The EU common Agricultural Policy

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Agricultural subsidies and rural development projects swallow 46% of the 2005 budget.
France has traditionally been far and away the biggest recipients of these funds, as the bar chart below demonstrates.

Farmers from the 10 states that joined in 2004 began by receiving subsidies at 25% of the rate they are paid to farmers in the other 15 EU countries. That rate rose to 30% in 2005. Equality will be attained by 2013.

As a rule, agriculture plays a bigger role in the economies of the new member states than it does in the more developed economies of the older members. Poland will in time become a significant recipient of agricultural and rural aid.

However, the EU is under pressure to reduce agricultural subsidies in order to give developing countries a better chance to export food to Europe.

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Q&A: Common Agricultural Policy
The Common Agricultural Policy is regarded by some as one of the EU's most successful policies, and by others as a scandalous waste of money.
A series of reforms has been carried out in recent years, and the current round of World Trade Organization negotiations could result in further changes.

The CAP has also been a battleground in the dispute over the EU's 2007-13 budget. In the first half of 2005, the UK was demanding guarantees of reduced farm spending before it would agree to cuts in its rebate.

Agriculture has been one of the flagship areas of European collaboration since the early days of the European Community.

In negotiations on the creation of a Common Market, France insisted on a system of agricultural subsidies as its price for agreeing to free trade in industrial goods

The Common Agricultural Policy began operating in 1962, with the Community intervening to buy farm output when the market price fell below an agreed target level.

This helped reduce Europe's reliance on imported food but led before long to over-production, and the creation of "mountains" and "lakes" of surplus food and drink.

The Community also taxed imports and (from the 1970s onward) subsidised agricultural exports. These policies have been damaging for foreign farmers, and made Europe's food prices some of the highest in the world.

European leaders were alarmed at the high cost of the CAP as early as 1967, but radical reform began only in the 1990s.

The aim has been to break the link between subsidies and production, to diversify the rural economy and to respond to consumer demands for safe food, and high standards of animal welfare and environmental protection.

HOW MUCH DOES IT COST?

The cost of the CAP can be measured in two ways: there is the money paid out of the EU budget, and the cost to the consumer of higher food prices.

The EU will spend 49bn euros (£33bn) on agriculture in 2005 (46% of the budget), while the OECD estimates the extra cost of food in 2003 at 55bn euros.

The CAP budget has been falling as a proportion of the total EU budget for many years, as European collaboration has steadily extended into other areas. It has been falling as a proportion of EU GDP since 1985.

EU member states agreed in 2002 that expenditure on agriculture (though not rural development) should be held steady in real terms between 2006 and 2013, despite the admission of 10 new members in 2004.

This means that the money paid to farmers in older member states will begin to decline after 2007. Overall, they will suffer a 5% cut in the 2007-13 period.

If Romania and Bulgaria are paid out of the same budget when they join in 2007 or 2008, that will entail a further cut of 8% or 9%, the Commission says.

Agricultural expenditure declined slightly in 2004, as compared with 2003 but has jumped in 2005 as a result of the admission of 10 new members. Under the European Commission's budget proposals for 2007-13, it will peak in 2008/2009, in nominal terms, then decline until 2013.

WHO GETS THE MONEY?

France is by far the biggest recipient of CAP funds. It received 22% of the total, in 2004.

Spain, Germany and Italy each received between 12% and 15%.

In each case, their share of subsidies was roughly equivalent to their share of EU agricultural output.

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Ireland and Greece on the other hand received a share of subsidies that was much larger than their share of EU agricultural output - twice as large in Ireland's case.

The subsidies they received amounted to about 1.5% of gross national income, compared to an EU average of 0.5%.

The new member states began receiving CAP subsidies in 2004, but at only 25% of the rate they are paid to the older member states.

However, this rate is slowly rising and will reach equality in 2013. Poland, with 2.5m farmers, is likely then to be a significant recipient of funds.

Most of the CAP money goes to the biggest farmers - large agribusinesses and hereditary landowners.

The sugar company Tate and Lyle was the biggest recipient of CAP funds in the UK in 2005, raking in £127m (186m euro).

It has been calculated that 80% of the funds go to just 20% of EU farmers, while at the other end of the scale, 40% of farmers share just 8% of the funds.

HOW IS THE MONEY SPENT?

Until 1992, most of the CAP budget was spent on price support: farmers were guaranteed a minimum price for their crop - and the more they produced, the bigger the subsidy they received.

The rest was spent on export subsidies - compensation for traders who sold agricultural goods to foreign buyers for less than the price paid to European farmers.

But in 1992 the EU began to dismantle the price support system, reducing guaranteed prices and compensating farmers with a "direct payment" less closely related to levels of production.

Cereal farmers were obliged to take a proportion of their land out of cultivation in the "set-aside" programme.

In 1995, the EU also started paying rural development aid, designed to diversify the rural economy and make farms more competitive.

Additional reforms in 2003 and 2004 further "decoupled" subsidies from production levels and linked payments to food safety, animal welfare, and environmental standards.

However, three areas - sugar, wine, fruit and vegetables - have yet to be reformed. Further reform of the dairy sector is planned for the period after 2014.

Rural development funding, which currently accounts for about 13% of the total agriculture budget, is set to increase to 25% before the end of the decade.

In international trade negotiations, the EU has offered to cut all export subsidies, as long as other countries do so too. Big cuts in import tariffs are also being discussed.

WHAT PRODUCTS ARE SUBSIDISED?

The crops initially supported by the CAP reflected the climates of the six founding members (France, Germany, Italy and the Benelux countries).

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Cereals, beef/veal and dairy products still account for the lion's share of CAP funding, but the southern enlargements of the 1980s brought new crops into the system.

Cotton farmers received 873m euros in 2003, tobacco farmers got 960m euros, and silkworm producers 400,000 euros.

Payments to olive farmers in 2003 (at 2.3bn euros) were larger than those to fruit and vegetable farmers (1.5bn euros), sugar producers (1.3bn euros) or wine producers (1.2bn euros).

Producers of milk and sugar are subject to quotas, which they must not exceed.

Wine is a special case: the EU provides funds to convert surpluses into brandy or fuel - a process known as crisis distillation - and payments to replace poor quality with high quality vines.

HOW MANY PEOPLE BENEFIT

Critics argue that the CAP costs too much and benefits relatively few people.

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Only 5% of EU citizens - 10 million people - work in agriculture, and the sector generates just 1.6% of EU GDP.

Supporters of the CAP say it guarantees the survival of rural communities - where more than half of EU citizens live - and preserves the traditional appearance of the countryside.

They add that most developed countries provide financial support to farmers, and that without a common policy some EU countries would provide more than others, leading to pressure for trade barriers to be reintroduced.

The importance of farming to the national economy varies from one EU country to another. In Poland, 18% of the population works in agriculture, compared with less than 2% in the UK and Belgium. In Greece, agriculture accounts for more than 5% of GDP, whereas in Sweden the figure is just 0.6%.

The number of people working on farms roughly halved in the 15 older EU member states between 1980 and 2003.

About 2% of farmers leave the industry every year across the EU, though falls of more than 8% were registered between 2002 and 2003 in the Czech Republic, Hungary, Poland, Slovenia, Slovakia and the UK.

At the same time, the average age of farmers is rising. In 2000, more than half of individual farmers in the 15 countries that then made up the EU were aged 55 or over.

Farmers and their employees often work very long hours for little money. Many farms would be unprofitable if EU subsidies were withdrawn.

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Don't forget the hypocrisy of touting free trade while subsidizing the part of your own economy that competes with one of the major exports of the majority world.

Personally I love the argument that all the subsidies are so that some countries can maintain their "rural" traditions, (marrying close family members I suspect). Course that doesn't really cut it when you pose the question as to why a farmer in say Portugal should be susbsidised & a farmer in the UK, who has a more profitable buisness, isn't. Both countries are in the EU so both have a claim, what makes the one more valid than the other? Nothing much that I can see, then if you consider that one of the farms actually CAN compete without a subsidy, why the hell should the other get a prop?

The there's this freakish legislation stating nobody can make a certain product unless it comes from a specific place...That should be enough to corner a market.


Oh & news just in...
"The UK gives up 10.5bn euros (£7bn) of its budget rebate, after initially offering 8bn, while the overall budget grows to 862.4bn over seven years.

In return, the EU will review all its spending in 2008-2009, including the expensive Common Agricultural Policy. "

That means pay up & in a few of years time we'll decide to not change a ***damn thing.

I never thought I'd say it, but where's Thatcher when you need her!

Yes, next time Bliar goes he should be in a dress and wielding a handbag!:san_laugh:

It is rather easy to defraud the CAP. My Auntie over in the Irish Republic owns two goats, buys some goat's cheese from her neighbour to pass off as her own, and then says her goats made it and gets money for it.

My agricultural policy? Away with agriculture!

It's staggering we spend so much more on supporting inefficient farmers than research. No wonder Europe is falling far behind.

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Originally Posted by BDC

It's staggering we spend so much more on supporting inefficient farmers than research. No wonder Europe is falling far behind.

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Of course, you have to see that in perspective. Every member state spends more on research than on the EU, so whole Europe still spends vastly more on research than on agriculture, but still, all this money is a waste.

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Originally Posted by QwertyMIDX

Don't forget the hypocrisy of touting free trade while subsidizing the part of your own economy that competes with one of the major exports of the majority world.

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It also hurts the African nations that everyone seems to care so much about every few years. As long as we throw a few billion in aid at them I guess we can feel good about ourselves though. :shrug:

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Originally Posted by Xiahou

It also hurts the African nations that everyone seems to care so much about every few years. As long as we throw a few billion in aid at them I guess we can feel good about ourselves though. :shrug:

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That was what I was saying, Africa is part of the majority world that is hurt by minority world agriculutral subsidies (like the EU CAP, but also US Cotton subsidies and Japanese Rice ones and a lot of other ones).

We should let our agriculture die, it's as simple as that. This would benefit third world countries more than any trite benefit concert ever could, as well as freeing up funds for other things, and making more of the countryside available for tourism.

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Originally Posted by Big King Sanctaphrax

We should let our agriculture die, it's as simple as that. This would benefit third world countries more than any trite benefit concert ever could, as well as freeing up funds for other things, and making more of the countryside available for tourism.

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That's right make yourself completely dependent upon others for food supply for the masses.

We all know all well that works in history now don't we.

The CAP needs to be reformed, but I have a few points to say in it's defense.

Food, like Redleg said, is a strategic commodity. Way back in the sixties when the CAP was installed, it didn't seem to be such a good idea for western Europe to rely upon the Ukraine for its grain supplies.

The CAP is also about preserving cultural heritage. The preservation of the beauty of the old inner cities of Venice, Paris, Edinburgh, Amsterdam and Prague warrants a huge effort. The preservation of the traditional landscapes of Tuscany, the Provence and Bavaria warrants an effort too.

It is only because agriculture is the one economic area that is almost completely run by common policy that it takes up such a large amount of the EU budget. Overall, the amount of money spend on agriculture isn't that high.

The EU, the US and Japan each spend about the same amount on agricultural policy.


Having said that, do understand that no French politician will commit political suicide by squandering the vested interests of French farmers. :san_cry:
So by all means, feel free to save us from the hold of that handfull of pesky provincial peasants.

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Originally Posted by Redleg

That's right make yourself completely dependent upon others for food supply for the masses.

We all know all well that works in history now don't we.

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Ending farm welfare isn't the same as driving in and bulldozing every farm in the country. What it does do is encourage farmers to produce more food at competitive prices, or if they are unable to- get out of the business. Uncompetitive business shouldn't be propped up at the tax payer's expense.

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Originally Posted by A.Saturnus

My agricultural policy? Away with agriculture!

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You can't eat your own feeling of superiority. :san_wink: :san_laugh:

:san_grin: :san_grin: :san_grin:

I think that the agricultural subsidies are based on paranoia. Items like oil are also very important, but there are no special policies on them. The world is opening up, just deal with it......

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Originally Posted by Xiahou

Ending farm welfare isn't the same as driving in and bulldozing every farm in the country. What it does do is encourage farmers to produce more food at competitive prices, or if they are unable to- get out of the business. Uncompetitive business shouldn't be propped up at the tax payer's expense.

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You mis-understood the point of the response. Government subsidicy of farming is stupid if the farmers are able to compete on the market, the subsidicy should only apply when the farmers are being driven out of business by the world market. It should not be used to prop up prices for the farmer - but as a safety net to insure a domestic food supply is available.


To allow the destruction of your food production within the country in the pursuit of the all mighty buck via the free market is foolish. To advocate the destruction of the farming of any country for tourism is just as foolish. Both end in a stragtic blunder that the nation will not recover from if they are dependent upon others for their food supply

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Originally Posted by Byzantine Prince

You can't eat your own feeling of superiority. :san_wink: :san_laugh:

:san_grin: :san_grin: :san_grin:

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Oh yes, I can! It tastes like chocolate and there´s more of it than I could ever eat :san_tongue:

Why does France always seem to make out like bandits in these EU things

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Originally Posted by Louis IV

The preservation of the traditional landscapes of Tuscany, the Provence and Bavaria warrants an effort too.

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Don´t know about Tuscany and Provence but the sooner the giant farms you´ll find in Bavaria die the better. And did you see what ugly thing the timber industry made out of the Bavarian Wood?

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To allow the destruction of your food production within the country in the pursuit of the all mighty buck via the free market is foolish. To advocate the destruction of the farming of any country for tourism is just as foolish. Both end in a stragtic blunder that the nation will not recover from if they are dependent upon others for their food supply

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I don´t think so. We are already dependent on other nations´ exports. No country is an island (well, metaphorically speaking) and interdependence is a good thing.

Point is, would EU farming die without these subsidies? I suspect not; rather, it'd create a more competitive market within the EU itself. And if not, artificially propping up the industry with these subsidies isn't going to help in the long term.

Free trade is what we should be aiming for.
propping up an industry that is not economical is such a waste of resources. This money could be better spent in other areas (UK coal industry for example)
No EU country is fully self-sufficient in all areas. If we have no demand for an item, why is it being produced. Market forces should be allowed to kill of the excess.

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Originally Posted by strike for the south

Why does France always seem to make out like bandits in these EU things

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Because you get fed English language news? :san_rolleyes:

Here's the real deal:

The UK and France are both bandits. Net payers, sure, but quite capable of fending for themselves and never too shy to look after their own interests first and foremost.

So the bulk of the EU bill is footed by Germany, the Netherlands and Scandinavia. Which money is then transferred to Portugal, Spain and the former Eastern European members or squandered on Greece and Southern Italy..

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Originally Posted by A.Saturnus

Don´t know about Tuscany and Provence but the sooner the giant farms you´ll find in Bavaria die the better. And did you see what ugly thing the timber industry made out of the Bavarian Wood?

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I know, I know. But I desperately wanted to include at least one pretty northern European province.

*ponders again*
Nordrhein-Westfalen? Only industry. Schleswig-Holstein? Too flat. Sachsen or Sachsen-Anhalt? Erm, needs some cleaning up.

Darn. You guys need to help yourselves more from the CAP! :san_laugh:

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Originally Posted by Redleg

That's right make yourself completely dependent upon others for food supply for the masses.

We all know all well that works in history now don't we.

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We're dependant upon imports anyway-I don't see that this would make it worse.

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Originally Posted by Redleg

To allow the destruction of your food production within the country in the pursuit of the all mighty buck via the free market is foolish. To advocate the destruction of the farming of any country for tourism is just as foolish. Both end in a stragtic blunder that the nation will not recover from if they are dependent upon others for their food supply

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The percieved strategic value is something outdated. The risk for a war in Europe are more or less 0 and any food production should be done where it's cheapest for the consumers.
Furthermore, with the current stability in the western countries and most of the third world countries, it's more profitable to deepen the relationship with third world food producing countries than spend tax monies to save something that is doomed anyway....

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Originally Posted by bmolsson

The percieved strategic value is something outdated. The risk for a war in Europe are more or less 0 and any food production should be done where it's cheapest for the consumers.

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So sell it all off and see what happens. Stupid policy to sell off your countries agricultural assets for cheap. Giving rebates and welfare payments is not a good thing in my opinion - but neither is allowing your agricultural assets to disappear.

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Furthermore, with the current stability in the western countries and most of the third world countries, it's more profitable to deepen the relationship with third world food producing countries than spend tax monies to save something that is doomed anyway....

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When food production is seen as a doomed industry - the ability to feed the population disappears.

Well there is always Solient Green.......:san_wink:

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Originally Posted by Redleg

Well there is always Solient Green.......:san_wink:

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This could also solve
another increasing
problem...
:thinking2:

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Originally Posted by Redleg

So sell it all off and see what happens. Stupid policy to sell off your countries agricultural assets for cheap. Giving rebates and welfare payments is not a good thing in my opinion - but neither is allowing your agricultural assets to disappear.

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Who said that you should sell it off ? Let the agro capacity be used for what it is best suited for to a good price. Grow rice in France is not very logical, is it ? :san_wink:

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Originally Posted by Redleg

When food production is seen as a doomed industry - the ability to feed the population disappears.

Well there is always Solient Green.......:san_wink:

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Well, most countries are dependent on energy import. Energy used for producing fertilizer, in turn used for agro products. The ability to feed the population in a peaceful world is not dependent on domestic industry. Period. :san_smiley:

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Originally Posted by bmolsson

Who said that you should sell it off ? Let the agro capacity be used for what it is best suited for to a good price. Grow rice in France is not very logical, is it ? :san_wink:

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Oh someone who stated it should be turn over to tourism.

Correct on the second part

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Well, most countries are dependent on energy import. Energy used for producing fertilizer, in turn used for agro products. The ability to feed the population in a peaceful world is not dependent on domestic industry. Period. :san_smiley:

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We don't live in a peaceful world now do we? Nor will it be peaceful as long as humans live on the planet.

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Originally Posted by Louis IV the Fat

Which money is then transferred to Portugal, Spain and the former Eastern European members or squandered on Greece and Southern Italy..

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You, Sir, are an erudite and incisive fellow.

Any country we could buy food from would be more dependent of us than we of them.

At least export subsidies are going to fall by 2013:
http://news.bbc.co.uk/2/hi/business/4539108.stm

I think the whole CAP should be just stopped. The Southern and Eastern parts of Europe are fully capable of providing the rest of the Europe food with deacent prize. There always will be some agricultural production left in the rest of the European Nations also,becouse there are always people that are ready to pay a higher prize for locally produced food.
Supporting an unprofitable industry in a free market area like EU is just plain stupid.I think that we could have lot better things to do with half of the EU budget then this.

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Originally Posted by Redleg

We don't live in a peaceful world now do we? Nor will it be peaceful as long as humans live on the planet.

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Seems a bit biased to me.... :san_wink:
Why assume that every country with lack of a resource would invade another nation with lots of it..... :san_tongue:

I disagree, we will in the future get a peaceful world living in harmony. Maybe I am a dreamer....... :san_grin:

Oh stop being such a dreamy libby...
The only thing that can unify the world is if the Covenant invade:san_angry:

Anyways about the EU I thought Britain paid the second most in the union and without the rebate would pay the most whereas France through agricultural subsidies pays hardly anything.

Pulls out old hundred years war armour and banner of Henry V!