Signs of common sense coming to EU farm subsidies

Monday, March 5, 2012

European farming support plans for 2014 at last seem to be addressing problems that have been ignored for years, such as the huge handouts to already wealthy agri-businesses

by NORMAN DUNN

It's been a long time coming, but it looks like the era of Europe's big farming businesses getting hundreds of thousands of dollars in annual support – whether they need it or not – is about to end.

The open-handed attitude in the Brussels headquarters of the European Union (EU) still means, for instance, that in Britain more than 100 farmers and businesses each pull in the equivalent of over C$780,000 a year in agricultural support. The situation is much the same over the rest of western Europe. While the average family farm scrapes by with a modicum of support, big spreads claim – and get – annual sums from the EU that would help keep a 100-cow dairy farm, for example, ticking over for at least 10 years.

The situation was excellently presented by Germany's Spiegel magazine back in 2009. Its research revealed that around 80 per cent of that country's 380,000 farmers shared 25 per cent of the nation's EU agricultural aid. These mainly small-scale farmers were getting an average $10,400 support from the EU. But just two per cent of Germany's farmers were (and still are) getting a massive 40 per cent of the support cookie, giving these lucky 7,500 landowners an average $260,000.  

Naturally, we've got to be fair here. Those pocketing this annual Brussels jackpot sometimes even pay tax on the vast sums. They are also, in certain cases, fairly large employers out in the rural areas, which means they deserve a lot of help in this worthwhile respect. But the point of view gaining ground now is that this support should be more evenly distributed throughout the farming strata. And this opinion has been intensified since some of these highly-subsidized farmers joined forces to prevent publication of just how much they were getting and also started intensive lobbying for retention of the top-heavy system.

This time though, the still, small voice of common sense seems to have beaten the big guns of corporate lobbying. Starting in January 2014, the aim is to impose a limit on the amount of farming support given to individual farmers or farming companies.

What the EU law makers would like to see is "capping" of the present payments to an equivalent $195,000 a year for individual farms, followed by a gradual reduction until a full stop when double that sum has been received. If you take an average of support payments to all farms in the EU equivalent to $105 an acre, the new plan would mean individual support being completely stopped at 3,700 acres.

But the farms helping rural employment are being thought of here. The idea is to allow higher payments according to the wages paid to hired hands. In theory, this would mean that a farm already at the 3,700-acre limit, but with 10 hands paid an average $750 a month – in other words, with a total wage bill of around $90,000 – could then claim extra support. If this farm was receiving the average $105 an acre, an additional 850 acres could thus claim full support from the EU.

Plainly, the farms worst affected by this strategy will be the most economically efficient agricultural businesses. On the other hand, the very large payments currently involved have sown significant discontent amongst smaller-scale farmers, not to mention the general tax-paying public throughout the EU who can only dream about such handouts. The resulting resentment and, yes, envy too will probably ensure that this strategy is adopted in 2014.

Also helping acceptance by national governments are assurances by the EU that the money saved by capping subsidies will still be made available to the farming sector in the respective countries, ideally to help smaller-scale farming operations in difficult areas.

Here, the EU wants to help virtually deserted regions where, even with the present financial support from Brussels, there's not much chance of a worthwhile living from the land. Sheep and cattle grazings in the Scottish and Welsh highlands or in the Auvergne of south-central France are good examples of regions where family farms are disappearing fast. To keep community life intact in such areas, and livestock on the hills, the EU planners want to retain support based on actual production. This means cash grants per calf or lamb produced instead of the current trend towards paying a set sum for each acre of land.

Such a policy will probably also be introduced in 2014. It's another move indicating that, as far as farm support is concerned anyway, nowadays there's more common sense being applied in the Common Market. BF

Norman Dunn writes about European agriculture from Germany.