Analysis: Economists have welcomed Franz Fischler's plans to reform the CAP, writes Denis Staunton from Brussels
Europe's farmers should be rewarded for producing quality rather than quantity, according to the European Commission's proposals to reform the Common Agricultural Policy (CAP).
Unveiling the plan in Brussels yesterday, the Agriculture Commissioner, Mr Franz Fischler, said it aimed to stop the overproduction of food, which had become a scandal in the EU.
"We want more money to be directed to measures that will benefit the environment and the countryside," he said.
Direct payments to farmers would no longer be linked to production so farmers would receive payments regardless of the amount or type of food they produced. The level of payment would be based on the subsidies each farmer had received in recent years. No farm would receive less that €5,000 or more than €300,000 each year.
Although farmers would no longer be required to produce any food in order to receive subsidies, they would be required to maintain the land in good condition and to respect high environmental and animal welfare standards.
Direct payments would be cut by 3 per cent each year for the next seven years, up to a maximum of 20 per cent for each farm. The money saved would be reinvested in rural development schemes but it would be up to each member state to determine exactly how the money should be spent. The reforms would hit big farms, which currently eat up 80 per cent of EU subsidies, the hardest. According to one calculation, the €5,000 minimum subsidy will ensure that 75 per cent of EU farmers will be unaffected by the changes.
Economists have welcomed Mr Fischler's proposals, which remain within the budget limits agreed by EU leaders in Berlin in 1999.
Dr Stephan Crammon-Taubadel, professor of agricultural economy at Goettingen University, said it was a better idea to pay farmers for doing nothing than to subsidise mountains of wheat or beef.
"It is more efficient than just paying out subsidies to farmers if they produce cereals that we don't need and that we can only get rid of with export subsidies," he said.
Euronatur, an EU umbrella group for environmental groups, also welcomed the proposals. "The decoupling reduces the incentive to intensify agriculture."
The decoupling of subsidies from production will also strengthen the EU's hand in a new round of negotiations at the World Trade Organisation (WTO), where Brussels is under heavy pressure from poor countries to stop subsidising food exports outside the Union.
CAP accounts for almost half of the EU budget, and Germany, the biggest contributor to EU funds, has long been demanding reform. Germany's Agriculture Minister, Ms Renate Kuenast, yesterday gave a broad welcome to the proposals. However, she expressed concern about the effect of the €300,000 subsidy ceiling on big farms in the formerly communist east of the country.
"We must now examine where the money saved will be used and about the question of jobs on east German farming enterprises."
French farmers have been the biggest beneficiaries of CAP, receiving more than €9 billion in subsidies in 2000. The farmers' union leader, Mr Jean-Michel Lemetayer, said the reforms would destroy French agriculture.
"In France, according to our calculation, the drop of 3 per cent would lead to the disappearance of 200,000 farmers within 10 years. Almost half of French farmers would have to shut up shop," he said.
Poland, which has the biggest agricultural sector of the 10 countries which hope to join the EU in 2004, responded cautiously to the Commission's proposals. The European Affairs Minister, Ms Danuta Huebner, said that the proposed reforms were a move in the right direction.
"It's good that the proposals are on the table because any delay would be dangerous for the enlargement timetable," she said.
The Commission wants to phase in direct payments for farmers in the candidate countries, starting at 25 per cent of the level paid to existing members. Poland and other candidate country governments are demanding the same level of subsidies. However, some EU member states, led by Germany, argue that the candidate countries should receive no direct payments at all.
Mr Fischler said that, although enlargement negotiations were separate from CAP reform, the proposals would help the process of accepting new member states into the EU.
"We are showing people where we want to go. The candidate countries can see clearly where the train is going," he said.