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Last Updated: Sunday, 29 June, 2003, 12:23 GMT 13:23 UK
Farm reforms 'biggest in 40 years'

By Tim Hirsch
BBC environment correspondent, Luxembourg

It was seven o'clock in the morning and a bleary-eyed EU official was briefing haggard journalists about the latest twist in the negotiations on reforms to the Common Agricultural Policy, by then in their 16th continuous hour.

Farmer ploughing field
Reform is aimed at discouraging overproduction
He was interrupted by a mobile phone call. "The ministers have ordered up the champagne!" he announced, causing pandemonium as the hacks scattered to file the story that a deal had finally been struck.

Reaching agreement on the reforms involved fudge and compromise which significantly weakened the original plan for a complete overhaul of the system of paying farm subsidies.

There are those who have claimed that the reform package which emerged from three weeks of mauling by ministers will do little or nothing to address the absurdities of the current system, such as the incentives to overproduce, the flooding of world markets with surplus food and encouraging farmers to trash the environment.

The idea is that in future farmers will make their decisions according to good business judgements, rather than how much subsidy they can earn.
Tim Hirsch
In my judgement that is a mistake. Fudge and compromise there may have been, but this could still signal the biggest change for farming and the countryside in Europe - and especially Britain - for more than 40 years.

The core of the plan drawn up by EU Farm Commissioner Franz Fischler remains and most of the subsidies paid to farmers according to how much food they produce will be abolished.

In their place from 2005 will be a single farm payment which will not be linked to what is grown, but which will be dependent on proper care being taken of the land and livestock.

The idea is that in future farmers will make their decisions according to good business judgements, rather than how much subsidy they can earn.

As the payments reduce, there will also be more money available for those who choose to take on extra responsibilities for managing the land to encourage wildlife.

Dire consequences

The fudge is that there will be exceptions and delays to this "decoupling" of subsidies from production.

This was the price for getting the agreement of countries like France, Ireland and Spain, which had warned of dire consequences for their huge farming industries if the plans were not toned down.

Individual countries will be able, if they wish, to keep some of the subsidies linked to the amount of food produced - a quarter in the case of crops, 30% for beef and half for sheep.

The rest of the payments will be made regardless of how much is produced.

There is a fear that as well as diluting the plan, these concessions could create new distortions and perverse incentives

In addition, countries will be able to delay the changes for two years until 2007 if they say they need time to adjust -- this was something insisted on by France.

There is a fear that as well as diluting the plan these concessions could create new distortions and perverse incentives.

Farmers in different EU countries could be operating under very different market conditions, and they could encourage abuses such as "cattle tourism" in which live animals are transported across borders simply to attract particular subsidies.

But the overall impact of the reforms should be to reduce greatly the incentives for farmers to overproduce, especially as countries which only partially "decouple" their subsidies will be heaping more red tape on their agriculture.

This may in the long run be seen as a bigger disadvantage than the full changes.

And some countries including the UK (or at least England) have made clear that they will decline any opt-outs, and press ahead as far and as fast as possible with the transfer of cash from food subsidies to measures which help the environment and improve food quality.

Wildlife protection

This is why the reforms have been greeted enthusiastically by groups such as the Royal Society for the Protection of Birds, English Nature and the Campaign to Protect Rural England.

They believe the opportunity is now in place to reverse the decline of many types of wildlife such as farmland birds, squeezed out of the countryside by four decades of incentives for farmers to use every corner of land to grow more - thanks to the Common Agricultural Policy.

Aid charities such as Oxfam have been scathing about the reforms, claiming they will do nothing to address the damage done to developing countries by forcing poor, unsubsidised farmers to compete with their protected European competitors.

After all, they argue, the same amount of public money will still be heaped on farmers, just shared out in a different way.

EU Farm Minister Franz Fischler
EU Farm Minister Franz Fischler drew up the original plans

But the changes, imperfect and diluted though they may be, will put countries such as the US and Japan on the defensive to justify their own food production subsidies.

The death of the Common Agricultural Policy, to paraphrase Mark Twain, may have been greatly exaggerated. But it could just have emerged from these changes as a reformed character.

Q&A: EU farm reform
11 Jun 03  |  Business
Fischler's farmyard revolution?
26 Jun 02  |  Europe
Down on the farm
03 Dec 02  |  Business
Fudge to CAP it all
21 Jun 03  |  Europe

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