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Reform of EU Farm Subsidy Proposed

July 11, 2002

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BRUSSELS, Belgium (AP) _ The European Union’s executive office proposed overhauling the $43 billion EU farm subsidy program, calling for cuts that were likely to meet heavy resistance among farmers.

The proposal announced Wednesday also would reward farmers for showing greater concern for the environment, public health and food safety.

Currently the 15-nation bloc operates a bewildering system of subsidies linked to production, taking into account the number of livestock on feed lots or dairy barns, the amount of land under tillage and harvest figures.

That practice has long been criticized by the United States and other producers as a gross distortion of world trade, subsidizing inefficient European farmers.

EU Agriculture Commissioner Franz Fischler proposed that in future, European farmers get a single ``direct payment″ based on past income; the payment would be cut over time.

That ``direct payment″ would be capped at $295,000 a year and supplemented by greatly simplified subsidies for particular crops and dairy products.

``The deep cuts proposed are a breach of faith with farmers by the EU,″ said John Dillon, head of the Irish Farmers Association.

``This will result in job losses ... and could force thousands of farmers (many of whom) are full-time beef producers into seeking off-farm employment.″

Luc Guyau, head of the French farm group APCA, said the EU had ignored deals with governments and farmers to protect them from unfair competition.

``At the moment when the EU is preparing for enlargement, and when the United States is reinforcing its arsenal of farm aid, politicians responsible should be sending a message of hope ... and not cede to temptation of laissez-faire,″ he said.

Fischler called for a ``greener″ approach to farming, responding to public demands for safer, better quality food products after a string of food safety crises in past years, including mad cow disease, foot and mouth disease and scares about dioxin contamination.

``In the future, farmers will not be paid for overproduction, but for responding to what people want _ safe food, quality production, animal welfare and a healthy environment,″ he said.

He added the overhaul would still guarantee farmers a ``stable income,″ but free them from ``the straitjacket of having to gear their production toward subsidies.″

The size of payments will be linked to how well farmers adopt stricter environmental, health and food safety standards as well as tougher animal welfare rules.

The British government said the proposals did not go far enough.

Environment Secretary Margaret Beckett said the changes would ``simply recycle money in the (EU) agriculture budget″ and lead to no great savings.

Australian Prime Minister John Howard, visiting the European Commission, said if the EU package lead ``to a cut in surpluses and fewer subsidized exports .... all of that will help Australian farmers.″ But he said he would need to see results before praising the plan.

European Commission President Romano Prodi again criticized the Bush administration for pushing legislation authorizing $180 billion in spending for U.S. farmers over the next 10 years, a $73.5 billion increase over existing programs. Washington ``is going in the opposite direction,″ said Prodi.

Fischler, the EU agriculture commissioner, said reform of the Common Agricultural Policy was imperative before the EU takes in Cyprus, Malta and eight East European candidates with even more inefficient farm sectors in 2004. He said the EU cannot afford to link subsidies to output when poorer farmers from candidate countries like Poland or Hungary join.

EU farm subsidies were created in the 1960s. Initially, they helped make Europe self-sufficient in food, but led to massive food surpluses in the 1980s that were then dumped on world markets, depressing prices there.

The proposed reform also calls for cuts _ of up to 50 percent in some cases _ in price supports for soybeans and such grains as wheat, corn, rice. Also, the EU executive wants to replace its milk quota system with quotas based on world market prices.

The commission said the reform will save $199 million by 2006. The savings, it proposed, should help preserve traditional family farms

But support for reforms is slim, at best, from farmers and EU governments keen to protect a decades-old system of handouts.

Objections to production cuts may well derail expansion talks with 10 candidate nations that are to be wrapped up by year’s end.

France, Ireland and southern EU nations have long resisted subsidy reforms because the handouts to farmers and poor regions have long been solid vote-winners for politicians in rural areas.

Fischler’s proposals are part of a midterm review of reforms launched in 1999 to cut the disproportionately large share farm spending assumes in the EU’s overall annual budget.

This year, guaranteeing minimum incomes to the EU’s eight million farmers will cost nearly half of the EU’s $98.1 billion budget. This rises to some 80 percent if regional aid funding is added.

Expansion has put the current 15 members in a dilemma: how to extend generous farm subsidies to new members without breaking the budget. The EU has about 8 million farmers. Poland alone has 10 million.

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