ECONOMY

Farm commissioner defends subsidy reform proposals

The European Commission’s proposals for reforming the Common Agricultural Policy do not discriminate against Mediterranean products, such as cotton, olive oil and tobacco, Agriculture Commissioner Franz Fischler told reporters yesterday. Fischler gave the interview to Greek journalists, via teleconference, just before he met Agricultural Development and Food Minister Savvas Tsitouridis, in Brussels. Fischler emphasized that the Commission proposal does not reduce the budget allocated to Mediterranean products and that the assertion by some media that 113 million euros in agricultural subsidies will be cut is wrong, since it confuses the non-binding actuarial forecasts, based on hypotheses regarding future product prices, with the actual binding upper limit of the CAP budget, which will not change. Fischler’s original idea was to break the link between output and subsidy, the so-called «decoupling.» Instead, more aid would flow to poorer farmers as income support, aid to larger farmers would be capped and farmers encouraged to grow commercially viable and environmentally friendly products. Strong objections by Greece, Italy, Portugal and Spain, seconded by France in their demand for more aid to disadvantaged regions, have ensured that a complete decoupling is no longer on the cards. As Fischler himself acknowledged in a draft document circulated last September, «(there is a risk) in specific areas of production of disruption and abandonment.» Instead, Fischler proposed to make 70 percent of subsidies to tobacco farmers 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. 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 heavily subsidized. Brussels grants just under 1 billion euros to tobacco growers, mainly in Greece and Italy, each year. Even Fischler’s revised proposals have met with significant resistance from the Mediterranean states, while northern states, and the European Parliament, have been pushing for a more thorough reform, including a complete abolition of tobacco subsidies in line with the EU’s policy of discouraging smoking. Last month, the Mediterranean countries secured a one-month delay in debating changes in the subsidy regime. The EU agreed because two of the countries – Greece and Spain – had new governments. But Fischler yesterday reiterated the need for negotiations to be completed by next Thursday, saying it would be more difficult once the 10 new members join the EU on May 1. Concerning olive oil, Fischler told reporters that maintaining the present subsidy regime is probably inevitable since none of the big three producers has completed a register of olive trees and olive farmers. As for tobacco, he said his proposals were satisfactory, given the opposition to continuing the subsidies. But even without this pressure, tobacco growing faces a long period of decline, he said.