Posted on 2-7-2003
European
Farm Reform Slashes Subsidies
(Photo shows European Agriculture Commissioner Franz Fischler)BRUSSELS, Belgium, June 30, 2003 (ENS) - Farm
ministers from across the European Union have adopted a fundamental
reform of the Common Agricultural Policy. The Council underlined that the
agreed reform "responds to the demands for healthy food, more
quality, environment and animal friendly production methods, the
maintenance of natural living conditions and the care of the
countryside."
The reform will change the way the European Union supports its farm
sector, and it is intended to strengthen the EU's negotiating hand in the
ongoing World Trade Organization (WTO) trade talks. The EU has been
accused of distorting world trade in farm products by subsidizing
overproduction and dumping surpluses on world markets, depressing prices.
EU Farm Commissioner Franz Fischler said, "This decision marks the
beginning of a new era." "To our farmers, it offers a policy
which will stabilize their incomes and enable them to produce what the
consumers want. Our consumers and taxpayers will get more transparency
and better value for money."
The new policy, agreed on Thursday, decouples subsidies to farmers from
the volume of production. Fischler estimated that under the reform deal,
90 percent of cereal subsidies and 70 percent of beef subsidies would be
decoupled from production levels over four years. Severing the link
between subsidies and production is intended to make EU farmers more
competitive and market orientated, while providing the necessary income
stability. But many European farmers,' business, consumer and
environmental organizations expressed disappointment with the farm policy
reform.
The largest farmers' association in the EU, is opposed to the deal.
"This is the most dramatic reform we have ever had and it undermines
the Common Agricultural Policy and the future of agriculture. The
competitiveness of European agriculture is in danger," said Peter
Gaemelke and Marcus Borgstroom, the presidents of COPA, Committee of
Agricultural Organizations in the European Union, and COGECA, General
Committee for Agricultural Cooperation in the European Union, in a joint
statement on behalf of their association, COPA-COGECA. COPA-COGECA warned
that the reform could increase production costs above market value and
force farmers to stop production. It urged the EU to "make it clear
in the WTO negotiations in Cancun in September later this year that this
is a final offer."
Head of the World Trade Organization, Supachai Panitchpakdi, welcomed the
EU's decision to reform the Common Agricultural Policy. He expressed his
expectation that the EU's agreement would revive stalled WTO talks on
agriculture. Head of the French farmers union FNSEA, Jean-Michel
Lemetayer, accused the EU of "abandoning assurance of farmers'
incomes." The European Farmers Coordination called the deal a
"scandal" and a "swindle," arguing that the
decoupling would accelerate the disappearance of family farmers.
"The small and middle farms will not resist the price falls and
decoupling will have perverse effects of agricultural abandonment in the
disadvantaged areas, where there will be no economical interest anymore
to produce for farm prices below the production costs. Then decoupling is
clearly an anti-rural development measure," said the farmers
organization European Farmers Coordination in a statement.
To avoid abandonment of production, EU member states may choose to
maintain a limited link between subsidy and production under well defined
conditions and within clear limits, Commissioner Fischler explained.
These new "single farm payments" will be linked to the respect
of environmental, food safety and animal welfare standards. More money
will be available to farmers for environmental, quality or animal welfare
programs by reducing direct payments for bigger farms, he said. The
different elements of the reform will enter into force in 2004 and 2005.
The single farm payment will enter into force in 2005. If a Member State
needs a transitional period due to its specific agricultural conditions,
it may apply the single farm payment from 2007 at the latest.
The Council also decided to revise the milk, rice, cereals, durum wheat,
dried fodder and nut sectors. In autumn 2003 the Commission will submit a
communication on the reform of olive oil, tobacco and cotton, which will
be followed by legal proposals. In order to respect the tight budgetary
ceiling agreed for the expanded European Union which will include 25
member states as of next May, ministers agreed to introduce a financial
discipline mechanism. This reform will also strengthen the EU's
negotiating hand in the ongoing WTO trade talks, they said. "Our new
policy is trade friendly," the ministers said. "We are saying
goodbye to the old subsidy system which significantly distorts
international trade and harms developing countries."
At the WTO Cancún Ministerial Meeting in September, the ministers said,
"the EU will be ready to use its increased negotiating capital only
if we get something in exchange. Unilateral disarmament is not on. The
ball is now in the camp of other countries, such as the U.S., whose
agricultural policies continue to be highly trade distorting and have
even become increasingly so."
EU officials have called on the United States to follow the European
example and cut its own farm subsidies policy. The U.S. will increase
farm subsidies by $73.5 billion over the next 10 years under the farm
bill, introduced by President George W. Bush in 2002. U.S. Trade
Representative Robert Zoellick and Agriculture Secretary Ann Veneman gave
a cautious welcome to the reform. "We hope that the compromises that
altered the original Commission proposal do not limit the EU's ability to
contribute to global reform in agriculture," they underlined in a
joint statement. They urged Brussels to submit its negotiating proposals
for the three core areas of WTO agriculture negotiations - reducing
domestic support, eliminating export subsidies, and cutting tariffs.
Consumers International, which represents 250 consumers organisations in
115 counties worldwide, expressed its "deep disappointment at the
so-called reform" of the farm policy. Consumers International
Director General Julian Edwards said, "This deal is another
magician's trick, a real sleight of hand, by EU agricultural
negotiators." Saying the reform offers nothing of substance, he
proclaimed, "This deal is anti-development, anti-trade and
anti-consumer."
The European Environmental Bureau (EEB), representing 134 member
organizations in 25 countries, expressed disappointment over the
weakening of the Commission's original proposals for farm policy reform,
deploring the lost opportunity for structural change towards sustainable
agriculture. "The first proposal in July 2002 gave us hope that a
real move was taking place towards sustainable agriculture," said
John Hontelez, secretary general of the EEB. "The legislative
proposal in January this year was already disappointing, having lost the
teeth of the first proposal. Now, the result of the negotiations of the
council is even more disappointing. What is left are bits and pieces of a
reform package, making it more complicated and hardly effective."
International conservation organization WWF called the reform deal
"half-hearted" and accused the EU of "lack of commitment
for an environmentally sustainable European agricultural
policy."
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