Farmers could face more subsidy cuts

12 March 1999

Farmers could face more subsidy cuts

By Johann Tasker

FARMERS could face further subsidy cuts in addition to those agreed
by European agriculture ministers in Brussels this week, it has

Despite major reforms to the Common Agricultural Policy (CAP),
ministers could be forced to announce more savings before the end
of the month.

Agriculture Minister Nick Brown described this weeks
reforms as the “most radical” since the inception of the CAP
during the 1960s.

But within hours he was embarrassed by a Downing Street
spokesman who said that the Brussels agreement did not go far

Reform of the Common Agricultural Policy (CAP) promises to reduce
support for cereals and dairy by 20% and support for beef by 15%.

But in reaching agreement, European agriculture ministers
watered down proposals and ruled out an upper limit on subsidies
for larger farms.

That means the cost of changes designed to reduce the cost of farm
subsidies threatens to actually boost the EU budget.

The budget must be reduced for Brussels to honour its promise of EU
membership for central European countries such as Poland, Hungary and
the Czech Republic.

Unless expenditure is at least stable, extending the CAP to those
countries will be unaffordable for the EUs existing 15 member states.

The government here would like to reduce CAP spending rather than
face relinquishing Britains annual EU rebate of £2 billion.

But European Commission statistics show that the CAP reforms agreed
over the past few days are likely to boost the EU budget by £3.4bn.

Agricultural spending could also have been cut had European
ministers reduced payments to farmers on a yearly basis – a concept
known as “degressivity”.

Degressivity would have exempted producers now receiving less than
£3400 a year in subsidies but would have saved £3bn annually.

The omission of the cost-saving measures from the CAP reform has thus
angered the British government which is now likely to press for more cuts.

“We certainly do not see this [reform agreement] as the end of the
road,” a Downing Street spokesman told the Reuters

“It is not as radical as we would like it to be.”

The exclusion of degressivity from the reform packageis at least
partly tribute to the lobbying power of the UK National Farmers Union

Although the policy would leave an estimated 70% of European farmers
unaffected, bigger farmers in the UK would suffer much bigger cuts.

NFU President Ben Gill was keen to point out that the £3bn
degressivity would have saved is still well short of the annual cuts the
EU needs to make.

But he has now warned: “I dont believe degressivity is dead and

Mr Gill said he believed that European heads of government could
consider degressivity again when they meet in Berlin on 24-25 March.

Such a possibility has been ruled out by Karl-Heinz Funke, the
German agriculture minister who is also president of the European Farm

But French Agriculture Minister Jean Glavany believes that more
reforms could be in the pipeline.

“For me the work remains unfinished,” he said. “There is a risk
that the [existing] agreement will founder on the financial aspects.”

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