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Expensive CAP Unlikely To Be Capped

With a wave of post-crisis austerity sweeping Europe, deep cuts to public spending are the order of the day, and for some, the EU’s much-criticized common agricultural policy (CAP) is a prime target for cost savings.

But given the current debate on the future of the European Union’s farm policy, those wanting a radical reform of the CAP and a significant cut in its budget look set to be disappointed.

Totalling nearly 60 billion euros (US$83.55 billion) last year, farm subsidies consume more than 40 per cent of the European Union’s 130-billion-euro annual spending, and reformists argue the policy is an outdated luxury the bloc can no longer afford.

This week, the EU’s executive published its initial thoughts on the bloc’s next long-term budget from 2014-20. At first glance, it appeared to confirm that the writing is on the wall for the EU’s most costly policy.

“The share of the CAP in the overall budget (has been) falling steadily in recent years. Continuing the trend would still leave agriculture representing a major public investment,” the European Commission said.

That was seen as a sign that the commission would not fight to keep the current level of farm spending when it reforms the policy and the EU budget from 2014, as France – the main CAP beneficiary – and other governments have urged it to do.

But those wanting deep CAP spending cuts, such as Britain and Sweden, would be wrong to see the commission as an ally in the debate.

Last August, a leaked draft of a similar paper called for a “major refocusing of EU spending” away from agriculture towards new priorities such as economic growth, jobs and climate change.

This week’s much more toned-down version has given officials in the Agriculture Department cause for hope.

“Clearly things have changed since the leak of the first budget document in 2009,” said an official who declined to be identified, citing sensitivity around the issue within the commission.

“Perhaps there will be a natural decrease of the share of the CAP in the overall budget, but I would not predict big changes for the budget, and expect something symbolic, a reduction of a few billion euros perhaps.”

“What we’ve got at the moment is between 55 billion and 60 billion euros. I wouldn’t be surprised if at the end of 2020 we still have an agricultural budget of more than 50 billion,” said another agriculture official, who also requested anonymity.

EU budget chief Janusz Lewandowski has said farm spending should shrink to about a third of the budget, implying a cut of 20 per cent to about 45 billion euros, assuming – as most do – that the budget stays broadly stable.


The commission’s agriculture spokesman, Roger Waite, said it was too early to predict the size of the CAP budget after 2013, but that a reduced share of the total EU budget for farming would not necessarily translate to a smaller CAP budget.

“In the past, economic growth has meant the EU budget has always increased. So while agriculture has seen a gradual reduction of its share in the overall budget, the financial envelope for the CAP has remained stable,” he said.

Most forecasts are for the commission to propose a 10 to 20 per cent cut in CAP spending, but Brussels-based agricultural consultant Bruce Ross points out that in past reforms, the commission’s proposals have been watered down by EU governments.

“Generally speaking, what the commission proposes is the absolute limit to what will happen,” Ross said.

“From what one hears from agriculture ministers and the little that’s been said by anyone more senior than that, it doesn’t sound like there’s revolution in the air. There doesn’t seem to be any evidence of a radical change to the budget.”


Even if the CAP budget is only cut by 10 or 20 per cent, there will still be winners and losers in the reform.

In a draft commission paper on the CAP reform due to be adopted on Nov. 17 and seen by Reuters, the main losers are set to be large landowners and farmers, particularly in the older EU member states in western and southern Europe.

The commission has pledged to iron out inequalities in the system of distributing direct subsidies, which sees farmers in Greece get over 500 euros per hectare compared to less than 100 euros in Latvia, implying a redistribution of funds eastwards.

The paper also floats the idea of an upper limit on the level of subsidies paid to individual farms and a minimum level of aid for small farms, suggesting that smaller producers could benefit at the expense of larger ones.

With 75 per cent of subsidies going to only 17.5 per cent of farmers in Europe, according to commission figures for 2008, limiting the largest payouts is seen as a way of freeing up funds for new priorities such as environmental protection.

Environmental campaigners have welcomed the paper’s focus on “greening” the CAP in the reform, but remain skeptical about the true scale of the commission’s ecological ambitions.

“They’ve finally realized that the environmental issue is a horse they can ride, but the disappointing thing is that it’s rather half hearted,” said Ariel Brunner, head of EU policy at the conservation charity BirdLife.

“Given how hard it will be in future to defend this pot of money, the only way is to be offensive and say ‘we need this money to fight climate change, biodiversity loss and ecological collapse.’”

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