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EU: Ministers Agree To Reform Common Agricultural Policy

  • Mark Baker

Prague, 26 June 2003 (RFE/RL) -- European Union agriculture ministers, meeting in Luxembourg, have agreed to what is being hailed as a radical reform of the bloc's Common Agricultural Policy (CAP).

The deal, announced early today, came after some 16 hours of continuous negotiations among the EU's 15 member states.

The CAP was widely viewed as badly in need of reform. The system of farm subsidies takes up almost 50 percent of the EU's annual operating budget of around 100,000 million euros. Agricultural countries like France -- whose farmers on balance gain from the program -- are traditional strong supporters, while net paying countries like Germany have long called for change.

European Farm Commissioner Franz Fischler was enthusiastic in announcing the agreement: "In my view, the decision that we have made here today is the beginning of a new era."

The main change is that in the future, subsidies paid to farmers will no longer depend on the amount a farmer produces. Instead, subsidies will be based on the size of a farm -- although output-based subsidies will continue for some crops and beef products.

This is an important change because in the past, the system had encouraged farmers to overproduce, creating huge surpluses. The surpluses were in turn exported, depressing world prices for agricultural commodities, and bringing the EU into conflict with its main trading partners.

Among the strongest critics of the CAP were the developing countries of Africa, Asia, and Latin America, where the subsidies were seen as damaging the economies.

Today's agreement will hold total spending on the CAP at current levels of around 40,000 million euros until 2006. After that, the amount will rise to 45,000 million euros.

The agreement is also intended to strengthen environmental and farm-safety standards. The changes will be phased in over two years.

"I am certain that our agricultural policy will totally change on the basis of the new rules, because Europe has given itself a new, efficient agricultural policy," Fischler said.

Reaction from within the EU was mostly positive. British Agriculture Minister Margaret Beckett is quoted today as saying "the agreement today delivers what we wanted -- real change." Britain, like Germany, has been a longtime critic of the CAP.

French Agriculture Minister Herve Gaymard was quoted by the Associated Press news agency as saying he is happy with the deal. He said the 9,000 million euros that France receives every year will more or less stay the same.

The agreement was seen as necessary for preserving the EU's finances ahead of next year's planned expansion to include 10 mostly Central and Eastern European countries. Many of the new members -- most notably Poland -- are heavily agrarian.

Today's agreement is also hoped to give a boost to the current round of international trade talks launched in 2001 in Doha. The talks are aimed at lowering tariffs and increasing trade. The round, which is due to be completed next year, was seen as losing momentum -- in part because of what was seen as inaction on the part of the EU.

Reports said Fischler feared that if the EU did not reform its farm subsidy system, the United States and Japan would have little incentive to compromise at the trade talks.

The EU's farm support program dates from the 1950s and was originally set up to help war-ravaged Western Europe achieve self-sufficiency in food production. The system worked -- to the degree that by the 1980s, the EU was exporting large amounts of subsidized food products.

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