DEVELOPMENT-EU: Farm Reforms Still Leave France the Winner

By Julio Godoy Reprint | | Print |

Julio Godoy

PARIS, Jul 1 2003 (IPS) - France opposed reforms to the EU Common Agriculture Policy most strongly because it gained the most from it. But the reforms as they stand still leave France a winner.

"France hasn’t abandoned its ambition of remaining a great agricultural power," farm minister Herve Gaymard announced at a press conference after the reforms were agreed. "The reform doesn’t imply a reduction in our budget for farmers."

French farmers will continue to be the main beneficiary of European Union (EU) subsidies. They pocket more than 11 billion dollars a year – almost a quarter of the EU’s total spending in agricultural aid.

The reforms agreed at a meeting in Luxembourg last week maintain the budget of the Common Agriculture Policy (CAP) at 50 billion dollars until 2013.

The agreement provides also an escape clause for France and other EU countries, which can delay implementation of the reform for up to two years.. France can also stop reforms on the ground that they may reduce land under cultivation.

The Luxembourg agreement will break the links between production and subsidies from 2005. That link is believed to have led to intensive agriculture, and to consequent side effects like the mad cow disease.

The agreement also provides for the EU to reduce support prices to farmers in case of overproduction of cereals. From 2014, the EU will reduce aid to producers of milk and derivates.

Farmers will continue to get subsidies, with variability linked to environmental concerns.

The EU agreed to the reform under pressure from the World Trade Organisation (WTO), the United Nations (UN), the World Bank, and the International Monetary Fund (IMF), but the agreement will benefit only a handful of non-European countries, particularly producers of cereals and milk goods..

"The poorest countries of the world will not profit from this reform," the French economic daily newspaper La Tribune wrote. "The reform will be to the advantage of relatively rich non-European countries – Australia, New Zealand, Indonesia, Argentina, and Brazil."

African countries, which do not produce corn, milk, or butter for exports are not expected to gain.

Several experts point to the mismatch between President Jacques Chirac’s words on Africa and his actions. Chirac called a special meeting on new development programmes for Africa at the summit of the eight most industrialized countries (G8) at Evian June 1-3. "We owe a commitment of solidarity to Africa," Chirac said.

But over the last two weeks, Chirac tried hard to block EU efforts to reform subsidies that harm African peasants. He has been doing so for years. Last December, he obtained an agreement from Germany to maintain European agricultural subsidies at the present level until 2013.

Chirac, who was minister for agriculture in the early 1970s, has close relations with conservative French farmers, who form the backbone of his political support.

Chirac tried to block the plans to end the link between subsidies and production in the days leading up to the Luxembourg meeting. Breaking this link could potentially reduce overproduction and with it the need to dump agricultural surplus on the world market. This dumping reduces competition from Africa.

Chirac told representatives of African farmers in Paris June 12 that European subsidies are "neutral to economic development" in Africa. He challenged "anyone" to prove that European subsidies damage African agricultural interests.

But that link has been long proven. The latest world economic survey released by the United Nations (UN) last week says the massive agricultural subsidies in Europe and North America undermine the living conditions of millions of poor farmers in Africa, Asia, and Latin America.

Other international organisations have reached similar conclusions. The World Bank says that ending the subsidies worth 350 billion dollars, mainly in North America and Europe, would boost the income of developing countries by 150 to 400 billion dollars within five years.

The IMF says that abolition of subsidies for farmers in Europe and North America would boost African gross domestic product by 0.6 percent annually.

"Three simple economic indicators show the absurd state of our world," Bruno Rebelle, director of the French wing of the environmental organisation Greenpeace told a press conference. "One-third of the human population, that is, more than two billion people, must live on one dollar per day. In contrast, the European Union gives out two dollars a day in subsidies for one cow."

The contrast with the military budget of the United States is even more stark, Rebelle says. "Every citizen of the United States pays three dollars a day to finance the military machine."