Iowa Public Television


E.U. Proposes Overhaul of Farm Policy

posted on July 12, 2002

One influence on farm income that's somewhat less speculative than the weather is government policy. But in Europe even that may be changing.

Currently, nearly half of the European Union's annual budget goes to a bewildering system of farm subsidies based on production. But severing the link between payouts and output is at the core of a new plan sure to meet resistance from European farmers.


Instead of tying subsidies to output, the Europeans would introduce a flat-rate payment ... one based on previous production and compliance with environmental, animal welfare, and farm safety standards. The plan would reduce direct payments to farmers by 20 percent over seven years and use the money saved for rural development.

E.U. Farm Commissioner Franz Fischler said cutting the link between aid to farmers and production restores the credibility of the continent's common agricultural policy, or CAP.

But there are financial issues, as well. Wholesale reform is necessary before the E.U. can expand its membership and extend the CAP to millions of farmers in Eastern Europe. It also allows the Europeans to take the moral high ground in global talks on liberalizing trade.

In a rejoinder to U.S. farm policy, supporters of the reform said it also would make European producers more market-oriented.

Response to the proposals fell along the usual lines. Germany, England and Italy welcomed the plan. The French hated it. Indeed, the French farm minister called the reforms intolerable and said they would wipe out half of his nation's 400-thousand farmers.


Tags: agriculture Congress European Union news policy politics trade