EU farm subsidy dependence to end

European Union farm ministers agreed significant reforms to the controversial and hugely expensive system of paying subsidies to farmers for over-producing.

    EU farm commissioner announces
    breakthrough, but France plays
    down radical change

    The enormous $50b billion subsidies, widely-criticised for distorting global trade and crippling third world economies, will be substantially reduced.

    The most controversial element of reform was the idea to break a long-standing link between farm output and subsidy.

    In the near future, more produce no longer leads to more cash from Brussels – a policy that should end the era of wine lakes and butter mountains.

    EU agricultural commissioner, Franz Fischler, who first proposed the reforms, said the accord marked "the start of a new era" and would fundamentally change the 45-year-old Common Agricultural Policy (CAP).
    Not everyone pleased

    But farmers and unions were already fearful that they would be driven out of business without the subsidies they have got used to.
    Germany's farmers union, DBV, said the deal would cost German farmers between $1 billion and $1.8 billion in lost income, as milk prices are likely to plunge.
    "It's a typical EU compromise which gives and takes a little from everyone and creates terrible difficulties for those who have to implement it," said Gerd Sonnleitner, head of Germany's farmers union.

    The breakthrough deal comes after three weeks of talks, and the original proposals have been watered down.
    Deal weakened

    France, the many subsidy taker, and other countries insisted on major changes to the original tough reform package as the price for making an agreement, and only Portugal was left opposing the deal.
    Abolish most of the subsidies that reward farmers according to how much food they grow.

    • Farmers will receive a single payment, rather than grading the amount of money with the amount of food produced

    • The prices at which the EU intervenes to support farmers are to be cut in key sectors, including milk powder and butter

    • Countries like the UK, which want to press ahead with more radical reform, are allowed to do so

    • Direct payment for bigger farms will be cut to finance the new rural development policy, promoting the environment and animal welfare.

    End of subsidies?

    Subsidies have been the key sticking point in agreeing the next round of global trade talks.

    Other countries, including Australia, the US and much of Africa, say it is unfair to ask them to open their markets while the EU is protecting its own agriculture business.
    And a statement from the French farm ministry suggested that the reforms were not as radical as being claimed elsewhere. Part of the agreement allows individual countries to stick to the old system if there is a risk that the new system may lead to  land being abandoned.
    "This reform preserves - as was France's position all through the negotiations - the essential principals of the Common Agricultural Policy," the ministry said in a statement.


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