21 November 1997

Modulation worth the price for free efficient, farming

By Alan Barker

MODULATION is an acceptable trade off for the freedom to farm and, as such, efficient UK farmers should welcome the Agenda 2000 reform proposals.

It was understandable, if myopic, for farmers used to a diet of government support to put compensation for price cuts at the top of their priorities, economist Sean Rickard of the Cranfield School of Management told an HGCA conference at the Central Science Laboratory, York.

But reform of the CAP was being driven by a rapidly changing world in which subsidies were viewed not only as a misuse of taxpayers money, but also as self-defeating, leading to inefficiency and an inability to compete on world markets.

The next round of world trade talks and European enlargement made the present CAP system of border tariffs and export subsidies untenable. Their removal was inevitable and so was the dismantling of the present system of price support. Within a relatively short period EU farmers would be operating at world prices, he predicted.

The commission believed its proposed cut in cereals intervention price would bring farm gate prices to a level which removed the need for subsidised exports and the requirement to set land aside.

It was a reasonable assumption that the commission would achieve its aim of an EU world price equivalent of £67/t and, at the same time, set farmers free to grow whatever crops they judged appropriate to their farms.

The response of many UK arable farmers to Agenda 200 had been negative, seizing on modulation as a threat to their competitiveness, said Mr Rickard. But they were wrong.

The industry would never have the incentive to drive for more efficient, cheaper methods of production if its entrepreneurs were guaranteed a living by the state.

Sean Rickard…

subsidies are viewed as misuse of taxpayers money.