European Parliament defends farm fat cats

If Europe’s wealthiest landowners, from the Duke of Westminster in the UK to Prince Albert of Monaco to the fabulously-named Johannes Adam Ferdinand Alois Josef Maria Marko d’Aviano Pius von und zu Liechtenstein (aka Hans Adam II, Prince of Liechtenstein) were having sleepless nights over the future of their six and seven figure annual handouts from the Common Agricultural Policy, they can rest assured that they have friends in high places. Or at least, they have friends in the European Parliament.

The European Parliament doesn’t have any powers in agriculture policy but the Commission and the Council go through the motions of consulting the elected chamber and today the Parliament is debating its response to the Commission’s health check proposals. As Roger Waite explained earlier in the week, the idea of trimming payments to very large farms. It’s worth quoting the Commission’s reasoning in full:

(8) The distribution of direct income support among farmers is characterised by the allocation of a large share of payments to a rather limited number of large beneficiaries. It is clear that larger beneficiaries do not require the same level of unitary support for the objective of income support to be efficiently attained. Moreover, the potential to adapt makes it easier to larger beneficiaries to operate with lower levels of unitary support. It therefore seems equitable to expect farmers with high amounts of support to make a particular contribution to the financing of rural development measures addressing new challenges. Therefore, it appears appropriate to establish a mechanism providing for an increased reduction of the highest payments the proceeds of which should also be used to deal with new challenges in the framework of rural development. To ensure the proportionality of this mechanism the additional reductions should increase progressively according to the amounts of the payments concerned.

The European Parliament hasn’t taken kindly to the idea that Europe should ‘spread the wealth around’ little more when it comes to farm subsidies, to quote the memorable phrase used by US President-elect Barack Obama it in his tête-à-tête with Joe the Plumber. Having twice failed to get agreement on a hard ceiling of 300,000 euros above which no subsidy is paid, the Commission took a rather more subtle approach this time, proposing a series of subsidy bands: the higher the band, the greater the reduction. Make no mistake, the reductions are not all that great, although they do ramp up over time. And also remember that the money saved by the cuts will not be returned to taxpayers, or spent on schools or hospitals. It will be spent on farm subsidies, but just a different kind of farm subsidies called ‘rural development’ – and that each euro cut from direct payments has to be matched with a new euro from member state treasuries.

The table below summarises the Commission plan and the Parllament’s proposed amendment:

It is important to remember that these proposals leave 80 per cent of farms unaffected as they receieve less than 5,000 euros. Around 18 per cent of farms receive between 5,000 and 99,999 euros, one per cent receive between 100,000 and 199,999 euros and fewer than 0.3 per cent receive more than 200,000 euros. But though they are small in number, this CAP elite receives upwards of 80 per cent of all subsidies.

Am I alone in finding it odd that the only directly-elected EU institution is fighting to ensure the CAP remains at its core a 50 billion euro a year slush-fund for Europe’s large landowners and big agribusiness?

I’ll come back later in the day with more on the Parliament’s deliberations.

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