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EU's New Farm Subsidy Program Raises Criticism - 2002-07-10


The European Commission, has approved a far-reaching plan to reform the costly EU farm subsidy program, known as the Common Agricultural Policy. But EU governments have to approve the proposals and France has signaled it will fight them.

Farm subsidies swallow up nearly one-half of the European Union's $93 billion budget. The reforms proposed by EU Agriculture Commissioner Franz Fischler would end the link between how much farmers produce and how much they get in subsidies.

Under the present system, the more you produce, the bigger the subsidy you receive. Mr. Fischler wants production levels to be determined by the market. And he thinks the European Union should invest more of its agricultural funds in promoting rural development and environmentally friendly farming, instead of just distributing the money to farmers.

French President Jacques Chirac, whose country is the biggest beneficiary of the current program, fiercely opposes the reforms.

German Chancellor Gerhard Schroeder, whose country is the biggest contributor to the EU budget, says Mr. Fischler's proposals do not go far enough. He wants member states to co-finance aid to their own farmers, a proposition rejected by France.

Mr. Fischler wants to cut subsidies to big farmers and give more money to smaller farmers, especially those that grow organic produce. The chief economist for the National Farmers Union in Britain, Derrick Wilkinson, said the battle lines are being drawn over this and other issues.

"It is a very complex set of proposals. There is stuff in there that everybody can object to, and there is stuff in there that everybody can sign on to," he said.

The looming debate between net beneficiaries of the current policy, like France, Spain, Italy, and Ireland, and net contributors to the EU budget, like Germany, Britain, Sweden, and the Netherlands, promises to overshadow final negotiations with countries wishing to join the European Union in the year 2004.

Mr. Fischler and other European Commissioners argue that the EU cannot afford to admit new members, most of them Eastern European countries with large farm sectors, if the present agricultural subsidy program continues. They say the European Union will go broke, especially if Germany refuses to pay any more than it already does.

But some farmers, like Raymond O'Malley, who raises 400 head of cattle in Ireland, say enlargement is coming at the expense of people like himself.

"Europe wants to enlarge to the east, and I think we all agree with that. We do not see a budget for that," said Mr. O'Malley. "And certainly, as farmers, we suspect that payments made to eight million farmers across Europe will be used to finance enlargement of the European Union."

Mr. Fischler has offered farmers in candidate countries only 25 percent of what their counterparts in current EU members get in subsidies. The amount would be increased to 100 percent during a 10-year period. That has raised howls of protest in the candidate countries, especially in heavily agricultural Poland.

Some backers of Mr. Fischler's reforms say the European Union should change the Common Agricultural Policy before any new members are allowed to join. Others caution that if farm subsidy reform and enlargement are too closely linked as the debate progresses, the European Union may end up neither reforming nor enlarging.

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