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Greening the Cap Monday, 22 February, 1999, 19:23 GMT
Putting a CAP on Euro spending
Revolution is brewing in the countryside
It has spurred farmers from across Europe to desert their fields and spill out onto the streets of Brussels, burning haystacks and waving banners.

Reforming the Common Agricultural Policy or CAP was always going to a touchy subject.

Greening the Cap
The policy soaks up about half of the EU's annual 65bn budget - more than 30bn a year, most of which is handed out to prop up EU farm incomes.

This is despite the fact that 5% of the workforce is actually employed in agriculture.

The cash helps farmers compete on world markets, where prices for their produce are cheaper.

The system is a post-war legacy based on Europe's determination to guarantee food supply and a thriving farm industry at whatever cost.

But it led to the undesirable position in the 1970s and 1980s where grain and meat mountains and wine lakes were allowed to build up through over-production and farmers were being paid to keep their fields fallow.

Pressure has been mounting for years to make Europe's farmers face up to economic reality and wean them off the drip-feed of cash from Brussels.

Growing burden

The looming expansion of the EU, with east European nations queuing to sign up, is the catalyst that has prompted the overhaul of the CAP system.

If the EU continued to subsidise farmers there, it would soon be bankrupt.

Some countries also resent how much they are expected to contribute.

Nations like Germany, once arch-opponents of farm reform, have decided that they cannot afford to go on being the main paymaster of the CAP and would like to see a complete freeze on spending. Britain too, is keen to curb subsidies.

Another spur has been the need for the EU to comply with World Trade Organisation rules to ensure freer trade.

A tractor in a hayfield
Farmers fear for their livelihoods
This means cutting import tariffs and export subsidies and generally forcing farmers in Britain and other member states to rely on world market prices.

The aim is to alter the system now so that substantial savings can be made by 2006. The European Commission hopes to save as much as 1.7bn a year.

In the short term however, the CAP will cost taxpayers more perhaps 3bn a year in compensation payments to farmers.

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

The Commission is proposing to slash guaranteed prices and export subsidies for meat, cereal and dairy products by up to 30%.

There are also proposals to make national governments responsible for 25% of direct aid to farmers. This is deeply unpopular with France which would lose out financially.

Farmers fear the reforms will damage their incomes at a time when farm revenues are already under pressure from depressed world markets.

Conservative leader Wiliam Hague says that any reforms which hit bigger farms harder will be unfair, with Britain's average farm size of 168 acres comparing, for example, to Italy's 15 acres or Austria's 32 acres.

Radical reforms

But European Agriculture Commissioner Franz Fischler insists reform is inevitable and is set on driving through the Agenda 2000 farm spending proposals at a special summit due to take place on March 24-25.

He said: "We need a result by the end of March. We are no longer prepared for intervention stocks and food mountains."

Graph of what people get out of the EU
Countries like Germany and the UK get a lot less from the EU than they put in
However, he also told protesting farmers that subsidies would not disappear altogether and markets would grow.

He said: "These farmers should take into account that they will have more production opportunities in the future.

"We are prepared to pay for losses of income, we are prepared to pay more for environmental issues and more for taking care of the landscape."

Ben Gill, president of the England and Wales National Farmers' Union, has acknowledged that change is needed.

He said: "We do accept that reforms are necessary but we must do them in an organised way that does not mean that large tracts of British agricultural land are hit.

"We need to be organised so we have a simpler CAP that allows farmers to be more market-orientated and competitve, but still in a position where they have a fair chance of making a profit."

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