ECONOMY

Southern EU states to resist reforms on oil, tobacco, cotton

TAORMINA (Reuters) – Spain, the world’s largest single producer of olive oil, is gearing up to fight plans for a major EU reform that it fears could lead to farmers abandoning their olive groves, its farm minister said yesterday. Under proposals to be presented in public today, the EU’s executive Commission hopes to shake up three sectors – olive oil, tobacco and cotton – that are of key importance to Spain, Italy and Greece, which dominate EU production. The battle over these so-called Mediterranean products is expected to be long and bitter, especially over olive oil. Spain is likely to win support in resisting reform from Italy and Greece, the world’s second and third largest olive oil producers. «I have recently had very informal contacts with my Greek and Italian colleagues, to talk about the problems we have not only on olive oil but also on tobacco and cotton,» said Spain’s Agriculture Minister Miguel Arias Canete. «Each one (country) has a different position but in the case of Spain, there seems to be a strong resistance in certain regions,» he told reporters on the sidelines of an informal meeting of EU farm ministers in Sicily. During the EU’s last olive oil reform in 1998, Spain’s demands for an increased production quota nearly scuppered a broad package of other farm measures – as thousands of its farmers took to the streets against the proposals from Brussels. «We want to maintain Spain’s production potential (for olive oil). We want to avoid producers being tempted to abandon their land,» Arias Canete said. The EU grants around 2.3 billion euros in olive oil subsidies each year. «We want to ensure that any system that is established provides an incentive for farmers continue producing… and making oil to the maximum quality.» For the three Mediterranean products, the Commission wants to cut the historic link between how much a farmer produces and the subsidy he receives: a process known as decoupling, and the cornerstone of the EU’s major farm reform in June. For tobacco, Spain would try to forge a joint stance on reform with Greece. The lion’s share of the EU’s annual 970 million euros in tobacco subsidies goes to Italy and Greece. «On tobacco, we will look for a common position with our Greek colleagues who have a high production of tobacco. They could have an identical position to ours – we have a strong concern about maintaining rural populations,» Arias Canete said. In the EU, tobacco is mostly grown in the poorest areas. Farmers depend heavily on subsidies, which make up 80 percent of their incomes.