Europe inches towards farm subsidy reform


10 March 1999


Europe inches towards farm subsidy reform


BRUSSELS – After two weeks of false starts and frustration, European
agriculture ministers appear finally to be inching towards reform of the Common
Agricultural Policy (CAP).

Ministers from the 15 European Union (EU)
countries are now considering a new compromise paper from Germany said to offer
further concessions on CAP reform.

Germany has already conceded that cuts in
guaranteed prices for beef, cereals and milk could be limited to 20%, 10% and nil
against European Commission proposals of 30, 20 and 15%.

The new compromise
paper, released this evening (Wednesday) by the German EU presidency, is expected
to offer further concessions to the commissions original Agenda 2000 proposals.

As a sign of his determination to broker a deal before the weekend, German
minister Karl-Heinz Funke, the president of the European farm council, has ruled
out a return to Brussels next week.

One European council spokesperson said:
“Ministers accept they are starting to look foolish. They realise they cant go
on like this.”

Commentators are now speculating as to what form a final deal
will now take – and whether farm ministers can reach agreement within their
self-imposed deadline.

Least controversial is the arable package, where a
support price cut of 20% is expected, with half the loss made good with extra
area aid.

Oilseed aid is likely to be cut in three stages until it matches
that paid for cereals.

To the relief of some delegations, getting rid of milk
quota appears to be back on the agenda, although it seems reform will only kick
in from 2002 or 2003.

UK agriculture minister Nick Brown threatened to vote
against any extension of milk quotas when the current regulations end next March
if there was no commitment to reform the sector now.

Other ministers are now
arguing that delaying reforms could be necessary to find an acceptable compromise
which would appease Ireland and France.

“If we really want to make a
collective mistake, then it is better to do it later rather than sooner,” said
Jean Glavany, the French farm minister.

In the beef sector, delegations
seemed to be homing in on a 20% price cut, rather than the 30% proposed by the
commission.

The real debate, however, has been around the level at which
safety net intervention is triggered, and the rate of headage payments to be
applied.

Publicly, the European Commission maintains that more radical reform
is necessary to pave the way for eastward expansion and increase the level of
unsubsidised exports.

But privately it acknowledges that an agreement along
these lines would be a reasonable achievement.

The National Farmers Union,
however, is concerned at the number of special deals being offered to certain
individual member states.

Finnish cereal growers have been offered extra area
aid, Irish and Italian dairy farmers have been offered additional milk quota, and
Spanish and Portuguese producers have been offered more beef quota.

“We must
have a deal that is fair to all parties,” said Tim Bennett, NFU deputy president.
“Weve been in regular dialogue with our farm minister and he understands our
priorities.”

The real pressure for an agreement on subsidy reform, however,
comes from European finance ministers who meet in Brussels next week to discuss
reform of the EU budget.

Without a deal on reform to the farm subsidy system,
the finance ministers would have the right to set a budget for the next six years
within which farm ministers would be forced to operate.

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