* EU allows more payments to be linked to production
* Farm subsidies to be tied to environmental benefits
* Sugar quotas to be abolished in 2017
By Nigel Hunt
LUXEMBOURG, June 26 Reforms agreed by EU
negotiators on Wednesday offer subsidies to keep farms producing
in regions where conditions are hard, going against the bloc's
shift towards relying on market forces in agriculture.
Since 1992, the European Union has been altering its common
agricultural policy (CAP) to encourage farmers to grow crops in
response to market prices, not subsidies. The aim was to avoid
the butter mountains and wine lakes seen in the 1980s, when
farmers were paid to produce even when markets were satiated.
"The current reform is quite a break from that," said Alan
Matthews, Professor Emeritus of European Agricultural Policy at
Trinity College, Dublin, noting a shift towards linking payments
more closely to production, a practice known as coupling.
EU negotiators said they agreed sweeping changes to the
bloc's farm policy on Wednesday, fixing the rules governing 50
billion euros ($65 billion) in annual farm subsidies for
The package includes liberalising sugar production from 2017
and cutting subsidies to the largest farms in the bloc.
But it also lets some countries link direct subsidies to
output levels in certain regions, to help maintain output where
farmers face natural or other constraints, such as dairy farms
in mountainous central France.
Analysts said the latest reforms link a limited share of
payments more closely with production in part to maintain
agriculture in more areas.
Under the complex new rules, for some member states up to 15
percent of payments may be coupled but for others it may be only
"This is not something that's going to increase production.
This is something designed to maintain existing production in
areas where it would otherwise disappear," said European
Commission agriculture spokesman Roger Waite.
BIG IS BEAUTIFUL
Some were critical of EU moves to protect small, struggling
Independent consultant Sean Rickard said there was a need to
invest heavily in new technologies to drive the growth in
production needed as global demand expands.
"You can't do that with farmers hanging on by their
fingertips," said Rickard, a former chief economist for
Britain's National Farmers Union and a UK government advisor.
"The future lies with large-scale efficient farms."
Others, however, stressed the value of farming in preserving
the beauty of the countryside.
"Imagine the countryside without farmers, it's something
else entirely. The diversity of landscapes is precisely part of
Europe's charm," said Philippe Chalmin, economist at Paris
Dauphine university and a commodities specialist.
The EU is asking farmers to justify subsidies by linking
part of their payments to the adoption of measures designed to
improve the environment, such as ecological focus areas where
wildlife can thrive.
"Moving from payouts based on production to flat payments
turns farmers into welfare recipients with tractors," said Simon
Evenett, Professor of International Trade and Economic
Development at the University of St Gallen.
"At a time when budgets are tight no special interest group
wants to be seen getting something for nothing," he added.
"LOGIC OF LIBERALISM DID NOT WIN"
Britain, a strong proponent of liberalising EU farm policy,
had reservations about some of the latest reform proposals,
while France has sought more protection for farmers and saw it
as a victory.
Noting that global talks meant to liberalise trade have been
an important driver for market forces, Britain's agriculture
minister Owen Paterson regretted that none were now under way.
"It was unfortunate there were no (global) trade talks to
keep the pressure on," Paterson said.
The World Trade Organization's Doha round ground to a halt
in 2008 amid disagreements over farm subsidies, tariffs and
market access. An impasse was formally declared in 2011.
"The logic of liberalism did not win, on the contrary we
managed to turn the situation around...we didn't let things
slide, we changed what has been the prevailing trend in
agriculture," French farm minister Stephane Le Foll said.
The current reform package does contain elements which point
to more open markets such as the abolition of sugar quotas in
2017. The basic principle had, however, been agreed years ago
and the latest reform delays implementation by two years.
The EU's acknowledgement in these reforms that its farmers
need protection from the market may also encourage other
governments around the world who prop up unprofitable producers.
In China, for example, sugar production continues to be
heavily subsidised, exacerbating a global glut of the sweetener.
"It's a negative signal to the rest of the world," Trinity
College's Matthews said.
(Additional reporting by Gus Trompiz in Paris; Editing by