EU set to kick its subsidies habit

Date: 07/07/05

The EU is spending Û72 million on a new media campaign, which will include placing off-putting images of cancer and sexual impotence on cigarette packets.

But that looks paltry compared with subsidies for tobacco crops at about Û1 billion per annum. And much of the EU-funded tobacco is exported to developing countries, where smoking-attributed deaths are rising steadily.

The Union's policymakers are particularly vulnerable to accusations of hypocrisy over tobacco.

But an agreement on reforming tobacco subsidies reached by EU farm ministers last year should deprive critics of much ammunition.

Crop-specific subsidies for tobacco are to be phased out and replaced with payments that are not based on the level of a farmer's production. "This means that there will be no specific tobacco subsidies," says Michael Mann, the Commission's spokesman on agriculture. "It is true that in some regions in the southern parts of the EU, there is apparently not much alternative to growing tobacco. But we hope that by having a single farm payment to guarantee their income, farmers won't want to grow tobacco anymore."

While raw tobacco is produced in twelve of the EU's 25 states, Greece, Italy and Spain account for the vast bulk of the crop grown in Europe. Before the EU admitted ten new countries last year, 87% of all tobacco produced in the Union came from those top three producers.

Luc Joossens from the European Cancer League says: "This practice of giving Û1bn to tobacco subsidies and only a few million euros to anti-smoking campaigns should end by 2010."

"Some felt that the time schedule [for phasing out] was too long but we have to take into account the social aspects," he adds, referring to how tobacco growers often live in economically disadvantaged areas.

The European Court of Auditors has also complained of anti-competitive behaviour in Spain, Greece and Italy, particularly price-fixing between growers and tobacco industry.

In October 2004, the Commission signalled that it was taking a firm line against such activities by fining five companies involved in the Spanish raw tobacco processing market a total of Û20m. "The agriculture sector is not immune from competition rules," declared Mario Monti, then the competition commissioner. The size of the fine was particularly significant, given that Spain's raw tobacco sector is only worth about Û25m a year.

Article compares the cost of the EU's anti-smoking campaign to the tobacco subsidies it pays out to EU farmers. In 2004 it was decided that crop-specific subsidies for tobacco were to be phased out and replaced with payments that are not based on the level of a farmer's production.

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