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Greening the Cap Tuesday, 23 February, 1999, 11:45 GMT
EU says CAP no longer fits
Farmers are angry at the prospect of subsidies being cut
By Jonathan Beale in Brussels

The Common Agriculture Policy is one of the most controversial pieces of European Union legislation.

EU Agriculture Ministers are meeting with a view to reforming the policy, but the move has angered farmers who fear their subsidies will be cut.

The farm budget and other subsidy programmes, which take up most of the EU's 85 billion euro annual budget, will have to be trimmed to allow as many as 10 east European nations to join over the next half decade.

Why reform CAP now?

Only 5% of the EU population work in agriculture
Once farming was the biggest employer, now only five percent of the EU's population work in agriculture. Why should such a small number of people benefit from half of the EU's budget?

The EU is also expanding eastwards and it can't afford to subside candidate countries at the same level. In Poland 25% of the population work in agriculture. If the EU continued to subsidise farmers there it would soon be bankrupt.

Finally, by offering guaranteed prices and export subsidies the EU is falling foul of World Trade Organisation rules to ensure fair trading. Essentially if the EU does not reform it would not be allowed to export food abroad.

How will it be reformed?

With difficulty. Fifteen member states must agree on the reforms and at the same time try to keep their own farmers on side.

The main aim will be to switch subsidies from production to income, in other words trying to help the poorest farmers rather than guaranteeing food prices.

The British and Germans (Germany currently holds the EU presidency) favour "co-financing". It means member states would take more financial responsibility for their own farms - paying up to 25% of subsidies.

Clearly forcing national governments to pick up some of the CAP bill would make them more willing to find savings.

But there's strong opposition from the French to co-financing. Perhaps no surprise since France currently is one of the net beneficiaries of CAP.

Instead it seems more likely that a deal will be struck on a gradual cut in subsidies. It means there would be reductions of up to three percent a year on all subsidies related to productivity.

There seems to be broad agreement on this, but the devil is in the detail and each country may have problems with the percentage of cuts proposed for different sectors dairy, beef or cereals.

Will there be an agreement?

Not this week, even though there's a marathon farm ministers meeting in Brussels and a mini summit of EU heads of state in Bonn on Friday to try to broker a deal.

France has said that it won't approve anything until it knows what happens to the EU's structural funds. This money which goes to help Europe's poorer regions is the other half of the negotiations for Agenda 2000.

But it does seem that the basis for a deal is there, even though most of the farmers who will be protesting in Brussels will fear they'll be left in a worse position with the end of guaranteed food prices.

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