18 January 2002

Pressure for aid reform as EU enlargement costs rise calls for aid reform

By Philip Clarke Europe editor

FARMERS in central and eastern Europe could receive direct aid payments as soon as they join the European Union, adding to the cost of enlargement and increasing the pressure for reform.

Formal proposals from Brussels on the exact terms under which the candidate countries should become EU members are expected at the end of this month. But European farm commissioner Franz Fischler has given his first indication that these plans would include area payments.

While it was important not to hinder essential structural change by giving them too much, neither could there be a two-tier Europe, he told an industry audience at the annual Green Week in Berlin last week. Direct aids should, therefore, be phased in gradually.

"In the initial stage, we should consider whether the administrative burden of direct payments is in proportion to the funds paid out. To restrict this red tape, it might be worth considering the introduction of a simplified rule for the transition period."

A commission official said this would involve adding up the total direct payments a country would be entitled to under the existing Common Agricultural Policy and dividing it by the area of farmland to give an average area payment.

This would be scaled back in year one, then gradually increased each year until it reached 100% at the end of the transition period. Payments to individual farmers would vary according to the size of their holdings.

Until now, the commission has channelled all financial support for farmers in the candidate countries into rural development measures to help them upgrade their infrastructure.

Studies issued last year suggested that paying full area aid to new EU members would more than double the k3.4bn (£2.1bn) already put aside for enlargement.

When commissioners issue their proposals on Jan 30 details of the length of any transition period – widely tipped to be seven years – and base periods for working out things like milk quotas and reference yields will be revealed.

Farm ministers will then have five months to agree the package, which will form the basis for negotiations with the candidate countries. For the most advanced, these should be completed by the year end so enlargement can get underway in 2004. &#42

Green sheaves… Ecological farming was the centrepiece of the annual Green Week in Berlin, reflecting a swing in government policy in the past 12 months. However, German farm leader Gerd Sonnleitner, said the "organic good, conventional bad" message pushed by ministers was ill-conceived and objectionable.