year, another bumper subsidy for European farmers, yet this time
it is different.
The European Union (EU)
farmers to the tune of around €70 billion a year and has been a key part of
the European Union for as long as the organization has existed. It is the
one truly common European policy, and it has been the butt of endless
criticisms over the last 50 years for it's propensity to create butter
mountains and milk lakes, to undercut farmers in the developing world and
for it's ability to shield farmers from taking the tough decisions that
market forces normally demand.
Yet times are
changing. Since the late 1990's, encouraged by the Word Trade Organization (WTO), the EU has gradually
been moving towards a more liberal and cheaper policy. In the 1970's
Agriculture accounted for 70% of the EU budget, now it is down to around
38%. The butter mountains and milk lakes are gone (although the wine lake
remains!), quotas are disappearing in the milk and sugar sectors and farmers
are no longer paid a subsidy for what they produce, they are now generally
paid for keeping their land in good agricultural condition and encouraged to
make money directly from the market.
EU Ag policy is
becoming much more liberal, or at least it was under last year. Sensing the
direction that the Common Agricultural Policy (CAP) was travelling, farm
organizations and the European
Commission realised that they needed a new justification for paying
subsidies to farmers as the market was clearly winning the propaganda war.
They came up with the environmental protection argument and have devised a
new policy, known as "greening" which will now pay farmers the same subsidy
as before, but now they have to carry out three environmental measures on
their farm. The three measures are to keep 5% of the land in set aside, to
grow at least three different crops at the same time and to not convert
permanent grassland on the farm into arable land.
This year these new
reforms will be implemented in farms across Europe and very little good will
come of it. Small European farms, who already struggle to be economically
viable due to their size, are now faced with reducing their production in
order to ensure that they continue to get their subsidy (a subsidy that
accounts for half of farm income on average).
The end result will be
a policy which is not green, as farmers will be encouraged to overproduce on
the parts of the farm they can use, an increase in the already high food
prices in Europe and an increased reliance on the subsidy as farm income
For the first time in
a decade the CAP is going backwards. Europe has some of the most productive
agricultural land in the world and a well funded industry. Yet it is
hampered by an agricultural policy which actively tries to stop the
necessary rationalization of the industry into bigger farms and a scientific
policy which blocks farmers from using most of the modern technology
available to farmers in the rest of the world. At some stage in the future
this will change, but for now European farmers will continue to face these
challenges and European consumers will continue to pay over the odds for the
food they buy.