7 January 2000

Farmers need to market more to escape crisis

By Philip Clarke

THE days of direct production aids are numbered, and, instead, farmers should look towards marketing initiatives as a way out of the current crisis.

Addressing this weeks Oxford Farming Conference, farm minister Nick Brown said the current Common Agricultural Policy was failing to serve the interests of farmers, consumers or taxpayers.

"The cost is huge," he said. "The CAP costs UK taxpayers and consumers more than £10bn annually. Around half of this is returned to farmers, accounting for 30% of the value of agricultural output, or to put it another way, 230% of total income from farming in 1998." Despite this, many sectors of farming were in crisis.

The CAP would also come under renewed pressure from the World Trade Organisation. Despite the failure of the Seattle meeting last month to launch an overall new round, fresh negotiations on agriculture are due this year.

"These negotiations will be aimed at continuing the process of substantial progressive reductions in support and protection, resulting in fundamental reform."

It would have to go further than the Agenda 2000 package agreed in Berlin last year, Gus Schumacher, under-secretary at the US Department of Agriculture, told the conference. "This is not a durable policy for the future."

He accepted that some payments to farmers were legitimate – so long as they were non-trade distorting and did not influence growers planting decisions.

But the EUs continued use of export subsidies was "the largest single distortion of agricultural trade in the world". "The EU was isolated in Seattle. The rest of the world disagrees with Europe on this issue."

A swift resumption of negotiations on agriculture under WTO was essential. "If we do not get started now, we risk damaging the credibility of the entire international trading system."

A move to greater trade liberalisation was not a threat to UK farming, added Mr Brown. But farmers would have to work with the rest of the food chain to secure a premium price for UK produce.

"With farm incomes as low as they are, the temptation is to seek to graft additional supply side measures on to the CAP. This is not the answer. It is only by looking at what can be done on the demand side that farm businesses will overcome their current difficulties." &#42