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EU office proposes reform of agriculture policy

(Wednesday, Jan. 22, 2003 -- CropChoice news) -- Associated Press: BRUSSELS, Belgium -- The European Union head office on Wednesday proposed reforms of its contentious $45 billion agricultural subsidy program, diverting money away from handouts based on production to payments aimed at promoting rural development and food quality.

``This reform has one objective, making sense of farm subsidies for our farmers, consumers and taxpayers,'' said EU agriculture commissioner Franz Fischler.

The plan aims to end the decades-old practice of subsidizing farmers based on output, which is widely criticized for encouraging wasteful overproduction regardless of market conditions.

Instead, farmers will be given a single payment based on the size of their farm, rather than production levels, but Fischler made clear the plans ``were not going to pay farmers for doing absolutely nothing.''

Subsidies will also be linked to farms meeting standards of food safety, environment protection and animal welfare.

Direct payments to big farms will be scaled down gradually from 2007, with the aim of freeing up more money for rural development in the EU's poorest farming regions.

Cuts will also be made in the fixed prices which the EU guarantees for products including cereals, milk and rice.

Fischler said the reforms would make the system fairer and less wasteful, and strengthen the EU's hand in negotiations within the World Trade Organization where the subsidy program is a frequent target for criticism from competitors such as the United States and Canada.

``We don't think it goes far enough. It isn't substantial enough,'' said Allen Johnson, the chief U.S. agriculture negotiator in the WTO talks from Geneva. ``The cuts in domestic support leave in place the great disparities that have existed... We don't accept that that is as far as Europe can go.''

Poor countries also attack the EU's Common Agriculture Policy, saying it unfairly harms their exports.

``The new single farm payment will not distort international trade and hence not harm developing countries,'' Fischler said. ``This will maximize the negotiating capital of the EU in the WTO.''

However, Fischler will face a fight to get his reforms approved by the 15 EU governments, with France almost certain to battle for a better deal for its powerful farm lobby.

Already on Tuesday, France and Ireland blocked agreement on an EU plan to open markets to agricultural imports from developing nations. That proposal is now likely to be discussed by EU farm ministers next week.

The European farmers association, CPE, said in a statement that Fischler's plans would not benefit farmers but rather industry.

``The main purpose of this proposal is to lower farm prices first to supply at a cheap rate the agro-industry and the supermarkets,'' said the CPE. ``The competitiveness seen by Mr. Fischler is just a lie with respect to farmers and taxpayers.''

Environmentalists also criticized Fischler's plans, claiming opposition from EU governments have forced him to dilute more radical proposals floated last year.

``Funding needs to be directed to those areas where maintaining farming means preserving nature,'' said the World Wildlife Fund. ``This is a missed opportunity.''

European officials acknowledge that the sweeping changes Fischler first proposed in July had to be rethought to take account of an agreement among EU leaders in October. That effectively freezes farm spending through 2013, although millions more farmers will be eligible for EU subsidies after the Union takes in Poland, Hungary and eight other new members next year.

However, Fischler said the proposals would still offer a better deal to consumers who have long complained the EU's policy has artificially inflated food prices and drained away tax money. By giving farmers more flexibility on what and how much they produce, farm incomes will also improve with the reform, he said.

Small farmers who receive less than 5,000 euros ($3,360) a year from EU coffers will not have their subsidies cut under the plan, but handouts to larger farms will be gradually reduced over seven years to 2013 with an eventual fall of almost one-fifth for the largest holdings.