Russian collapse boosts case for EU farm policy reform

Date: 24/09/1998

By Myles Neligan

AGRICULTURE Commissioner Franz Fischler will warn EU farm ministers next week that the Russian economic collapse has made agreement on his package of farm reform proposals imperative.

Fischler is expected to argue that unless he is given the go-ahead to cut EU agricultural support prices, the loss of Russian export markets and tougher competition in alternative export destinations will make it impossible for European farmers to compete with their rivals in the US.

But he admitted this week that the depressed state of world agricultural markets means that he may have to dilute his Draconian proposals for farm support price reductions. “Our original estimates are now a year old and they need updating,” he said.

A European Commission report to be unveiled at a ministerial meeting next Monday (28 September) predicts the Russian crisis will hit beef farmers particularly hard, leading to “consequences as worrying as the BSE crisis”.

The report estimates that the loss of the Russian market, which accounted for 41&percent; of EU beef exports last year, could result in additional surpluses of 300,000 tonnes. The crisis will also have serious consequences for pig farmers who may see their exports fall by as much as 32&percent;.

But independent experts say the report is unlikely to have a decisive effect on the debate on the proposed changes to the EU's Common Agricultural Policy.

The Union countries most directly affected (Ireland, Denmark and the Netherlands) argue that the crisis in Moscow is a short-term phenomenon, and that it would be better to introduce temporary market support measures to help EU exporters maintain their share of the Russian market. The Dublin government has already requested an increase in the beef intervention price.

At next week's meeting, EU farm ministers will also hold their first discussion on Fischler's proposed reform of the wine sector. The unveiling of the proposal, originally scheduled for June, was delayed for a month after Budget Commissioner Erkki Liikanen raised objections to the extra 500 million ecu per year needed to implement it.

The revised plan, to be discussed by ministers, scales down this additional expense considerably. However, non-producer countries are expected to protest that increasing expenditure on one agricultural sector is indefensible at a time when most others are facing large cuts in funding.