A complete makeover for EU agricultural subsidies

The revised Common Agricultural Policy (CAP) will radically change farming in the European Union. European Commission spokesman for agricultural issues Franz Fischler reiterates at every opportunity that the CAP must be dealt with during the Greek EU presidency, and he met Greek Prime Minister Costas Simitis in Athens for that purpose. Despite objections from member states, there is every indication that the Commission’s proposals, which were submitted on January 22, 2003, will not be drastically amended during negotiations. The Greek government has taken advantage of the fact that it currently holds the EU presidency to avoid taking a stand against the proposals. In fact, its attitude is far from negative, as it has stated that the majority of Greek farmers will not be affected by the changes. The only objection it has raised is the inclusion of Mediterranean products in the negotiations, a petition which has not been granted. The opposition has not raised any serious objections either, simply admonishing the government to defend the Greek farmers’ interests. Yet the main rural cooperative (PASEGES) and farmers’ unions that belong to the leading political parties (SYDASE, with New Democracy and GESASE, with PASOK) are diametrically opposed to the Commission’s proposals and the revised CAP. Farmers are joining protest rallies en masse, and not one of them believes that what is coming will benefit them. Why are farmers objecting, regardless of their political views? Objections Farmers object to the decoupling of farmers’ subsidies from the amount and type of goods they produce. The Commission proposes that farmers receive a uniform sum that will replace most current subsidies. The sum will be calculated according to total EU farm revenue for the past three years, a formula the Commission believes will enable producers to change crops so as to meet market needs and to emphasize quality. Farmers’ organizations counter that the system will lower incomes and reduce production, thereby forcing food manufacturers to import raw materials. Subsidy reductions Modulation is the gradual reduction of uniform subsidies for producers from 2006 to 2012. Farmers receiving less than 5,000 euros subsidy a year will be exempt. By 2012 there will be a reduction of 12.5 percent for farmers receiving up to 50,000 euros and 19 percent for those receiving more than 50,000 euros. Part of the money saved by this measure will be redistributed to member states for agricultural development. Farmers’ organizations protest that CAP expenditure on Mediterranean products has been stable since 1992 (about 8 billion euros a year), and so these products ought to be exempt from the measure. Although Agriculture Ministry figures show that only the 9.8 percent of producers who receive subsidies in excess of 5,000 euros will be affected by the changes, farmers say many more than that will be affected. These statistics do not include all producers, as there are sectors such as oil and cotton production which have not yet been included in the new proposals. In its most recent proposals, the Commission removed the paragraph which imposed an upper limit of 300,000 euros payment per farm, which runs counter to one of its basic arguments for adopting modulation – a more equitable distribution of EU funds – since only 20 percent of farmers receive 80 percent of the subsidies. In order to get subsidies, farmers must meet cross-compliance requirements. This entails ensuring that their farms comply with certain criteria concerning environmental protection, food safety, animal welfare and work safety. Penalties Infringements of the rules will incur penalties in the form of reduced EU subsidies ranging from 10 percent to complete exclusion from the subsidy system. Farmers do not disagree with the implementation of environmental measures, but believe it is hard to enforce new rules when Greece cannot implement the old ones. The imposition of fines, as of 2004, will lead to large reductions in subsidies, as in Greece neither farmers nor the administration system are ready to implement such measures. The exclusion of Mediterranean agricultural products from this stage of the negotiations has aroused keen suspicion, since subsidies for such products will be included in the overall philosophy of the revised CAP. The EC’s proposal aims at «an agreement for a long-term CAP policy» but it does not say what will happen to products, such as olive oil, tobacco, cotton, fruit and vegetables and wine.