The rise in basic agriculture prices provides the opportunity to consider the trends of two key events: the conclusion of world trade negotiations at the WTO and the review of the EU Common Agricultural Policy (CAP) (see yesterday's column). On the first point, this column has long argued that it is unreasonable to expect spectacular last-minute results in the Doha Round. It would be better to look positively on what has already been achieved, rather than compromise these achievements with arguments which would poison the atmosphere. A few final adjustments, so that no one feels they have gone away empty-handed, and world trade will be given the boost it needs, in conditions that are acceptable to everyone and positive for the future.
Lack of vision. Thanks to developments in agricultural prices, the direction taken in the review of the CAP could be in line with environmental, food and other concerns and demands. The planned reform will only come into effect in 2013, but it will have to be prepared in advance; the CAP “health check” will be discussed in 2008 and 2009. The guidelines from Commissioner Marianne Fischer Boel are not sufficient. They lack vision, do not take account of the importance of agricultural activity for Europe and re-hash the worst of well-known clichés: agricultural activity is essentially seen as a “second job”, an additional activity largely funded by public subsidies; markets are increasingly open to world competition; reductions in European production. The commissioner hardly ever mentions the key points, like (the strategically essential) European food autonomy, growing world need for food products to combat shortages and famines, the pressing demands of spatial development, respect for traditions and countryside. Ms Fischer Boel has often taken good one-off management decisions on the CAP (thanks to those around her?), but she does not display any overall vision.
The myth of how much the CAP costs. Furthermore, those who highlight the cost of the CAP (and they are still many, even in so-called “agricultural” member states) show the same lack of vision and are allowing themselves to be influenced by appearances. When considering the significant, though falling, proportion of European funding allocated to agriculture, account must taken of the fact that this is the only sector where expenditure is (virtually) entirely met by the EU. The European share could be reduced by extending co-funding with member states. But this would be to the detriment of less affluent countries (including Poland), which do not have sufficient national resources to share the costs, while net contributor member states would derive greater financial advantage. According to reliable calculations, combined EU and member state agricultural spending, including expenditure on rural development, comes to roughly 0.55% of European GDP. This is slightly lower than that of the United States and Japan. Is this excessive? The question, rather, should be if it is high enough.
Essential reform. None of the above means in any way that nothing should be changed. Far from it. The present CAP maintains artificially privileged allowances, which are of disproportionate benefit to some categories of farmer. This has to be changed (the most prosperous sectors are not the ones that have above all to be helped) and transparency of aid has to be increased (this is already under discussion).
Moreover and especially, the trend to make subsidies completely separate from agricultural production (decoupling) has to be corrected. Successive reforms have pushed hard in this direction, in the desire to open up the European market to more and more imports from throughout the world. So farmers get premiums for protecting the environment and countryside, no matter what they produce. And we want to go further, in order to open EU borders further. This move discourages farmers and only allows some specialities to survive. It has to be partially corrected. Recent rises in world prices should encourage a change of direction, in order to avoid having increasing amounts of agricultural land lying fallow (the agricultural activity which, in the main, best looks after the land). With this in mind, the “Community preference” has to be retained and possibly restored.
The risks are huge: a wrong policy would reduce security of supply, compromise the quality and safety of products, upset spatial development, lead to job losses and cause the relocation of the food industry. That cannot be accepted. (F.R.)