EU plans farm sector shake-up

21st May 2008, Comments 0 comments

As food prices soar to a record high, the European Commission is urging Europe’s farm sector to increase production.

21 May 2008  

BRUSSELS - The European Commission urged on Tuesday a shake-up of Europe's farm sector to ramp up production in the face of soaring food prices, with Britain and France braced for battle over hand-outs to farmers.
With food prices rocketing worldwide on tight supplies, the European Union's executive arm wants to encourage farmers to produce more after years of trying to rein in chronic overproduction.
EU Agriculture Commissioner Mariann Fischer Boel told journalists in Strasbourg that the package "aims to remove restrictions on farmers to allow them to respond to the market".
"I think it is not the time in a situation like this to micro-manage farmers," she added, describing the package as "balanced".
Even though prices of farm products have eased off recent peaks, they remain at historically high levels amid rising demand in China and India, with wheat up 84 percent over one year, maize 21 percent and butter 21 percent.
The commission proposed to phase out milk quotas and scrap rules on keeping land fallow, which it hopes would bring four to five million hectares of idle fields into production.
The commission also wants to shift more funds used for subsidies to development of rural areas by reducing handouts for the biggest farms, although it has had to water down that proposal under pressure from Britain and Germany.
The commission wants the new wave of reforms to build on an earlier shake-up in 2003, just before the EU took in 10 mostly former communist countries, in May 2004, whose farming sectors have had to modernise quickly.
The 2003 reform sought to discourage overproduction by making subsidies to farmers less proportionate on how much they produced, in what is known as "decoupling" in EU jargon.
While 90 percent of farm subsidies are currently decoupled from production, the commission wants to take that principle even further, making it applicable to an even broader range of crops and products.
The proposals will next go to member states and the European Parliament for consideration in the second half of 2008, when France - the biggest national recipient of EU farm subsidies - holds the bloc's rotating presidency.
While EU member states agree that Europe needs a thriving farming sector in reaction to the current food crisis, opinions diverge sharply over how much the public sector should foot the bill through costly subsidies.
Despite reforms, farm handouts under the Common Agricultural Policy remain the single biggest spending item in the combined EU budget, swallowing up about 40 percent of the whole - around EUR 40 billion.
As Europe's biggest farming power, France has led resistance to any changes that would reduce handouts to farmers in the face of recurrent British calls to shift more funds from subsidies for farmers to rural development.
While stressing that he wanted "a strong agriculture sector in Europe,"

British Environment, Farm and Rural Affairs Secretary Hilary Benn argued on Monday that currently high food prices were not grounds for returning to a heavily subsidised farm industry.
"We must guard against the danger that the debate on global food prices leads us to go backwards in terms of operation and functioning of the Common Agricultural Policy," he told journalists in Brussels.
Hitting back, French Agriculture Minister Michel Barnier said that "the food crisis gives us a reason to preserve (the) production capacity that we have in Europe".
The COPA-COGECA European farmers association also rallied to ward off any deep cuts in farm support, despite the booming agriculture commodities market.
"It is simply not the time to shift resources away from supporting European farmers' production role towards supporting rural development," COPA vice president Gerd Sonnleitner said.

[AFP / Expatica]

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