| Time to scrap the CAP |
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| Written by Tom Clougherty | |
| Sunday, 11 May 2008 | |
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For years the farm lobby have justified their subsidies on the grounds that low food prices meant farmers couldn't make a living and that the countryside would be left to ruin without government money (ignoring that fact that their "subsidized overproduction" was partly responsible for low prices). But now prices are high, the same farm lobbies say they need subsidies to ensure 'food security'. Which is nonsense. The point of rising prices is to encourage higher production, so that supply catches up with demand. Indeed, as The Economist notes, high food prices present a perfect opportunity for subsidies to be removed – any hardship for rich-world farmers will be far less keenly felt. But it's not going to happen. Franco-German pressure means the EU's common agricultural policy (CAP) is here to stay: This is bad news for European consumers and taxpayers, who were promised a proper debate on CAP reform later this year. They will have to continue paying (€55 billion last year) for this wasteful and wicked system. It is terrible for poor-country farmers, who have long suffered from being shut out of rich-world markets, and having rich-world products dumped on them. Now they can hear the gates of fortress Europe clanging shut just when world prices should be triggering an export boom. And it is dreadful news for the hungry poor, because restricting trade in food exacerbates shortages. Frankly, I don't see any real chance of reforming the CAP – EU politics is too dominated by special interests for that. This doesn’t mean we should stop trying, but the UK needs to be ready to take matters into its own hands. If we have to, we should unilaterally abolish agricultural subsidies and tariffs, and withhold part of our EU budget contribution – encouraging other trade-friendly countries to do the same. Certainly, Old Europe would make a fuss, but what's the worst that could happen? Comments (3)
CAP spending spree continues as before
written by JP Floru, May 22, 2008
The reforms of the CAP over the last ten years are a bit of a joke. About the same amount is still being spent by the EU, but the headings have been changed, conveniently "showing a decline" in CAP spending as a percentage of total EU spending. Tariffs and export subsidies continue to exist. Government subsidies as a percentage of farm income is still much higher in the EU than in the USA. Direct farm subsidies are being reduced - which is good - but the money is now being spent on "rural development and environmental projects" : politicians out on a spending spree with taxpayers money.
The 2008 / 2009 EU budget review, which will determine spening in the EU after 2013, will unfortunately be negotiated by the Brown government. Grab your pens, computers and microphones right now...
Plus ça change written by Tom Papworth, May 22, 2008
While I agree , Tom, I really don't see what's new or different. We've lall been writing and talking about this for years.
Of course your nuclear option does hold out the hope of achieving a different ASI objective, which is withdrawal (or expulsion) from the EU, but it's not going to happen - the Tories are too afraid of touching that rail and the other two parties are pro-Europe. BTW: Does the £55bn a year include the food-tax that consumers pay in the form of artificially elevated prices? And is it spread evenly across European taxpayers (the UK gets a rebate, after all)? It would help if somebody produced figures for the REAL cost to consumers of the CAP, in each and every country of the EU. Write comment
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A leader in last week's Economist 
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Sir, I wonder if you have seen the latest rationale tried out by the subsidy supporters with the latest US farm bill. "The rising prices will encourage higher production, so we need higher subsidies to protect against the inevitable crash in a few years when that extra supply causes prices to decline dramatically." Apparently prices which are higher, lower, or staying the same are all reasons for more subsidy.