EU pushes for major farm reforms

The 40-year old CAP has fallen into disrepute

By Tim Hirsch BBC Environment correspondent

The European Union's Agriculture Commissioner Franz Fischler is to unveil the most ambitious attempt so far to reform the much-criticised Common Agricultural Policy (CAP) on Wednesday.

At its heart will be an end to the link between the subsidies paid to farmers and the amount of food they produce.

The bewildering array of payments based on the number of livestock or the amount of land under cultivation would be replaced by a single subsidy based on past income - and that would be reduced over time.

Proposed reforms to CAP

Remove link between production and subsidy

Impose ceiling of 300,000 euros (£187,500)

Make direct aid dependent on observing environmental and food safety laws

Gradually cut support payments for rural development

Introduce farm subsidy inspection system

But there are also vocal defenders of CAP - notably France, Ireland and the southern Europeans, who say it is unfair to revisit the issue now after a reform package was agreed only three years ago.

The CAP dates back to the period after World War II when the overriding objective was to ensure that farmers embraced the most productive practices so that Europe would be self-sufficient in food.

But in recent years, it has fallen into disrepute, accused of encouraging environmental destruction while failing to prevent farmers from suffering financial hardship.

And it is estimated to cost the average European family £10 (16 euros) a week in taxes and higher food prices.

Subsidy reforms

Mr Fischler is expected to push for much more radical changes than most observers had predicted, until details of the package started to leak out in recent weeks.

Under the proposals, the largest farms would be penalised with a cap of 300,000 euros ($295,000/£187,500) on individual subsidies, and the very smallest farms would be exempt from any cuts.

The farming reforms are designed to help the environment

Germany and Britain have the largest farms in Europe, so this is seen as favouring the countries of Southern Europe, which have so far been most opposed to CAP reform.

The fear of Britain's National Farmers' Union is that since British ministers are so keen to see changes to the overall policy, they will be prepared to accept measures which are against the interest of their own industry.

Government sources have indicated that they too are unhappy about this aspect of the package.

They are also concerned that the proposals will do little to cut the overall cost of the CAP, since the reductions in subsidy will be ploughed back into new payments for environmental improvement and rural development.

Opposition

But there's no doubt that Britain together with allies including Germany, the Netherlands and Sweden strongly support the thrust of Mr Fischler's reforms, and believe this opportunity must be grasped now for two main reasons.

One is that the proposed enlargement of the EU to bring in former Communist countries of central and Eastern Europe becomes extremely difficult unless the system of farm subsidies is changed - the budget could not possibly afford to let these largely agricultural economies join on existing terms.

The other is that the CAP is a running sore in relations between the EU and developing countries, who complain that overproduction in Europe is flooding their markets with subsidised exports, jeopardising the ability of poor farmers to sell their produce at home.

But it is already clear that the proposals will face stiff opposition from a powerful group of EU countries led by France, which successfully blocked the last attempt at major reform in 1999.

Months of argument between ministers lie ahead, and it is impossible to predict whether the final outcome will bear any resemblance to Mr Fischler's package.

If the EU does duck this opportunity to go for major reform, the consequences for enlargement, international relations and the environment could be very serious indeed.

Environmental concerns

Mark Avery of the Royal Society for the Protection of Birds in Britain believes the proposed changes to the subsidy system would mean there would no longer be an incentive to over-produce and adopt practices which damage the environment.

"Farmers will be paid for farming, and then they'll have to react to the market, so things like overstocking of sheep on the hills which has been a big problem in many parts of Europe will no longer be profitable," says Dr Avery.

"Their incomes will be protected and they can choose to farm in a more environmentally friendly way. That's jolly good."