28 April 1995

Ministers CAP vision – further cuts in support

By Peter Bullen

FARMERS face further EU support cuts without long-term compensation if farm minister William Waldegrave has his way.

The minister spelled out his vision for the future at a European Policy Forum conference on reforming the CAP in London.

In a speech that revealed some of the first influences of his CAP reform "think tank" appointed in December, he described the inevitability of further reform to meet both GATT requirements and the enlargement of the EU with east European countries.

He said many would argue farmers should be compensated for policy changes as they were in the past when prices or milk quotas were cut but he was not convinced that compensation need always be justified. "And certainly not on an ongoing basis as was agreed in 1992," he added.

Later he explained he did not rule out short-term, transitional compensation but the idea that taxpayers should provide farmers with permanent compensation was vastly pessimistic. "I am strongly in favour of an EU agriculture that can stand on its own feet on world terms," he added.

In any case, removing CAP support as part of a global GATT programme could increase world cereal prices by up to 20%, beef and sheepmeat prices by 30% and sugar and dairy products by 50%, he estimated. At the same time farmers input prices would fall and they would use fewer inputs.

"Any compensation arrangements would clearly need to take these factors into account."

Mr Waldegrave admitted British enthusiasm for CAP reform was not widely shared among the commission or other member states. Nevertheless, further radical reform was inevitable because growing agricultural productivity plus EU enlargement would increase food surpluses which could not be subsidised for export to third countries because of GATT restrictions. In addition there was another GATT review due in 1999 aimed at further cuts in protection and support.

The EU would have to choose between a more open liberal policy or further tightening of supply controls to contain production to meet GATT limits. He found the prospect of ever-tightening supply controls to insulate EU farmers from increasing world competition as "deeply unattractive".

The only realistic alternative was to change policies so EU farmers could export their products without the need for subsidy.

But he warned that any support changes would have to be introduced gradually to give farmers time to adjust. Special help may also be needed for socio-economic or regional reasons. This should be financed wholly or largely nationally, with the commission given tough powers to prevent any trade-distorting measures. &#42