Farmers face threat of new CAP reform

Date: 23/11/1995

By Michael Mann

THE European Commission's long-awaited report on the future of the Common Agricultural Policy will warn that further reform is a necessity if the EU is to confront a number of internal and external challenges over the coming decade.

Not least of these is enlargement to the east. The Commission estimates that admitting up to ten Central and Eastern European countries into the EU without changing the CAP would add 10-15 billion ecu to the annual cost of the EU farm policy.

But in its White Paper on CAP and enlargement, to be published next week, the Commission is careful to describe its ideas as “developing the approach” adopted in the 1992 CAP reform, rather than as a radical programme for change.

The Commission is quite convinced that EU farmers will have to accept cuts in support prices, compensated by direct payments more closely linked to environmental and social factors.

Budgetary limits for such payments would have to be set under the spending guideline, with the Union switching from yearly price negotiations to a five-year cycle, involving the European Parliament.

The Commission also believes that “action at the EU level should be limited to framework legislation, the setting of common objectives”, allowing member states more freedom in implementing EU rules on income support, so long as they acted “to a large extent” within budgetary limits.

Price reductions will also allow the Union to export to the world market without subsidies, the Commission concludes, which will in turn permit it to circumvent restrictions under the GATT world trade agreement.

The aim is to “adapt and amplify” several existing measures to transform the CAP into an “integrated rural policy”. Farmers would fulfil the role not just of producers of food, but also “stewards of the countryside, managers of natural resources, suppliers of services”.

Efforts should be made to maintain economic activities in rural areas “wherever this makes sense”, the paper continues.

Following “a radical simplification of what is done at EU level”, efforts would be made to diversify and improve rural infrastructures, based increasingly on local initiatives.

The White Paper is careful to avoid suggestions that changes to the CAP are necessary specifically to ease enlargement. It points to long-term market trends, further liberalisation in future world trade negotiations and a wider debate about integrating environmental, social and rural aspects into farm policy as factors influencing its thoughts.

The paper rejects the status quo as likely to “add to the emerging imbalance and accelerate its deterioration”, eventually leading to an untenable situation and the need for “a major CAP reform”.

It also dismisses what it describes as “radical reform”. This would mean a virtual end to support prices, direct “decoupled” compensation paid on a national basis and the abolition of quotas. This, the Commission argues, would entail social and environmental risks and “huge sums of additional public expenditure” over a five- to ten-year period. It would also distort the market in favour of the larger countries.