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CAP: dilution or development?


The beginning of a new era? An historic moment? Or a plain old compromise? All have been used to describe yesterday's agreement by EU farm ministers to approve hotly disputed reforms to the Common Agricultural Policy.

After days of intense negotiations, the ministers agreed on a somewhat diluted version of the reforms to CAP initially proposed by the EU's Agriculture Commissioner, Franz Fischler.

But the Commission remains convinced that yesterday's decision will give Europe a strong hand in upcoming negotiations on the Doha Development agenda.

"We are saying goodbye to the old subsidy system which significantly distorts international trade and harms developing countries. Now it's up to others to move to make the WTO trade talks a success,"Fishler commented yesterday.

Adding, with a swipe at the US, that "the ball is now in the camp of other countries, such as the US, whose agricultural policies continue to be highly trade-distorting and have even become increasingly so."

Fischler set out to reshape the CAP to ensure that only needy farmers are subsidised, and only necessary food is produced, avoiding the food mountains of the past. Instead, he proposed a system of 'decoupling', of single farm payments, independent from production.

France, currently benefitting from almost half of the €45 billion CAP subsidies, from the beginning was out to water down the reforms. At one point French President Jacques Chirac even threatened to veto the entire deal.

So, what is left of Fischler's brave new reforms? By all accounts, a slimster version, but one which guards the principle of the single farm payment. Compromises are seen in that limited coupled elements may be maintained to avoid 'abandonment of production'.

The European food industry, a strong supporter of Fischler's reform, welcomed the changes, keen to see market forces at work. Martin Paterson, deputy director general of the UK's food and drink industry body said:"This is very good news for continued agriculture production and industry investment in the UK, and for our trade prospects. We now look to build on this to achieve a worthwhile WTO trade agreement in September."

The UK food industry, valued at over £66 billion, purchases more than two thirds of the UK's agricultural produce. In Europe as a whole, the food and drink industry is the Union's third-largest industrial employer with over 2.6 million and transforms more than 70 per cent of the agricultural raw materials produced in the EU.

Commenting last week at a conference, Europe's food and drink federation, the CIAA reiterated its support for the changes.

"The CIAA is committed to continue the reform process in international agricultural policies that should lead to a clear set of trade rules creating a fairer playing field for WTO members following the Doha Development Agenda."

Although the UK farmer's body approved the deal, brandishing it as 'historic', Sir Ben Gill, NFU president, expressed concerns about some details of the reform.

Speaking from Luxembourg, Sir Ben said: "This is a historic turning point in the Common Agricultural Policy. But as ever the devil is in the detail."

Voicing fears over CAP's dilution, Sir Ben added that the compromises "give other countries options to maintain the link, at least in part, with production. We will ask the government for full decoupling in England. But if other member states don't do this, it could potentially distort the market".