Food fight threatens as EU looks to agriculture reforms

19th May 2008, Comments 0 comments

Free-market advocates in northern Europe, such as Britain, want the European Commission to scrap the EU's system of intervention in agricultural markets.

Brussels -- European Union agriculture ministers are bracing for a food fight as the bloc's executive proposes cutting farm subsidies at a time of soaring world food prices.

On Monday, the agriculture ministers of the bloc's 27 member states are set to meet in Brussels to debate how to tackle the price surge and reforms to the EU's Common Agricultural Policy (CAP).

Free-market advocates in northern Europe, such as Britain, want the European Commission to scrap the EU's system of intervention in agricultural markets. Big beneficiaries such as France and Germany say the system must be kept to protect local farmers.

On Tuesday the commission is likely to try and steer a safe course between them by proposing modest liberalizations to the CAP, such as phasing out quotas on milk production and stopping the practice of paying farmers to leave land unused.

The proposals are nevertheless likely to cause a bitter political battle as each side tries to prove that the food crisis makes its preferred policy the only safe one to adopt.

"The problem with the food debate is that most member states will conclude that it supports their current position on the CAP," one Brussels diplomat conceded.

Ahead of the meeting, British Finance Minister Alistair Darling wrote to EU counterparts to call for an end to CAP policies, which keep EU food prices artificially high, such as imposing high tariffs on food imports and giving farmers direct handouts.

It is "unacceptable that, at a time of significant food price inflation, the EU continues to apply very high import tariffs to many agricultural commodities," Darling wrote.

Germany's agriculture minister, Horst Seehofer, argues instead that "we have to make sure that we can provide this continent with food sustainably. This cannot be done by taking away subsidies from European farmers."

The CAP has long been one of the most hotly debated policies in the EU. In 2009 it is expected to pay out 42.9 billion euros (66.4 billion dollars), or over one-third of all EU payments.

Member states agreed in 2003 to reduce subsidies, but with food prices in the 15-member eurozone now rising at an annual rate of 6 per cent, critics say the reductions don't go far enough.

"For the weakest sector of our society, inflation is the main problem. They are suffering a loss of purchasing power and must pay more for food and other necessary goods," EU Economic and Monetary Affairs Commissioner Joaquin Almunia said on Tuesday.

"We should consider whether we can improve the functioning of our CAP," he said.

DPA

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