New research backs reform of EU farming subsidies

08/17/05

New research has provided further support for UK Prime Minister Tony Blair's call for Europe's Common Agricultural Policy (CAP) to be reformed. It concludes that the current distribution of over 90 billion Euros in farming subsidies will lead to even greater inequalities between rich and poor regions of Europe.

In the first comprehensive study of the effect of CAP on Europe's regions, a team from the Universities of Newcastle upon Tyne and Aberdeen found that, even after the CAP reforms agreed in 2003-04, rich, core regions in Germany, the UK, France and the Netherlands are collectively taking a greater slice than poorer, peripheral regions in Spain, Italy, Poland and southern and eastern Europe.

These outcomes work against the European Union's cohesion objectives which seek to reduce inequalities between richer and poorer regions, say the study authors, who publish the findings from their two-year study in a new book, out today.

Tony Blair is urging EU member states to reform the CAP, saying that more money needs to be directed away from farming production towards technology and research to boost Europe's economy. He also says that the EU must act before 2013 - the end-year of the current CAP deal.

In the new book, CAP and the Regions: The Territorial Impact of the Common Agricultural Policy, Professor Mark Shucksmith, of Newcastle University's School of Architecture, Planning and Landscape, Emeritus Professor Ken Thomson, and Dr Deb Roberts of Aberdeen University's Business School, base their conclusions on various official data sources on EU funding.

The authors criticise the CAP and its recent reforms, which they say did not go far enough to redress the balance between rich and poor, and they make a number of recommendations for changes that they say could better achieve the EU's cohesion objectives.

Currently, CAP subsidies are awarded from two pots, called Pillar One and Pillar Two. Pillar One, worth 90bn Euros per year (about 60 billion, or 131 per man, woman and child), is made up of direct subsidies paid to farmers and the cost of 'market price support' - consumers paying higher prices for farm products. This overwhelmingly favours the prosperous, core regions with large farms producing grain, milk and beef, rather than poorer, peripheral regions with smaller farms and products like olive oil and wine.

Perhaps more surprisingly, the newer and much smaller rural development measures, Pillar Two, worth 4.6bn Euros per year (about 3 billion, or 10 per head), and offering support for environmental farming and 'Less Favoured Areas' such as hills and mountains, also go predominantly to the richer nations of the EU. This is mainly because these measures are more used by the rich countries of North West Europe, who are more able to exploit the relevant Regulation.

Professor Shucksmith and his team call for money to be redistributed gradually but more quickly from Pillar One into Pillar Two. This would mean reducing the amount of direct subsidies for farmers, decreasing market protection over time, and increasing the amount of money available for environmentally friendly farming, and rural development measures generally.

They continue by saying that the distribution criteria for Pillar Two funds should be changed so that poorer nations have a bigger slice of the money to boost their rural economies.

Key recommendations include the distribution of Pillar Two funds according to relative need, and the expansion of schemes such as the European Union's LEADER programme, which funds rural communities to come up with their own solutions to economic problems. The researchers also suggest that, where initiatives require match funding from a member state, poorer nations should only have to provide a reduced percentage.

Professor Shucksmith said: "Tony Blair is right in saying that the CAP money should be redirected towards other areas and that this needs to begin before 2013. In our book, we are not talking about a sudden change, but a gradual and preferably well-planned move towards measures that will provide a sustainable future for our rural areas. The EU's regional policy is intended to build up the poorest regions but the CAP is doing the opposite, not only through its still-substantial expenditures but also through much less transparent import barriers."

Professor Thomson urged that society-wide - and not simply agricultural - arguments should be used to decide and promote the best ways of using available EU funds. He said: "EU funds should be used in ways that address EU-wide problems and this includes encouraging many of the member states in the south and east of the enlarged Community to address problems of agricultural and rural development in their regions.

"The CAP should not simply try to prop up traditional agricultural structures where these are no longer viable due to demographic and economic changes, including wider markets. We need to develop new elements of the rural economy that people will want to continue paying for in the long run, such as environmental projects and community action."

The authors believe that their proposals would also help the EU to meet pressure through the World Trade Organisation for EU food prices to be realigned with world levels, and thus give all poorer nations a fairer chance to trade within the global economy."

Source: Eurekalert & others

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