The EU's CAP on prosperity



Although the press is currently caught up in its own misery caused by the hacking scandal, Westminster should not be at the centre of the news. More than ten million people are currently lacking food in the Horn of Africa, and estimates show that one million children are at severe risk of dying. If the EU had refrained from its heavy protectionism we might be in a different place to the sad, avoidable reality of today.

European farmers are assured of their livelihood by the generous subsidies that the Common Agricultural Policy (CAP) provides. This causes major inefficiencies, but that isn't the only problem. The attempt to unsustainably keep European farming alive prevents poorer farmers from selling profitably in the EU, which contributes to squalor in the poorest nations in the world. Despite efforts to gradually reduce these lethal subsidies, the direct consequences will be apparent for many years to come.

In a piece in Bridges Weekly Trade News Digest published by the International Centre for Trade and Sustainable Development, the lack of investment in infrastructure, irrigation, machinery, and fertilisers is emphasized as one major problem in the drought-striken region. Years of dumping subsidised European exports in Africa partly cause this in two ways: firstly, the presence of unfavourable and unfair market conditions has significantly lowered any entrepreneurial incentive to invest as low expectations persist. Secondly, a downward pressure on prices has caused a great share of the farmers in the region to employ unsustainable harvesting techniques. This gradually drives down profits.

In 2006, British households paid an additional £832 in grocery bills as a result of the major subsidy scheme, and throughout the first ten years of this millennium, the CAP has nearly accounted for half of the EU’s entire budget. The EU is one of the biggest practitioners of protectionism in history.

Directly addressing the current famine in Africa in the context of his new book Human Encumbrances: Political Violence and the Great Irish Famine, Dr David Nally of Cambridge University recently stated that:

To tackle global hunger we must… address the legal and institutional structures that directly restrict certain people’s ability to subsist. The reason that this is not done is because these same structures guarantee the high standard of living that many of us have become accustomed to.

Indeed, European farming relies on a frequent dose of life-saving financial support from the EU. This kind of financial support, however, is exactly the kind of institutional structure that restricts the ability of entire populations in specific regions to subsist, and it is time to vehemently oppose European protectionism. According to the European Commission, the annual budget for direct payments, a substantial part of the CAP’s budget, is likely to be cut by 2% per year between 2013 and 2020. Ongoing reforms of the CAP are steps towards the inevitable end: its complete abolition. Now we just need to speed up this process.