ECONOMY

EU farm chief turns attention to the Mediterranean

BRUSSELS – European Union farm chief Franz Fischler plans to reform the olive oil, cotton and tobacco sectors along the lines of his recent revamp of agriculture policy, a document obtained by Reuters showed yesterday. Fischler hopes to repeat his winning formula for the three products – of major interest to Mediterranean countries such as Spain, Italy, Greece and Portugal – by breaking the historic link between subsidy and output. This concept was bitterly fought over by farm ministers for a year before they agreed to the final shape of the June farm reform. The three sectors, along with sugar, were not included. Although the three crops only account for 4 billion euros in EU subsidies, less than 10 percent of the total farm budget, they are of huge economic and social importance to southern states. Scrapping output-related subsidies could have drastic effects in some regions as these crops tend to grow in remote areas where farming is the only source of employment, so Fischler has opted not to pursue a complete break of the link. «(There is a risk) in specific areas of production disruption and abandonment,» the draft document reads. For tobacco, the plan is to make 70 percent of subsidies independent of production, leaving 30 percent tied to output. For olive oil and cotton, 60 percent of production-linked payments would be divorced from output. The EU executive is set to adopt the proposal on September 23, along with an options paper for reforming the sugar regime. But Fischler faces a tough battle as the four countries with most interest in the Mediterranean products have successfully diluted ambitious Commission reform proposals in the past. Spain is the world’s largest single producer of olive oil and accounts for more than 35 percent of global output. Italy and Greece are the world’s second- and third-largest producers. Cotton cultivation is of particular importance to Greece and Spain, the only two producers in the EU. With 80 percent of EU output, Greece is by far the larger of the two – but is still dwarfed by the likes of top Asian producers China and India. Of the three so-called Mediterranean products, tobacco is the most subsidized. Brussels grants just under 1 billion euros to tobacco growers, mainly in Greece and Italy, each year. EU farm ministers will thrash out the proposals in the coming months.