EU growth to cost 17bn farm aid

21 July 2000

EU growth to cost 17bn farm aid

by FWi staff

THE Common Agricultural Policy must be fundamentally changed if the European Union is to take in more countries, a Brussels think-tank has warned.

Reforms agreed under Agenda 2000 are not enough for the EU to take in another six member states, claims the Centre for European Policy Studies.

Budget provisions provide for about Euro17bn (10.7bn) in additional spending to 2006. But experts from the centre believe this is not nearly enough.

They claim an extra Euro27-28bn (17bn) in agricultural aid will have to be paid to farmers in central and east European countries joining the EU.

Paying full direct income payments in the CEECs would cost about Euro12bn (7.6bn). Regional aid would push the total up to about Euro27-28bn (17bn).

Against this, new members are forecast to contribute just Euro 3.5bn (2.2bn) – prompting fears of a budgetary crisis unless EU farm policy is reformed.

The analysts suggest direct payments should be decoupling from production and phasing out. Direct payments to new farmers should then be disallowed.

Instead, more money should be spent on rural development with subsidies linked – as is increasingly the case – to environmental improvements.

Milk reform should also be speeded up.

Leaving it until 2005 would mean some new EU members having to set up complex quota systems, only to have to dismantle them the following year.

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