EU Farm Talks Break Down

The third time could be a charm. At least that’s what European Union Agriculture Commissioner Franz Fischler hopes after EU farm ministers meeting in Luxembourg this week failed to overcome their differences and broke off their long-running negotiations to reform the union’s cash-consuming Common Agricultural Policy (CAP).

After days of marathon meetings, the ministers late Thursday agreed to adjourn until next week when they will make a third attempt to end a year of deadlock and reach a compromise on the future of the EU’s farming subsidies.

"Since Tuesday, we have tried to take every opportunity to find a just solution, without winners or losers, but it is still not possible to achieve a result," Greek Agriculture Minister Georgios Drys announced at a press conference on Thursday.

Cutting subsidies

The main point of conflict is a reform of the EU’s hefty agricultural subsidies. At the moment almost half of the EU’s €90 billion budget ($107 billion) goes into agriculture. At the end of the year, though, the present policies will no longer be sustainable. That’s when farmers from ten further countries join the current 15-member union and add to the drain on the budget. Compounding the situation, many of the new members, such as Poland, have economies heavily dependent on agriculture.

Opponents of the current system also say that by directly subsidizing EU farmers, the CAP encourages massive surpluses that are dumped on the markets, hurting farmers in developing countries.

The European Commission has been a strong proponent of reforming CAP, saying it would strengthen the EU's position at the World Trade Organization’s liberalization talks, which start up again in September. Major trade partners, such as the United States, have criticized the EU for maintaining their high farming subsidies which distort free competition within the European food market.

Revamping an old system

In order to bring the 45-year-old CAP into the next decade of the EU, Fischler has suggested that subsidies be paid without regard to actual quantities of food produced. This decoupling of production levels and subsidies would mean that farmers would receive a flat annual sum linked to rural development and food safety standards.

In other words, subsides for cereal farming, for instance, would be completely decoupled from production levels except for specific problem areas where there is a risk of farming being altogether abandoned once the EU subsidies dry up. In such risk areas, the EU Agriculture Commission would link 25 percent of subsidies to production.

France and Spain, two of the most vocal critics of the reform, have called for a 30-percent figure, in line with the compromise on the table for cattle farmers. And because everyone wants a piece of the pie, sheep and dairy farmers are also protesting the proposed subsidy cuts and putting pressure on their governments to block the CAP reform.

As it stands now, France, Belgium, Ireland, Finland, Italy, Luxembourg, Spain, Austria and Portugal have all rejected parts of Fischler’s compromise plan, which has already been amended twice in as many days.

France blocks compromise

When asked if France, the largest beneficiary of CAP funds and Fischler’s strongest opponent, was responsible for the latest derailment of negotiations, the agriculture commissioner responded diplomatically, saying it was not the fault of any one member state.

However, diplomats present at the farm talks in Luxembourg had speculated aloud to reporters that the reason for the break down in talks was due to pressure from French President Jacques Chirac who had threatened to veto any reform of farm subsidies in which France was outvoted.

Chirac was reportedly so adamant about blocking any reform that went against the wishes of the French farmers, that he appealed to Greek Prime Minister Costas Simitis for a last-minute inclusion of farm policy on the EU summit agenda. But according to the Greek leader’s spokesman, Simitis refused to put CAP on the agenda until it was resolved at ministerial talks in Luxembourg.

Chirac’s spokeswoman, Catherine Colonna, indirectly admitted that he had then pushed for the suspension of the meetings in Luxembourg rather than risk a majority compromise that could have hit French farmers.

"France is looking for a consensual solution on the CAP," she told the Reuters news agency. "The conditions were not right today. We hope that these few days will permit progress."