Applicants chastised for failing to tackle farming sector problems

Date: 11/11/1999

By Simon Taylor

GIVEN the EU's own poor performance in reforming its agricultural policy, it is not surprising that the applicant countries have been very slow in tackling the major problems facing their farming sectors.

The latest European Commission report on the progress made by the six front-runners in the enlargement process states bluntly: “None of the candidate countries have demonstrated significant progress in the area of agricultural structural reform.”

To be fair, the applicants have faced a major challenge in the decade since a wave of popular uprisings brought down Communist regimes across central and eastern Europe.

Throwing off the deadhand of state domination of the economy, the ten candidate countries in the region have faced a three-fold challenge in preparing their agricultural sectors for Union membership: creating a functioning land market, installing the essential administrative apparatus to apply the EU's labyrinthine Common Agricultural Policy - and most difficult of all - bringing their farming sectors up to Union levels of competitiveness and quality.

Creating a working land market, which is seen as essential to attract much-needed investment into the sector, requires answers to extremely sensitive political questions about ownership and compensation.

The Commission's report highlighted Romania as a country where land market problems meant there were “fundamental weaknesses in the foundations on which EC law is premised”. Bulgaria was also warned it needed to speed up the process of land restitution.

The freedom to buy and sell land has already emerged as a major bone of contention between the EU and applicant countries. Poland and Hungary are leading the campaign for permission to extend bans on foreigners buying agricultural land, amid fears that Union membership would spark a rush of wealthy EU speculators snapping up cheap farmland and driving locals out of the market.

Hungary argues that this issue should not be seen solely in eco-nomic terms and points out that the Union is adapting its own farm policy to reflect the social value of maintaining farming in areas where it might be under threat.

While a solution to this problem can be found through negotiation, the challenge of introducing the administrative apparatus which will be needed to cope with the complexities of the CAP will be harder to meet.

This problem is made worse by the small size of many farms in the applicant countries. The average dairy herd has only one or two animals, making it very costly and difficult to apply the heavy administrative burdens of the CAP's mechanisms.

Although the EU is providing €520 million a year to help the candidates adjust to the Union's rules, they will have to make major efforts themselves to meet their target dates for completing preparations.

The major problem remains the scale and structure of the farming sector in the candidate countries. While there has been some progress, with large collective or state farms being broken up and an increase in the average size of holdings at family-farm level, the proportion of the population employed in farming in many countries remains at very high levels. In Romania and Bulgaria, the numbers have increased as unemployed workers have returned to the land.

Poland's situation is causing the Commission the most concern.

Officials warn privately that the government has done nothing to tackle the massive need for restructuring because of fears of the political fallout from a social group which survived the wave of collectivisation visited on the rest of the former Communist bloc.

“The inertia in structural reform in the agricultural sector does not augur well for smooth adoption of the Common Agricultural Policy,” stated the country's recent progress report.

While these problems are at least being discussed, the debate on one of the most difficult issues in the negotiations - compensation payments - has hardly moved on at all over the last 12 months. The applicant countries still insist that their farmers should receive these

payments, which now account for well over half of the EU's total agricultural spending. But the Union is equally adamant that they are only meant to compensate farmers for the succession of price reductions introduced under the last two CAP reforms.

Denying farmers in the candidate countries the money will, however, be politically impossible because it would put them at an enormous financial disadvantage.