EU expansion means change

11 February 2000

EU expansion means change

By Robert Harris

FARMERS across Europe face drastic changes in support over the next few years if EU expansion to the east is to succeed.

To survive, producers in existing EU member states may have to undergo as much change as those in countries seeking to join, warns Séan Rickard, senior lecturer at Cranfield School of Management.

Although the EU has so far insisted that aid payments cannot be extended, the 12 states engaged in accession talks have argued that this could undermine the process. The issue is once again being debated in the Commission.

"It strikes me that reform must include equivalent entitlement to payments in the central and eastern European countries. By reducing payments to the current 15, you will more easily achieve it," Mr Rickard told delegates attending the University of Reading Agricultural Clubs conference – EU enlargement and its effect on UK agriculture – this week.

The need for CAP reform was spelled out by Duncan Sparkes of the European Directorate General for EU Enlargement. There were 10 central and east European countries seeking to join over the next decade, with Hungary, Poland, the Czech Republic and Slovenia likely to succeed by 2003-5. Malta, Cyprus and Turkey also wanted to join.

But those countries were poor, with a combined gross domestic product no bigger than that of the Netherlands. So, although EU population was set to climb by 30%, GDP would only rise 4%.

Without big CAP changes, the EU agricultural budget would rise by half, said Mr Sparkes. "There is already great pressure for further reform. Enlargement will only intensify this."

Devices were also in place to maintain trade barriers for a transitional period of up to 15 years on important commodities like cereals, sugar and milk. Without change, newcomers would be viewed as second-class citizens for years, warned Mr Rickard.

"We are going to treat these relatively poor countries with relatively large agricultural sectors in desperate need of support rather shabbily, to protect a large number of farmers in western Europe who have no future.

"This highly protected industry has had its day as a protected industry. It has got to learn to stand on its own feet."

The EU would have to end compensatory aid, like headage payments and arable area payments, soon, he believed. "I would make them degressive, over 10 years, and cap them immediately."

Mr Rickard believed pure decoupled payments, which were not linked to production, must be introduced across the EU to help offset the loss of compensatory payments. These could include social payments, worth about k300/ha (£185) and capped at 50ha (123 acres), and environmental payments paid on a cost-plus basis. Both would be compatible with WTO rules, and would be targeted, given budgetary constraints.

Richard Gueterbock, agrifood consultant, agreed that radical CAP reform was needed. But he also believed that UK agriculture needed help to become more competitive in the short-term. Talk of markets being flooded with produce once CEECs joined was hype, but competition would eventually rise. "Bearing in mind the lack of support, I would like to see the NFU getting more belligerent. I would also like to see a reduction in bureaucracy from Brussels. Civil servants must be much more judicious in their interpretation of those rules. Far too many are copper-plated in the UK." &#42

Agriculture has had its day as a highly protected industry and must stand on its own feet, says Séan Rickard.

UK agriculture needs help to become more competitive, says Richard Gueterbock.

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