Farming needs urgent solutions as CAP changes loom ahead

The greatest challenges being faced in the agricultural sector – and which must be dealt with as soon as possible – are five: delays in technological advances, an absence of institutional and organizational structures, delays in adapting to changes pertaining to the European Union’s Common Agricultural Policy (CAP) and the constant loss of competitiveness due to Greek farmers’ inability to stay on top of changes taking place in the international market. The technology lapse at all levels of the agro-food chain creates problems both for the agricultural sector and for the economy and consumers generally. By technology, we do not just mean equipment, infrastructure, construction and so on, but also the mechanisms that allow information to travel to the production and commercial sectors of agriculture, and to the production network in general. In Greece, this problem is especially acute due to the fact that farmers and other workers in the agro-food chain are not trained, not regularly briefed, do not have access to information networks, are not equipped to track developments in technology, and cannot become informed of or adapt to rapid market changes and constant revisions in agricultural policy. The institutional and organizational structures of the economy and the administration in Greece are wholly inadequate. Regression to the 1980s socialist-style structures that were proven to fail in other parts of the world (such as collectivized farming and agro-industrial complexes) impeded the smooth developmental course of the Greek agricultural sector and has delayed the modernization of institutional and organizational structures. Today, Greece has lost the battle of the distribution networks. It has only a handful of private businesses capable of holding their own against competitive foreign markets and the corporate movement, and is lacking in credibility and financial strength. It is staggering. Unfortunately, reorganizing institutional and organizational structures takes time, while it is an even bigger task to set up from the start new, modern structures able to handle the weight of the development process. From once being a source of support, the State has become a dynasty. We have an overgrown state where it is needed least and a small state where a big one is necessary. Quality control is, in essence, non-existent. Corruption is on the rise. What few sources of information farmers once had have been wiped out. The State is trying to control the market with laws and agronomic measures that have proven ineffective in the past. An enormous number of funds are being squandered, while a large section of the agricultural population, especially in mountainous areas and the border regions, are facing poverty. Revisions to the CAP have caught Greece unprepared, as they are adapted to the new political and financial landscape in Europe and the global market. Unfortunately, Greece did not prepare its groundwork and much-needed aid is now up in the air. Statements to the effect that the revisions of the CAP for Mediterranean products ensure many years of subsidy inflows and income supports are, to say the least, incorrect, if not misleading. Even if subsidy flows were ensured, which they aren’t, over 20 years of European subsidies have failed to solve the problems of the agricultural sector in Greece, because what is most important is a core strategy. Finally, the constant erosion of the Greek agricultural sector’s competitiveness is proven by a growing trade deficit in agricultural products and foodstuffs – something that was unthinkable of in Greece 20 years ago. This deficit creates significant currency outflows which have a negative impact on the balance of payments and essentially weaken the benefits of EU subsidy inflows enjoyed by the country. This therefore, proves that the aim of agricultural policy should not be inflows from the EU, but the production of processed products of high added value that can compete on the international market. Globalization and the integration of markets is proceeding at a rapid pace, not just in financial markets, but in the product market as well. These changes are due to rapid technological developments, especially in telecommunications and transport, that have drastically reduced the cost of distance. The rapid changes on the international market require an equally rapid response, which, in turn presupposes knowledge and ability, as well as an extroverted market mentality. The Greek agricultural sector possesses none of these qualities. We have not only lost the battle of the international markets but of the domestic ones as well. The times when countries would seal their borders or raise obstacles against international trade in order to protect their trade balance belong to the past. All countries have understood that in order to achieve higher levels of prosperity for their citizens, they have to become more competitive, more outward-looking. Is there a way out? Of course there is, so long as efforts are well-structured and measures are complimentary to one another. What Greece needs is a radical restructuring of its institutions and of its administrative and support structures. Special measures must be taken for the most problematic regions of the country and we need policies for the overall development of the periphery. (1) Georgios Mergos is an Athens University professor of economics.