By Tito Drago
MADRID, Apr 29 1996 (IPS)

Though the European Union (EU) has agreed to end its system of lavish agricultural subsidies, the practice continues, with sometimes awkward results.

Spain is a good example. In some areas of this southern European country, the EU policy of cushioning farmers against supply-demand and other vagaries of the market, has produced farmers who are in the business not to produce crops. Effectively, they are paid for not producing.

And they can continue that way until the end of the century: the system of EU agricultural aid is guaranteed until 2000.

President of the autonomous government of Extremadura, Juan Carlos Rodriguez Ibarra, commented recently to a group of journalists that in his region — one of the largest and least developed in Spain — there were landowners who periodically bought new land with money received from EU subsidies.

In some cases, he noted, such as in growing sunflowers, the EU grants subsidies so that the farmers do not harvest the sunflower seeds. With what they receive over four or five years for doing this, the farmer can buy an amount of land more or less equal to that which produced the subsidies. That land in turn he will sow with sunflowers, in order to receive aid later… always on condition he does not gather in the harvest.

The agrarian specialist of the morning paper ‘El Pais’, points out that for some crops, including sunflowers among others, the subsidies exceeded the amount which the producer would have received for his crop in the best harvest years.

Average price of a hectare of land for agricultural use in Spain in 1995 was approximately 5,000 dollars. The price fell to slightly more than 1,000 dollars when large extensions of land were used as pastures for growing grass for fodder, or for cultivating wheat, barley or sunflowers.

Europe has some highly competitive farmlands and other areas which are not so competitive, and many which frankly are very inefficient if measured in terms of the relation between quality and price.

The EU’s Common Agricultural Policy (CAP) is designed to make the whole system more efficient. It discourages non-competitive production and applies production quotas to avoid the collapse of the market.

Now, with world markets being liberalised, and the having being forced to reduce tariff barriers against imports from other regions, including the Third World, subsidies provided under CAP are being used to eliminate certain crops as well.

Aid extended by the EU in some cases is intended to improve the revenues of farmers, but it is also designed to encourage them to abandon cultivation of certain crops, root out vineyards and olive groves and dedicate lands to afforestation.

In 1995, the EU provided Spain agriculture the equivalent of five billion dollars in direct aid. Provision of that money is not conditioned by production. It is paid without taking into account the results of each harvest.

This has produced a curious situation in which the price of land had risen over the past two years not because of improvement in the market or better harvests, but rather because EU aid is assured.

And in many cases, the aid is for NOT producing, or, if the farmer has already sown his land, for NOT harvesting the resulting crop.

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