Nearly half of the EU budget is consumed by the Common Agricultural Policy, a subsidy system with which almost nobody is happy. Moves are afoot towards a wide-ranging reform, with sustainability and food quality the likely beneficiaries. But is the political will for change strong enough across the EU Member States? Rajiv Desai investigates:
If a number of issues have dogged the European Union since its inception, then the debate about how to reform the Common Agricultural Policy (CAP) has without doubt caused the most consternation amongst Member States.
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CAP continues to be the major challenge facing the EU due to its enormous strain on the financial arrangements of the organisation, but it now appears that Member States are moving forward on its reform. After many years of Member States haggling over the rights and wrongs of the policy, CAP itself is beginning to buckle under the stress brought about by the BSE crisis, while concerns over food quality and an enlarged Europe have increased the urgency of updating the direction of the outdated policy.
The early years
The Common Agricultural Policy, which was set up against a backdrop of food shortages and rations after the Second World War, has always sought to increase productivity in a stable market while ensuring a fair standard of living for farmers.
The hopes for the forebearers of the trading bloc that started out as the European Economic Community was that CAP would ensure regular food supplies at a reasonable price for consumers.
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By GlobalDataThe policy was formed on the notion that a single market in farm products with common prices and free movement of agricultural goods within the community would give preference for community members while sharing costs. Fine in principle, but not always readily agreed to by Member States.
In its early years, CAP caused disagreement amongst Member States over its large budget with bigger nation states like Germany and France contributing more than smaller nations. A swelling budget, in part a result of community expansion as well as rising costs, has always been a constant source of discord. Although spending on CAP has been reduced in recent years, it still consumes almost half the EU budget. In 1996 for example, the European Union subsidised European farmers to the tune of US$120bn – that is nearly US$18,000 per farmer, or US$322 per consumer.
“CAP led to the infamous EU wine lakes and rotting butter mountains” |
Under CAP, the EEC guaranteed regular purchase of agricultural produce (intervention buying) from farmers, but the situation soon led to Europe’s infamous wine lakes and rotting butter mountains in warehouses across Europe. Surplus produce is routinely destroyed or dumped very cheaply on markets outside the EU.
For many people, CAP embodied their worst impressions of the European Community. The bloated bureaucracy and inefficiency of the system was noted by Member States but they could do little in terms of renegotiation of the policy as farmers, who gain under current policy, hotly opposed any change to the policy.
The French government in particular has been careful through negotiations on CAP during the community’s lifetime not to alienate its large and powerful agricultural lobby. France’s previous stance has always been to water down proposals for agricultural change when the issue of CAP reform has been on the agenda.
Crisis looms for CAP
CAP, however, faces significant problems. The forthcoming accession of eastern European countries like Poland into the EU fold, raises questions on how CAP can be adapted to an enlarged Europe, while a BSE-fuelled crisis in confidence about the food we eat has made the EU look long and hard at how our food is produced.
The main draw for many of the nations wanting to join the EU is CAP, but it is unlikely that they will benefit from the policy in its present form when they come on board. EU enlargement is the single most important catalyst for change as the CAP budget is likely to grow even further once other nations join the EU fold.
“Time for change from the policy of maximizing output towards issues of sustainability and food quality” |
More importantly, the food crises caused by BSE and latterly foot and mouth have played a part in signalling a change in direction of any future policy. The European Commission and latterly even the French government have indicated that it might be time for change from the policy of maximizing output towards issues of sustainability and food quality.
Sustainability
EU agriculture commissioner Franz Fischler speaking at an informal meeting of EU farm ministers in Sweden in March said the “times when the CAP was geared to maximizing output have long gone.” He added that agriculture needed to face the challenges of what society expected of it in light of recent events over BSE and more recently foot and mouth.
Fischler was pointing to reform of the policy to take on concerns like quality assurance, animal welfare, environmental goals and food safety. His views are supported by Germany, who under its Green Party agriculture minister, Renate Kuenast , is keen to move away from industrial agriculture towards a more sustainable system. She wants to divert much of the subsidies away from mass production and into promoting organic farms, which shun artificial feeds and chemical pesticides.
France’s present socialist government has also been vocal in stressing it will seek to reform CAP. French agriculture minister Jean Glavany is a firm supporter of reform and has called the present policy “outdated.” He has indicated that his government would like to see CAP realigned to concerns that seek to improve food quality.
However, Jacques Chirac, the French president, is predictably cautious on the approach to the subject, stressing that he is prepared to look at change but at the same time is keen not to anger his own farmers. He has said that France would only consider agricultural reform after 2006 when the EU renegotiates its financing arrangements, insisting farmers needed a period of stability and should not be subjected to change “every two years.”
Some governments including the UK and Sweden support further liberalisation of the CAP, but may be prepared to countenance a move towards environmentally friendly policies.
On the financial side, the framework (Agenda 2000) agreed by heads of government two years ago in Berlin on the CAP budget is likely to have been exceeded because of BSE-related problems, while foot and mouth outbreaks in the UK, France, Ireland and the Netherlands has added further stress to the budget. It is also likely that the World Trade Organization will continue to press for CAP reform.
The EU is already committed to reviews of individual agricultural sectors in 2002 and 2003, but it is likely that the EU will take positive steps towards comprehensive reform before 2006, possibly with a wide-ranging review next year under the Agenda 2000 reform package.
Arguments over the rights and wrongs of the present policy are now far outweighed by the future problems of an enlarged Europe and the problems relating to food production caused by the food crises of recent years. The political will to change CAP has never been greater.
Rajiv Desai is a freelance journalist and was formerly deputy editor of just-food.com
