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Greening the Cap Monday, 22 February, 1999, 19:24 GMT
Small change for consumers
checkout
Agenda 2000: A recipe for reform that will not bring food prices down
By Environment Correspondent Alex Kirby

Europe's Common Agricultural Policy (CAP) does not come cheap. To achieve its aim of giving EU farmers a reasonable standard of living takes almost half the Union's entire budget.

Greening the Cap
In 1996 EU taxpayers contributed 56.1 billion to pay for the CAP - 46 bn from the EU budget, the rest for extra farm spending by individual member states.

In 1997, the estimated cost for every person in Britain of supporting the CAP was about 4 a week. Although world prices have risen in recent years, they are still appreciably below the levels paid by the CAP to European farmers.

There is no sign that that will change much under the reforms tabled by the European Commission, the Agenda 2000 proposals.

They are intended partly to reduce future spending, which cannot go on at the present rate once the EU expands to include countries in central and eastern Europe.

Breaking the link

But just as importantly, the reforms aim to redistribute the money spent, redirecting more of it from large farmers to small ones.

The idea is to try to sever the link that has always been the basis of the CAP, which has meant that the more farmers grow, the more they are paid.

Agenda 2000 seeks to steer subsidies away from production, the system which created the grain mountains and wine lakes, and to more socially useful ends.

stall
There will be savings - but for whom ?
So small farmers would get the extra help, not to produce more, but to cope with the demands of working marginal land.

And all farmers would, at least in theory, be eligible for support if they made their farms more environmentally friendly.

Greening the CAP, and using it to keep farmers working in remote areas like the uplands which would stagnate if they left, may well be laudable.

Cost will rise

But although it will be less damaging than the present system, it will hardly be cheaper.

Making the switch, in fact, could add an extra 2bn or so to the cost of the CAP.

The EU agriculture commissioner, Franz Fischler, told British farmers this month: "Governments have to realise that if they want a fitter, leaner more competitive agricultural sector, then it is going to cost money.

trolley
They'll still be as expensive to load
"On the other hand, the reforms will bring a major overall economic gain to farming and to consumers."

Dr Fischler said independent studies had shown a potential saving of up to 1.2bn a year by 2005 "if farm gate prices fall by the full percentage of the proposed reduction, and if they are passed on".

His qualifications are important. Farmers doubt that any price reductions they make will in fact be passed down the food chain.

They believe it is the food processors and supermarkets who will enjoy the benefits, not individual consumers.

So the supermarket trolley may cost just as much as it does today.

See also:

20 Oct 98 | The Economy
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