15 May 1998

Brussels U-turn on cash offer

BRUSSELS is reneging on a former promise by offering farmers only partial compensation for price cuts under Agenda 2000.

According to EU farm body COPA, the promise was made in 1993 when the European Council said if the MacSharry reforms did not meet all requirements of the last GATT agreement, farmers should not face further restraints.

"COPA considers this to be a clear undertaking that if the EUs GATT commitments mean further reductions in support prices, farmers will at least be fully compensated by direct payments," it says. "Yet the commission is proposing only partial compensation; 50% of the price cut for cereals; 60% for beef and 70% for milk."

The Commission argues that market prices will not fall the full extent. It also wants to avoid over-compensation.

"But farmers do not want over-compensation," says COPA. "They want fair compensation which fully offsets any losses. Either support price cuts must be limited or there must be additional aid linked to market prices."

COPA also attacks the Commissions claim that further CAP reform is needed to reinforce the EUs position in the coming round of world trade talks. The reverse is true, with a real danger that EU farmers will pay twice, by lowering support before the WTO round, and again afterwards.

Reforming now is "strategically misguided", says COPA, suggesting the commission is "tying its hands before negotiations have started".

Agenda 2000 also paves the way for distortion of competition through the creation of national envelopes of aid money and allowing member states to set environmental conditions for farmers to qualify for support.