Agriculture no longer absorbs most of the European Union funds. But even now, when summit communiqués are peppered with references to “innovation” and “competitiveness pacts”, some of the EU’s biggest rows are still about how much money farmers get.
The farm subsidy row will resurface in the coming months. The EU has embarked on another reform of the Common Agricultural Policy (CAP), which is currently worth €56 billion, or 42% of the EU budget. As ever, CAP reform is not just for agriculture ministers, but will be closely tied to setting the EU’s next seven-year budget. But one difference is clear in comparison to the last round of talks in 2002, when Jacques Chirac and Gerhard Schröder stitched up a deal that set agriculture spending in stone for a decade. This time, central and eastern European countries will no longer be candidate countries sitting on the sidelines, but full member states and very active players.
Will the EU’s most recent entrants operate as a bloc? The ‘new’ member states have very different farm sectors. The Czech Republic gets just 0.5% of its national wealth from farming; Romania gets 5.4%. Likewise, while the Czech Republic has a small number of farmers with large holdings (90 hectares on average), Romania’s farmland is parcelled out between 3 million smallholders.
Common goals and grievances
Despite these differences, many states share common goals and grievances. Most would like a so-called strong and efficient CAP that at least maintains the current level of spending. This was the message of a 2010 declaration signed by Bulgaria, Estonia, Latvia, Lithuania, Hungary, Poland, Romania, the Slovak Republic – and Cyprus. (The Czech Republic did not sign, but Prague is not so far off this line, despite its early flirtation with the ‘anti-CAP’ countries, Denmark, Sweden and the UK.) Essentially, the declaration defends the CAP and puts central and eastern European countries in line with the majority of the ‘old’ member states. The declaration’s stress on food security, containing market volatility and maintaining spending suggests that most do not want a revolution in farm policy.
Central and eastern European countries share a common goal of overturning the unequal farm subsidy regime. The current system, based on historic calculations, disadvantages newcomers: a Greek farmer can get around six times more money per hectare than his Latvian counterpart. Farm payments to the EU10 are on an upward trend, but even by 2016, when they will reach their highest point, the gulf remains wide.
For new member states, self-interest is buttressed by solidarity and the single market. One diplomat from the EU10 points to the difficulties facing farmers in his country, who have to compete with those only 20 miles over the border who are getting substantially higher payments. As well as competitive distortions, there is also the simple question of fairness. “The problem is the disparity, when someone receives six or seven times more,” Imants Liegis, a member of the Latvian parliament, told European Voice earlier this year. He explained that Latvia is arguing for all payments to be on a scale of €200-€300 per hectare. This does not mean that all countries should get the same, he said. But it could make the politics of CAP reform difficult to swallow for today’s beneficiaries. “If we receive more, someone will have to receive less,” he said.
Central and eastern European countries also have a common interest in modernising farms and improving productivity. The 12 countries that joined the EU in 2004 and 2007 increased the EU’s arable land area by 40%, but production for most products went up by only 10-20%. Poland, in particular, makes a strong argument for maintaining direct payments to enable “investment” in modern farming equipment and methods.
Central and eastern European officials also sound a sceptical note about the European Commission’s talk of making farming less damaging to the environment. “European agriculture is already green and it is hard to make it greener,” says one EU diplomat. This is only slighter blunter than the recent conclusions agreed by a majority of EU ministers, which also sounded lukewarm about a greener CAP.
But it will be far trickier to find consensus on spending priorities among the EU10, especially over whether farm money should take second place to protecting structural funds – the EU money for economic catch-up in disadvantaged regions, which is another priority for the EU10. One EU10 diplomat talks about trading farm spending for regional funding. “We can imagine that the CAP would be cut in favour of keeping cohesion policy and structural funding,” the diplomat says. But in contrast, others do not want farmers to lose out. Other EU10 countries want the cohesion funds and agriculture budget to remain intact. “We don’t want structural funds to be strengthened at the expense of agriculture,” says the diplomat.
New v old
Countries from the EU10 will also make alliances with ‘old’ member states when there is a common interest at stake. A recent example is the statement against a Commission proposal to cap payments to large farms, which attracted support from Germany, the UK, the Czech Republic and Romania, among others.
Although it is unlikely that the newer members will act as one united bloc in farm and budget negotiations, their common interests will carry weight in the negotiating game. This time round, it will be far harder for just two countries to fix the future of Europe’s farm policy in a backroom deal.