EU farm payments likely to be capped under reform

BRUSSELS - The European Commission has strongly hinted that new funding criteria under a reformed EU common agricultural policy are likely to introduce a de facto capping on the size of handouts given to the bloc's farmers.

Speaking at the end of a two day conference on CAP reform (19-20 July), EU agriculture commissioner Dacian Ciolos noted that the post-2013 policy would place greater emphasis on the provision of public goods such as preserving the environment.

"There are some limits to what big farms can provide in this area," said the Romanian politician who took up the executive post in February. "It's not an objective in itself to have capping but if support is not justified we have a problem."

The debate on how to reform the cornerstone EU policy is closely linked to negotiations on the size and shape of the EU's future long-term budget (2014-2020), and comes at a time when cash-strapped national capitals are being forced to implement unpopular public sector cuts.

Stories of 'subsidy millionaires' and the fact that the CAP takes up roughly 40 percent of the EU's €120 billion annual budget are regularly cited by those most keen on substantial reform.

The relatively small size of many European farms and the bloc's commitment to producing high quality goods make the payments essential say the agricultural sector.

"Two thirds of farm incomes come from the CAP payments," said Padraig Walshe, president of the EU Committee of professional agricultural organisations (COPA). "They are absolutely vital."

It appears clear however that the current system for calculating single farm payments for European farmers, a direct payment calculated according to a formula which looks at production levels over three reference years (2000-2002), is set to be scrapped.

"We are now going to have a discussion on how to move away from historical payments," Mr Ciolos told journalists, without revealing what the new formula will look like. The 12 EU member states that joined in 2004 or later already use a system based on hectarage rather than former stocking levels.

Mercosur and deforestation

The two-day conference which marked the end of a CAP-reform consultation period before the commission comes forward with proposals this November also saw several delegates speak out against the recently re-started EU-Mercosur trade talks.

Europe's farming community is worried that a reduction in tariffs as part of any deal will see the 27-member bloc flooded with cheaper agricultural imports from the South American trading bloc made up of Argentina, Brazil, Uruguay and Paraguay, the former two among the world's largest beef producers.

Mr Walshe said any trade deal was likely to lead to greater deforestation in the Mercosur region as farmers looked to ramp up production by taking over new land, despite other commission initiatives to prevent deforestation in Latin America.

The claim was supported by a number of environmental NGOs, but strongly rejected by EU and Brazilian officials approached by EUobserver.

"Its a classic case of policy incoherence across the EU commission, DG environment versus DG trade," said Vichy Hird of Friends of the Earth.

One EU official who wished to remain anonymous said special interest groups would always seek to bloc trade deals that would ultimately benefit EU citizens as a whole, even if certain sectors lost out.

A senior Brazilian official said the claim that greater farm exports necessitated cutting down areas of the Amazon rainforest was completely bogus.

"Brazil's territory is twice the EU's territory and more than 30 percent of its rural land outside the rain forests is still available for agricultural expansion," said the official. "The deforestation argument is protectionism at its worst."