speaking via a recorded message at the National Farmers Union conference in Britain, Ciolo? said it’s too early to say how the public debate on the future of the CAP will be “framed’.
Meanwhile, Spain’s farm minister, Elena Espinosa, at a seminar organized by the European Parliament Socialist Group, stressed that post-2013 the CAP should have a “sound budget” and be based on a system of direct payments to farmers, market instruments and crisis management, and rural development policy.
Finally, this week also saw a new report [sub. req’d] by the European Environment Agency, which argues that CAP payments could be used more effectively to support High Nature Value farmland and help halt biodiversity loss. The report includes five case studies which suggest fundamental differences in CAP implementation in EU-15 and EU-12.
The world’s largest food and farm show, France’s Salon d’Agriculture, is taking place in Paris this week.
Europe’s new agriculture commissioner Dacian Ciolos cut the ribbon — a first for an EU commissioner — after President Nicolas Sarkozy broke with tradition and skipped the opening ceremony. The French premier will wrap up proceedings on Sunday instead.
The event comes after a year in which French farming has suffered its worst crisis in decades. According to Reuters, it is a “chance for Europe’s top agricultural producer to convince the visiting public and foreign officials it is worth safeguarding a sector undermined by declining revenues.”
Target number one is Commissioner Ciolos.
As the Financial Times put it, “the invitation comes as Europe begins a thorny debate over financing the CAP … France wants to lead the debate [and] believes it has an opportunity to push its view, and the invitation of Mr Ciolos is a sign of its confidence.”
Seizing his opportunity, French farming minister Bruno Le Maire reiterated his proposals — such as bolstering prices for farmers — at a joint press conference with Ciolos. “It is unacceptable that farmers have to sell their products below their cost price,” Le Maire said.
Ciolos was more equivocal. “I think it’s important to find the middle way. I don’t like extremes,” he said. Instead, he said he’d look to combine both market forces and support mechanisms for farmers.
Yet the commissioner fell short of making firm commitments, saying it’s too early to discuss specific measures. When can we expect to see any? By the end of the year, Ciolos said.
The FT also noted that “the proposals have quite sensibly shifted the early debate on the CAP away from the controversial issue of funding to the question of what its priorities should be.”
Ciolos echoed this sentiment. “What is important is not simply the budget … but how European agriculture as a whole can survive,” he told reporters.
Still, as the FT reminds us, if EU member states “agree to regulation à la francaise, they will have agreed implicitly to a big budget, as the measures would demand significant funding.”
Le Maire wasn’t the only farm minister getting face time with Ciolos this week. The commissioner pressed the flesh with Hilary Benn of the UK, his German counterpart Ilse Aigner, Spain’s farm minister Elena Espinosa, and Brendan Smith of Ireland.
According to the German food ministry, Ciolos and Aigner had “an open and intensive exchange of views” in Berlin. Ciolos said afterwards: “We need an open debate in the general public. We will listen very carefully in the weeks and months to come. It is no coincidence that I have chosen Berlin as the first stop in this consultation progress.”
This week also saw the publication of three papers.
First, agriculture ministers and policy-makers from the 30 OECD countries, as well as several observer countries (such as Brazil, Indonesia, and Russia), which together account for a huge proportion of the world’s production and consumption of food and agricultural products, met in Paris.
According to communique released after the meeting, the participants concluded that agriculture has an important role to play in the process of “green growth”.
They also discussed food security at length, called for frameworks to enable food and agricultural markets to function “efficiently, effectively, transparently, and fairly”, and proposed an analysis of the “functioning of markets and the extent to which the changing physical and market environment is generating new or increased risk and volatility affecting the agriculture and food system.”
Later in the week, the European Commission unveiled a long-awaited economic roadmap for Europe. The EU’s new strategy for sustainable growth and jobs — “Europe 2020″ — replaces the Lisbon Agenda and puts innovation and green growth at the heart of its blueprint for competitiveness.
Yet agriculture was conspicuous by its absence from the text. According to AGRA FACTS (sub. req’d), commission officials said later that “even though agriculture is not mentioned so clearly, it is clear that agricultural policy is central to these issues”.
But conservation group WWF isn’t so sure. They say the strategy shows “little ambition” and “fails to give any clear direction on some of the biggest policy overhauls coming up in the next few years, including agriculture, fisheries and rural development, which are barely mentioned in the document”.
Finally, the Centre of European Policy Studies, a think tank, this week published a paper arguing that the EU budget should shift funds from the CAP to energy and climate change to reflect the bloc’s changing priorities. The paper says “tying up 40 percent of funds in the CAP restricts the manoeuvre of the budget” and that increased CAP co-financing would give the EU budget more flexibility.