CEECs would pay price of limited farm reform

Date: 24/09/1998

By Myles Neligan

ONE of Farm Commissioner Franz Fischler's main justifications for reforming the Common Agricultural Policy is the compelling argument that the expense of extending its present highly generous subsidies to the applicant countries would bankrupt the EU.

The sums are simple. The Commission has calculated that applying the unreformed CAP to the six 'first-wave' applicants would cost an extra 10 billion ecu per year.

The Union's austerity programme, which dictates that enlargement should be completed without any proportional increase in its existing members' budgetary contributions, means that by 2004, when the first candidates may already be on board, total transfers to new members cannot exceed an estimated 8.8 billion ecu. The EU would therefore face a shortfall of 1.2 billion ecu if CAP were left in its present form.

Fischler's proposed reforms essentially aim to pre-empt such problems by abolishing the more profligate CAP subsidies before any of the central and eastern European countries can claim them.

The long-term objective is to set in place a more minimal system of agricultural support. “It's a case of robbing Peter to pay Paul,” quipped a Commission official when the institution first unveiled its CAP reform proposals.

The problem is that keeping within the Commission's tight spending constraints depends to a large extent on the success of the agricultural reforms, and this cannot be taken for granted. National governments accept the logic of Fischler's proposals, but they will certainly not accept his planned reductions in guaranteed farm product prices (30&percent; for beef, 20&percent; for cereals and 15&percent; for milk) in their entirety. Every concession they wring from the Commission runs the risk of upsetting the institution's delicate budgetary calculations.

Commission officials stress that they have left themselves some margin for manoeuvre in their budget projections up to 2006. But if member states force major concessions, it is the eastern applicants who will have to pay the price in the form of tougher transitional arrangements.

As many of them already object to the present proposals, under which CEEC farmers will not qualify for the large direct subsidies paid to their western counterparts, this could make the final stages of the accession negotiations highly problematic.