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European Outline Sweeping Changes to Farm Policy


By: Reuters
New York Times, July 10, 2002



BRUSSELS (Reuters) - The European Commission on Wednesday unveiled radical proposals to reform its Common Agricultural Policy by severing the link between farm subsidies and output, amid fierce opposition from farming giant France.

The European Union's farm policy, which eats up almost half the EU budget at a cost of 40 billion euros ($39 billion) a year, is under mounting pressure as the 15-nation bloc prepares to admit up to 10 new members from eastern Europe and enter a new round of world trade talks.

EU Farm Commissioner Franz Fischler outlined to the European Parliament plans to shift income support away from producing surpluses and toward meeting tough environmental, animal welfare and food safety standards.

Less money will go on market subsidies and more on rural development under the proposals, which must be approved by a weighted majority of EU member states to take effect.

``It is not enough just to touch things up cosmetically. We need a complete facelift to give credibility to the CAP,'' Fischler told parliament, insisting on the need to break taboos to give a better deal to farmers, consumers and taxpayers.

France, which has vowed to oppose the reform, points to the United States' recent farm bill, which boosted spending on domestic subsidies and was widely criticized by trading partners as potentially destabilizing for world trade.

But Fischler declared: ``It would be fundamentally wrong to use the deplorable Farm Bill as a pretext for following the American lead in returning to stone-age, trade-distorting agricultural policies.''


French farmers, the biggest beneficiaries of the current CAP, say the changes would decimate their ranks. They insist the EU agreed in Berlin in 1999 to maintain the present CAP until at least 2006.

``In France, according to our calculation, the drop of three percent (in direct payments) would lead to the disappearance of 200,000 farmers within 10 years! Almost half of French farmers would have to shut up shop,'' FNSEA farmers' union leader Jean-Michel Lemetayer told the daily Liberation.

The most radical proposal was an end to production-related subsidies, a mainstay of the CAP, founded four decades ago to boost food output in an era when a six-nation European Economic Community was a net food importer.

``While guaranteeing farmers a stable income, the new system will free them from the straitjacket of having to gear their production toward subsidies'' and hence remove an incentive to create unmanageable surpluses, Fischler said.

Farmers would get a single payment from Brussels based on money received in the past -- regardless of whether they continue production on the same scale.

Fischler believes this will streamline the CAP, making it easier to extend to millions of farmers in an enlarged EU and giving the bloc the moral high ground in trade negotiations.

Direct aid to farmers would be trimmed by three percent a year over seven years and the savings spent on rural development. Aid to larger farms would be capped at 300,000 euros a year.

Guaranteed cereals prices would be cut by five percent, reducing the amount the EU pays in export subsidies that bridge the gap between high internal prices and a lower world market.


About 250 farmers demonstrated against the reform near the Commission's headquarters Wednesday, banging drums and blocking traffic. One banner depicted Fischler as a feckless Roman emperor, dubbing him ``the Nero of European agriculture.''

Fischler has support from countries such as Britain, which have been pushing for a shake-up of farm policy for years, and Germany, the EU's main paymaster which wants to lower the cost.

In a debate on his speech, the Socialist, Liberal and Greens spokesmen in the European Parliament broadly backed his approach but conservatives objected, notably to the upper limit on farm payments.

France, the historic defender of the CAP, will lead the resistance in the EU Council of Ministers and may find support from several other mainly southern European states.

Fischler shrugged off the opposition, telling reporters: ``I don't see this proposal being stopped. We are now starting a negotiating process.''

Last week, new French Prime Minister Jean-Pierre Raffarin signaled his government's determination to protect the CAP from the Commission proposals and world trade negotiations.

In an attempt to sway France, EU Trade Commissioner Pascal Lamy, a French socialist, endorsed the plan in an interview with Le Monde as essential for European agriculture to survive and avoid the same fate as the moribund coal industry.

``The French cannot be on the defensive all the time,'' he said.

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