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AGRICULTURE-EU: Subsidies Hurt Poor Nations, Short-Change Family Farms, Says Oxfam

Tito Drago

MADRID, Mar 19 2005 (IPS) - Changes to the current agricultural policy of the European Union would benefit not only the world’s poor nations – and thereby help achieve the Millennium Development Goals – but also the majority of European farmers, who are short-changed by the system now in place, says the Spanish affiliate of Oxfam.

Changes to the current agricultural policy of the European Union would benefit not only the world’s poor nations – and thereby help achieve the Millennium Development Goals – but also the majority of European farmers, who are short-changed by the system now in place.

This was the conclusion reached by a study released this week in Madrid by Intermón Oxfam, the Spanish affiliate of the British-based non-governmental development organisation Oxfam.

Seven big landowners in Spain received a total of over 14 million euros (19 million dollars) in EU subsidies in 2003. This is roughly the same amount that was shared among 12,700 smaller Spanish farms that same year – and is equivalent to the combined annual income of 90,000 peasants in Mozambique, the report added.

The seven leading beneficiaries of EU largesse through its Common Agricultural Policy (CAP) include Cayetana Fitz James Stuart, the Duchess of Alba, who receives 1.88 million euros (2.5 million dollars) a year. At the top of the list are the Mora Figueroa Domecq brothers with an annual subsidy of 3.6 million euros (4.7 million dollars), which equals the combined yearly earnings of 15,000 Guatemalan campesinos.

The concentration of aid among the largest farmers has hurt family farms, 147,000 of which disappeared in Spain between 1999 and 2003.

The Millennium Development Goals (MDGs) were adopted by the U.N. General Assembly in September 2000, and include reducing the proportion of the world’s population living in hunger and extreme poverty by one half, among other targets to be met by 2015 in the areas of development, health, education, gender equity and the environment.

There are currently 2.7 billion people in the world who live on less than two dollars a day, and 1.2 billion who scrape by on less than one dollar, according to U.N. statistics. The vast majority are in Africa, Asia and Latin America.

“EU aid for the agricultural sector has to be more equitably distributed,” said Javier Sánchez Ansó, the director of international relations, strategy and development at the Spanish Federation of Farmers’ Organisations (COAG).

Sánchez Ansó’s group has been demanding changes to the EU subsidy policy since 1990, because under the current distribution system, “four percent of the recipients make off with 40 percent of the subsidies, which is illegitimate and unjustifiable.”

COAG also maintains that the agricultural sector should not fall under the World Trade Organisation, because “it doesn’t manufacture nuts and bolts, rather, it is the foundation of food sovereignty,” Sánchez Ansó told IPS.

Statistics from the European Commission, the EU’s executive branch, reveal that 18 percent of the recipients of EU agricultural and cattle farming subsidies account for 76 percent of payouts under the CAP.

Among the most highly subsidised companies is Spain’s Ebro Puleva, the EU’s sixth biggest agribusiness firm, which was given over 20 million euros (26 million dollars) in subsidies in 2003 for its operations in the sugar and rice sectors.

In most of the other EU countries, the situation is similar, or even worse. In Britain, for example, the Duke of Westminster receives the equivalent of 628,000 dollars in subsidies every year, while the Duke of Marlborough collects 715,000 dollars thanks to the CAP.

In France, according to government figures, one quarter of the country’s farmers receive no assistance at all, while 15 percent – representing the largest agricultural operations – are given six out of every 10 euros in subsidies.

Intermón Oxfam’s research further revealed that every farmer in Germany receives a subsidy equivalent to more than four times the average salary of a German factory worker.

The United States does not differ greatly from the EU in this regard. While 60 percent of farmers do not benefit at all from the 20 billion dollars in agricultural subsidies doled out by the U.S. government, ten percent of the biggest and often most profitable producers received 72 percent of the total paid out between 1995 and 2003, according to the Environmental Working Group.

In Madrid, Gonzalo Fanjul, the author of the new Intermón Oxfam report – entitled “Goliath Against David: Who Wins and Who Loses with the CAP in Spain and the Poor Countries” – called for an end to the subsidy model that solely benefits big corporations and major landowners.

He also urged socialist Spanish Prime Minister José Luis Rodríguez Zapatero to lead up a reform movement within the EU aimed at achieving “an agricultural policy that is consistent with his commitment to fighting poverty.”

In February 2004, in the midst of the election campaign, Zapatero said he wanted to be the head of the government that brought Spain into an alliance against hunger, “the deadliest weapon of mass destruction.”

Zapatero’s statement clearly differentiated him from his conservative rival, then Prime Minister José María Aznar, who joined in the invasion of Iraq on the pretext of that country’s possession of WMDs.

“If Zapatero and the EU want to meet the Millennium Development Goals, they have to guarantee fair rules for agricultural markets,” said Intermón Oxfam representative Paloma Escudero.

This is a key year, with a special conference on the MDGs at the U.N.’s New York headquarters in September, a proposed reform of the EU’s sugar sector policy, and a WTO ministerial conference in December where the guidelines for the liberalisation of world agricultural trade over the next 15 years are supposed to be established.

As a result, “Spain has been presented with a unique political opportunity to bring its interests and commitments into line. Maintaining the current system would endanger the future of Spain’s farmers and tarnish the credibility of the government’s fight against hunger and poverty,” said Escudero.

The inequalities inherent to the current European agricultural policy are eloquently illustrated by the sugar sector.

According to Oxfam estimates, six big sugar refineries received 819 million euros (one billion dollars) in export subsidies in 2003. This allowed the EU to rank as the world’s second largest exporter of this commodity, to the detriment of traditional sugar-producing countries like Malawi, Ethiopia and Brazil.

The biggest beneficiary of these subsidies was France’s Beghin-Say, followed by Germany’s Sudzucker – the largest sugar processor in Europe – and the British company Tate & Lyle. Export subsidies drive down world sugar prices by an estimated 20 to 23 percent.

In Malawi, this fall in prices meant the loss of 42.8 million dollars in export earnings, an amount equivalent to the total annual health care budget in this African nation, where 15 percent of the population is living with HIV/AIDS.

In the Dominican Republic, where 30,000 small farmers make their living from dairy production, the EU sells subsidised powdered milk at a price 25 percent lower than domestically produced fresh milk. An estimated 10,000 local dairy farmers have been forced out of business over the last decade as a result.

In the meantime, 20,000 families in Honduras whose livelihood depended on rice production have been left unemployed by the “dumping” of rice exported from the United States at prices below the cost of production.

Intermón Oxfam is not proposing the elimination of aid for Spanish farmers, but rather, more equitable distribution of subsidies, along with respect for fair trading practices that do not hurt the world’s poor nations.

“There is no conflict between the interests of the majority of Spanish farmers and the interests of the poor countries. If the government wants to eradicate hunger and poverty, it should begin by demanding fairer distribution of aid and an end to subsidised European exports,” said Fanjul.

“There is no possible way of achieving the Millennium Development Goals adopted by the international community without guaranteeing fair rules for world agricultural trade,” he added.

Intermón Oxfam has proposed a number of initiatives, including a round of trade negotiations focusing on the needs of development, aimed at putting an end to export subsidies, recognising the right of poor countries to protect their agricultural sectors, and guaranteeing low-income countries access to the European market.