Britain, Poland urge shift away from direct farm subsidies

22nd November 2010, Comments 0 comments

Britain and Poland on Monday urged reducing direct subsidies to farmers in favour of more funding for rural development and diversification projects as the European Union overhauls its farm programme.

"We certainly support a shift in funding from pillar one -- the direct payments -- towards pillar two," focused on rural development and diversification, British farms minister Jim Paice said in Warsaw Monday.

The 27 EU members are currently in the midst of a debate on overhauling its generous farms subsidy scheme, the Common Agricultural Policy (CAP).

"It is the part of CAP where we can obtain the most change, by encouraging farmers and the food industry to invest in new production systems in modernisation of their business and prepare for those more challenging days ahead," he said following talks with his Polish counterpart Marek Sawicki.

The CAP currently gobbles up 40 percent or almost 60 billion euros (82 billion dollars) of the total European Union budget.

"There are areas on which we agree, notably beefing up pillar two to make the CAP more dynamic, innovative and competitive," Sawicki said, stressing that unlike Britain which wants EU spending on the CAP cut, Poland wants CAP funding to remain unchanged after 2013.

He added that while Poland wants CAP funds to be split equally between pillar one for direct farm subsidies and pillar two for rural development, Britain wants pillar one to be phased-out.

Both London and Warsaw agree that higher direct subsidies for farmers in older EU members and lower payments for farmers in 12 new members that joined after 2004 must be equalised.

"We have a great deal of sympathy for the Polish position wanting to see much greater equalisation of payment rates across Europe, whether it is achievable to get to a flat rate, I have my doubts," Britain's Paice said.

Poland, which absorbed 2.03 billion euros in CAP subsidies in 2009, argues that older EU members are picking up too large a slice of the subsidy pie under the current distribution criteria and wants a fixed rate of subsidies instead.

Its proposal is backed by other east European newcomer states states.

Austria on Monday said it backs France and Germany on the planned overhaul of the CAP in which Paris and Berlin have called for a strong farm budget but oppose the idea of a fixed rate of subsidies as proposed by Warsaw.

France and Germany are, along with Spain, the CAP's main beneficiaries.

Last week, the European Commission suggested a greener, fairer farming policy for the future, including a rethink of subsidies as part of a radical overhaul of the CAP.

A new CAP is due to enter into force January 1, 2014 but with deficit-hit member states keen to cut spending, all eyes are on the costly programme.

© 2010 AFP

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