EU Australia Online - News & information from the capital of Europe direct to Australian businesses

Protectionism: New Farm Funds Scandal

  • March 23rd, 2010
  • Posted by 7thmin

farm-protest-brussels-186.jpgCOMMENTARY: That bugbear of Australian – EU relations over decades, the Common Agricultural Policy, won’t go down – Europeans’ devotion to protected agriculture making itself felt in two recent developments.

The European Commission is chasing up certain national governments for defying new laws against excessive feather-bedding on the farm; and at the same time the EU’s often-named fourth institution, the European Economic and Social Committee, has made a nostalgic attack on the evils of the “market” in agriculture. 

REIGNING IN THE LOBBIES, AND LARGESSE

Executives of the EU have spent the last fifteen years changing their joint agricultural program (the CAP), from a system based on paying farmers to produce, to one spending about the same amount, for now, on other supports: in marketing, research, environmental care, infrastructure or communities.

The idea has been to take the incentive away from over-producing, such that the EU could reduce its infamous stockpiles – the butter mountain or the milk lake of the 1970s and 1980s.

Carried through it will undo the distorting impacts of European activity on world agricultural markets – the impacts of dumping of subsidised European products, and protecting Fortress Europe from imports from the Cairns Group and other outside producing countries.

However the changed mandates by the EU have not stopped national governments giving in to local lobbies looking for subsidies money; often enough, money from central funds is handed out on a false basis, or mismanaged – and so the European Commission has to demand its money back.

EC WANTS REFUND FROM BIG SPENDERS

eu-flag-reduced.pngSomething like that has transpired this month, reaching scandalous proportions, with actions against 20 or the 27 member states!

The EC statement on the matter is clear.

It says:-

A total of € 346.5 million (A$510.9-million; dcerates.com, 23.3.10) of EU farm money unduly spent by Member States is claimed back as a result of a conformity clearance procedure decision adopted by the European Commission.

berlaymont-resize-1501.jpgThe money returns to the EU budget because of non-compliance with EU rules or inadequate control procedures on agricultural expenditure. Member States are responsible for paying out and checking expenditure under the Common Agricultural Policy (CAP), and the Commission is required to ensure that Member States have made correct use of the funds.

Commenting on the decision, Dacian CioloÈ™, Commissioner for Agriculture and Rural Development, said: “This exercise remains a very important instrument in making sure that Member States have sufficient controls in place to ensure that taxpayers’ money is properly spent.”

Main financial corrections:

Under this latest decision, funds will be recovered from Belgium, Bulgaria, Cyprus, Denmark, Estonia, Germany, Spain, Finland, France, Great Britain, Greece, Hungary, Ireland, Italy, Luxemburg Netherlands, Poland, Portugal, Slovakia and Sweden.

The most significant individual corrections are:

•           € 47.5 million (A$70.2-m) charged to Spain for ineligible costs and for weaknesses in the control system in the fruit and vegetables sector;

•           € 92 million (A$136-m) charged to Poland for various weaknesses in area aids for the years 2006-2007;

•           € 105.5 million (A$155.9-m) charged to Greece for weaknesses in the control system for cotton and €18.5 million (A$27.34) for rural development measures, for severe and persistent weaknesses in the IACS system;

•           € 14.2 million (A$20.9-m) charged to United Kingdom for failure to meet the statutory deadlines for direct payments;

•           € 10.4 million (A$15.37-m) (for financial years 2003-2005) charged to the Netherlands for insufficient quantity of substitution checks performed in calendar years 2003 and 2004 in the sector of export refunds.

REAR GUARD ACTION?

Sometimes promoting itself to the status of “fist institution” of the EU , the eesc-logo.pngEuropean Economic and Social Committee (EESC) has declared it is “rising  to the challenge of providing a comprehensive vision for the future of the CAP”; declaring that the “free market will not save European agriculture.”

It said it was moving in advance of papers to be produced by the European Commission, on agriculture policy after 2013.

eesc-building.JPGIt said: “The EESC’s opinion on this divisive and highly controversial issue was adopted with near-unanimity”, a stand that it called “historical”.

“The current funding for the CAP expires in 2013 and discussions on its future go hand in hand with a review of the EU budget for the post-2013 era”, it said in a declaration.

 

“The EESC adamantly states that all debate on the post-2013 CAP needs to begin with a precise definition of its ultimate goal, which, once subscribed to, should be followed by an agreement on a set of policy instruments and a financial settlement.

 

“‘It is wrong to assign money to a specific policy and only then to divide it up between different measures and among Member States’, said rapporteur Lutz Ribbe (Various Interests Group, Germany). ‘Agriculture policy is about more than allocating money’.

“The European agricultural model, that is sustainable farming, designed to provide varied and safe bio-food whilst at the same time preserving landscape and rural areas is under threat, since it is increasingly subject to market conditions, says the Committee.

 

“Food prices do not include the cost of tasks that farmers are required to fulfil, such as environmental protection and landscape conservation.

 

“As a result, multifunctional agriculture that Europe prides itself on might, unless conditions alter, push many farmers into poverty and out of farming.

“The Committee insists on the need to put an end to the race for higher productivity at all costs, which is also what society at large wants as it does not embrace the use of GMOs, hormones and growth stimulants that such a race inevitably entails.

 

“A sixth of all jobs in Europe is related directly or indirectly to agriculture, and if agricultural production disappears, then the related jobs in the upstream and downstream sectors will disappear too…

“The Committee notes that, despite the market stabilisation being enshrined in the EU treaty as one of the CAP’s aims, the dramatic decrease in a number of stabilisation tools has led to speculation and volatility.

 

“In turn … it has not translated into lower consumer prices.

 

“Support measures need to be maintained and beefed up in the light of ongoing developments on the agricultural markets.

 

“In the same vein, increasing concentration in retail, which has given the sector an unmatched bargaining power, turned farmers from “price-makers” into “price takers”.

 

“The Committee calls on the European Commission to use its power to make pricing more transparent and look into these contractual practices…

“The Committee argues that any future payments must be exclusively linked to the delivery of services required by preserving European agricultural model, for example high food safety requirements, and decisions are needed to determine which services will be eligible for such payments.

“The EESC also calls for investment support for farms to make them as productive and sustainable as possible, as well as to reverse past damage to rural areas from intensive farming methods.”

 

COMMENTARY

 

The arguments being put forward by the EESC bring the issue of protectionism and demands of the farm lobbies well out into the open.

 

fields-resize4.jpgPart of the argument is “social” in the sense that Europeans in  towns are asked to accept stiff taxation, in form of higher prices, and direct tax to pay subsidies, for the sake of preserving a peasant countryside.

It’s been a powerful argument, bringing with it considerations of quality of life, environmental protection, and regulation that helps prevent rapacious intensive farming, and unpopular innovations like genetically modified organisms  (GMOs).

 

The EC has produced answers on some of those points, especially in converting CAP subsidies from production-based, to grants for environmental protection or support for village communities.

It has fallen down on the issue of GMOs, (see EUAustralia, Black Potato War …, 4.3.10).

 

The EESC won’t have any of that; it says that no matter if life on the farm has a sheltered workshop quality to it, the EC’s reforms have been spoiling the quality of that life. 

“There is an ever-growing gulf between the lip-service paid to the European agricultural model on the one hand and the reality of day-to-day farm life on the other”, says Lutz Ribbe.

The most forceful argument against the CAP has been the gargantuan size and cost of it, scarcely economically sustainable for the EU, especially with the inclusion of poorer member countries since 2004; its dubious claim to environmental sustainability in view of the incentive provided to over-production, an d the dumping and protectionism that has traditionally made a bad joke of the overall liberal position taken by the EU in international trade negotiations.

 

In terms of constitutional process and law marking this EESC is not, as it claims, the “first institution” of the European union, though it is a legitimate, if unelected body set up under European law, and plainly an explicit mouthpiece on policy issues whenever vested interests may be smoked out and stirred to action.

Says Wikipedia:  The European Economic and Social Committee (EESC or EcoSoc) is a body of the European Union (EU) established in 1958. It is a consultative assembly composed of employers (Employers’ organisations), employees (trade unions) and representatives of various other interests. It is similar to the Committee of the Regions, with whom it shares the Delors building in Brussels, Belgium as its seat… It was established by the Treaty of Rome of 1957 in order to unite different economic interest groups to establish a Single Market.. .

  

Reference

European Comisison, Brussels. “Commission to recover € 346.5 million of CAP expenditure from the Member States”, Media Rlease, IP/10/284,16.3.10.

EC,  “Managing the agriculture budget wisely”, Fact Sheet, MEMO/06/178.

http://ec.europa.eu/agriculture/fin/clearance/factsheet_en.pdf, (22.3.10). Details on individual corrections:

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/284&format=HTML&aged=0&language=EN&guiLanguage=en, (22.3.10).

EESC, Brussels, “Common Agriculture Policy after 2013: free market will not save European agriculture”, CES/10/35, 18.3.10. https://toad.eesc.europa.eu/AgendaDocuments.aspx?pmi=fw7jVHopV10%3d. Rapporteur: http://eescmembers.eesc.europa.eu/EESCMembers.aspx?culture=en , (22.3.10).

Wikipedia online encyclopedia, EESC, http://en.wikipedia.org/wiki/European_Economic_and_Social_Committee, (23.3.10).

Pictures

Farmers’ protest at Brussels; EU logo; Berlaymont, EC headquarters, Brussels; EESC logo; EESC building, Brussels.

Leave a Reply