In a bid to make its agricultural system more efficient and less subsidy dependent, the European Union (EU) is writing its own “freedom to farm.”
First, the basics: Europe is a continent made up of small countries like Luxembourg and big countries like Germany. Each is independent, with its own prime minister, president and/or royal family. Until recently, each had its own currency, while some still do.
There are currently 15 countries in the EU. Come January, there will be 25. To prepare for this, everything from the “constitution” to farm policy is being renegotiated. The EU wants to function more like a federal system, something like the U.S. of Europe, though that name was scoffed at and thrown out years ago. Yet, the principle's the same.
Many of these member countries want to share the same currency and foreign policy, all under a single leader — much like the U.S. under the Articles of Confederation in 1781.
A Bid To Please WTO
To date, EU agricultural subsidies have eaten up 50% of the entire EU budget. The subsidies are comprised mostly of direct payments with an occasional price support, as in the case of butter.
The EU's new policy has one main objective: to become less market distorting as required by the World Trade Organization (WTO). The EU plans to do this primarily by decoupling supports from production and re-coupling to land.
But if this is their vision for the future of Europe, the EU's July negotiations and final decision on their “common agriculture policy” should have come as a shock. It didn't.
The EU bureaucrats think the result will be a true “right to farm” policy. Farmers unions in the EU, however, say what the ministers actually did was re-nationalize farm policy and put power back in the hands of the individual nations.
It's been dubbed “a la carte” farm policy. Pick a decoupling level from list A and you may choose option 1 or 2 from list B. Since each nation has pet industries they want to protect, they'll do just that.
Protectionism isn't necessarily a bad thing, but protectionism is something the EU always points its finger at the U.S. for trying to do. Now, they call it “freedom to farm,” but, as they're quick to point out, “not like the Americans did it.”
In the European sense, decoupling means that direct payments, in an annual lump sum, will be on a per-hectare basis rather than based on production. Beef policy will remain on a per-head basis.
Basically, the EU's new policy means that if you live in a country that chooses 100% decoupling on cereals, established farmers will get about 200 Euros ($220 U.S.)/acre no matter what they grow. It can be corn, wheatgrass or prize racing horses, just as long as the soil is kept in good shape and the crop isn't fruit or vegetables.
But their offspring, who are working to buy a farm at what Americans would consider insanely high prices, (up to 20,000 Euro, or $22,000 (U.S.)/acre in some countries), won't get a dime in subsidies to grow cereals. They'll get “rural development funds” aimed at helping young starting farmers, but how it will work isn't really known.
The EU isn't really reducing subsidies, just moving them around in a find-the-marble game. Instead of subsidizing crops and livestock, they're subsidizing young people and land. So is there really any difference?
Under the proposed system, individual EU countries will get to choose their level of cereals decoupling on a national or regional basis, from 75% to 100%. (Rye supports, however, are gone completely.) If a nation chooses 100% decoupling, it can keep up to 40% of the durham wheat supplement payment.
From there, it gets to keep 50% of the sheep and goat premiums. It can choose to keep 100% of the suckler cow premium and up to 40% of the slaughter premium, or 100% of the slaughter premium, or up to 75% of the bovine male premium.
Ireland Most Affected
Ireland is the member state most likely affected by the changes in beef calf policy. Some farmers' organizations are saying that producers may take a 310 Euro ($336 U.S.)/head cut in subsidies. Since they'll now be producing for the market, calf numbers will have to decline to drive up the price.
Each country is allowed to add extra money for their pet industries, but at a rate no more than 10% of the national ceiling or more than 10% in any single industry. All this translates into one single payment, which is supposed to make planning easier on farmers and allow them to grow what they want. But in the end, it's one document, 25 different farm policies and the same amount of money.
No countries have officially said how they'll decouple. My ear in Flanders tells me Belgium is looking at 75% while I've heard rumblings of 100% in the UK. When each nation decides what it will do, EU analysts will scramble to come up with the probable result on European and world agriculture.
Both bureaucrats and farmers are sure that agriculture in drier areas, like parts of Spain, will disappear. Farmers without efficient farming practices will sell off almost immediately. No one is sure what the new face of EU agriculture will look like, other than it will be radically different.
There will be fewer farmers; that's a fact. Whether production will really drop, as WTO-wary ministers are hoping, or big farmers will buy out smaller farmers, is yet to be seen.
Two years after all EU countries have implemented the new policy, which is supposed to be by 2005, the EU will take a look and see if the policy has screwed up the market or not. Good luck.
Meghan Sapp is an American agricultural journalist from California who currently lives and writes about agriculture from her base in Brussels, Belgium.