Farm ministers seek to hold back reform tide

Date: 11/03/1999

By Simon Taylor

THE winds of change may be blowing across the European Union, but farm ministers are famous for refusing to be buffeted.

Despite signs that a new cost-cutting attitude to EU spending would force them to bite the bullet and reduce handouts to farmers significantly, ministers have gone for the soft option of watering down the European Commission's proposals for reform and delaying key elements of the package.

Hopes that farm ministers would accept a radical overhaul of the Common Agricultural Policy were boosted last autumn by signs that new German Chancellor Gerhard Schröder had learned to do an impression of Mrs Thatcher, who slammed her handbag on the table and demanded her money back.

Back in 1997 when the Commission originally put forward its plan for overhauling the EU's budget to prepare for the first seven years of the next decade, the idea was to give farm ministers more than €50 billion a year by 2006 to dole out to the agricultural community.

But pre-election noises from Germany, where Bonn's huge net contribution was becoming a hot topic, plus pressure from the Dutch, Austrians and Swedes, produced a change of heart in EU governments.

Instead of nodding through another increase in the amount of taxpayers' money spent on farmers to head off their protests, ministers were forced to contemplate keeping spending stable over seven years - a move which would have effectively sliced €10 billion off the farm budget.

Faced with the thorny problem of reconciling reform of the Union's Byzantine farm support policies with stricter funding arrangements, they considered cutting back payments by the end of the budget period, something which everybody outside the farm sector and the continental political elite have been demanding for years.

But as the negotiations moved towards their climax, ministers shied away from reining in farm payments. The original aim was to maintain the annual budget at the 1999 level of €40.5 billion in 2006, as demanded by the fiercest supporters of budgetary stabilisation. However, the deal agreed this week after long hours of fierce negotiations would exceed that by an estimated 2%.

Agriculture Commissioner Franz Fischler, like so many of his predecessors, was forced to watch while farm ministers diluted his plans, rowing back on key changes and piling on demands for extra concessions.

Fischler was putting a brave face on this after the negotiations, insisting that the package still amounted to the biggest-ever revamp in the CAP's near 40-year history. However, he had to give ground on what, for him, were the most important parts of the reform proposals.

He was forced to accept a 20% cut in beef support prices, instead of the 30% he had called for, and a three-year delay in reducing dairy sector prices by 15%.

Fischler had also hoped that the reforms agreed by ministers would be far-reaching enough to appease the EU's trading partners. Instead, if the deal is approved as it stands by finance ministers and Union leaders, he will find it hard to defend the EU's agriculture policy in the forthcoming World Trade Organisation talks which are due to start at the end of this year.

The US and other major agricultural trading nations such as Australia and New Zealand will be pushing hard for an end to direct state support for farmers based on how much land they farm or how many animals they keep. These countries maintain that these subsidies distort world trade just as much as the system of subsidising EU farm exports.

If agriculture ministers had agreed to start reducing payments over time, Fischler would have been able to argue that by the Union was moving towards a policy where payments were made simply to achieve certain environmental or social policy goals. Instead, he will come increasing pressure to make more substantial concessions at the WTO talks.

Article forms part of a survey on Agenda 2000, p11-14.