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October 13, 2011

Comment: Let EU member states decide farm subsidies

The reform package for the EU's Common Agricultural Policy (CAP) has been so unpopular, it begs the question – is Europe really the best level of government to control food production subsidies?

The reform package for the EU’s Common Agricultural Policy (CAP) has been so unpopular, it begs the question – is Europe really the best level of government to control food production subsidies?

The CAP has always been at the heart of the EU – part of the grand bargain that underpinned its launch in the 1950s between Germany and France. The French agreed to open their markets to German manufacturers and in return the Germans helped pay for French agriculture, via the then European Economic Community.

But with an EU of 27 member states spanning west Ireland to eastern Latvia, and northern Finland to southern Spain, that grand bargain is totally irrelevant to today’s Europe. The needs of food producers in this diverse continent vary hugely from country to country, so why not let national governments decide how to spend their farm subsidies? Of course, there needs to be open markets, common standards, emergency funds, trade deals with non-EU states, the application of EU competition law to subsidies, and more. But the logic behind setting farm subsidy policies at the remote level of Brussels seems cloudy at best.

Maybe that is why no one – apart from the Commission itself – seems happy with this reform package. Statements have reached just-food from producer groups such as COPA-COGECA, who dislike being told to leave a set amount of land under grass; the National Farmers’ Union in the UK, who dislike the planned criteria for identifying non-active farmers ineligible for payments; manufacturers group FoodDrinkEurope says the Commission has failed to use CAP reform to boost productivity in the sector; and non-governmental organisation federation CONCORD says the package fails to help the world’s poor. That is before member states and MEPs add their various local objections. At some point, the EU will have to ask itself what should it be doing, rather than how to improve what it has always done? Multilateral organisations have an important role for the food industry, but working out and administering subsidy systems is surely not one of them.

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