Rhein on Energy and Climate

Since the start of the European integration in 1958 agriculture has absorbed more political and financial resources than any other sector.

Despite the small and decreasing number of people that agriculture employs (some five per cent of EU labour force) it has always received the lion’s share of EU budget expenditures, though this share has progressively declined to 40 per cent presently.

The Treaty attributes to agriculture an outstanding place. The wording of the seven articles on agriculture has remained almost unchanged since 1958.Agriculture ranges third among 29 Titles dealing with policies, after internal market and free circulation of goods. Though the common agricultural policy falls under co-decision since 2009, most policy decisions can be taken by the Council.

Raising agricultural productivity and equitable living standards for agricultural workers (Art. 39 TFEU) remain the two supreme objectives for agricultural policy.

After 50 years of CAP and some €1500 billion (!) spent on market interventions, export subsidies and, more recently, direct income support, the results achieved leave to be desired. Structural change has been too slow; two thirds of EU farms have a size of less than 10 hectares. Agricultural incomes continue to lag behind other sectors, though they have risen by an impressive 30 per cent since 2005, especially in new member States.

No society can afford to subsidise indefinitely one sector of its economy. Producing agricultural products is not basically different from manufacturing machines, trucks or planes. European agriculture has to compete in the international market, by quality and price.

It has the capacity to do so. Market prospects are at least as good as for manufactured products. International demand for food products is expected to rise by two thirds until 2050. The risk of “milk lakes” or grain surpluses will be next to nil; food scarcity, not abundance will be the risk of the 21st century.

The preservation of a sustainable environment cannot justify permanent subsidies.

With 10 per cent of total EU green house gas emissions agriculture is a four times bigger emitter than air transport. Like all other sectors, it should therefore be obliged to take appropriate mitigation measures.

There is no reason for it to enjoy lower diesel tax rates than truck carriers. The massive cultivation of maize for biofuel and biogas should also be curbed because of its negative effects on soil, biodiversity and even C02 emissions.

Europe offers favourable conditions for cost-efficient production of a variety of high quality agricultural products. It appears less exposed to droughts and floods than most of its foreign competitors.

For these reasons the following policy changes should be undertaken:

  • cut 2014-20 CAP expenditures below the € 958 billion proposed by the European Council President last November. They should not exceed 33 per cent of total budget expenditures by 2020 and progressively be reduced to only 10 per cent.
  • make direct direct payments more transparent and equitable, to respond to criticism by the Court Auditors. This is under way.
  • put an end to still existing quota and price fixing for products like sugar, milk and butter. This should go along with a radical simplification/abolition of a panoply of regulations.
  • eliminate any overlaps between ”cohesion funding” and “rural development funding” .

With proper incentives to further structural improvements European agriculture should be able to become one of the most efficient and sustainable agricultural systems on earth.

Eberhard Rhein, Brussels

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  1. Thanks Eberhard for stoutly raising the question of agriculture which as you point out has a bloated position in politics and budget. The non-transparency and the milk lakes, meat mountains were foisted on the public in the Gaullist period with its closed door Councils and ‘package deals’. However, all of us eat. It would be best if we relied first of all on locally produced food, not world imports. Europe needs a sane agricultural policy that gives Europeans food security and environmental standards.
    The way forward is to revert to the basic ideas of the Community — a dialogue and legal responsibility between farmers, farm workers and consumers.
    Politicians, however, love other people’s money. They want to use secret subsidies for their own purposes.
    How can Europe move from the present distorted mechanism controlled by politicians to one were the three groups can exercise legitimate responsibility? I look forward to your future articles.

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