The European Commission's proposed mid-term review of the Common Agricultural Policy unveiled yesterday retains the essential elements of the reforms proposed by the Agriculture Commissioner, Mr Franz Fischler, last July.
Mr Fischler has watered down some proposals but two concepts - decoupling and modulation - remain at the heart of the proposed reform. Decoupling means breaking the link between subsidies and production so that farmers will receive direct payments even if they produce nothing, as long as they keep their land in good order.
Modulation means the gradual reduction of direct payments, with the money saved going to rural development schemes and to finance future reforms of the sugar and dairy sectors.
Mr Fischler has agreed to slow down the rate of the cuts and has abandoned a proposal to set a ceiling of €300,000 on the annual subsidy each farmer can receive. The EU is divided over the need for CAP reform, with Germany and Britain arguing that the present system encourages overproduction and creates a system of subsidy dependence for farmers.
Other member-states, such as France and Ireland, believe that the Commission's proposals are too radical and want to wait until the next big EU budget negotiations in 2006 before discussing big changes to the CAP. Mr Fischler said yesterday that his proposals reflected popular unease throughout the EU at the present subsidy system and he claimed that reform was the best way to protect farmers' incomes.
"Society is willing to support agriculture financially, on condition that the farmers offer what citizens want - healthy food, proper animal welfare and an intact environment," he said.
Reform became more urgent after World Trade Organisation talks in Doha in 2001 when the EU agreed to phase out "market-distorting" subsidies that developing countries blame for disadvantaging farmers in poor countries. Mr Fischler believes that, by shifting subsidies away from production, the EU can continue to subsidise farmers while fulfilling its WTO obligations.
"There is no doubt that the Commission proposal would strengthen our negotiating hand considerably in the Doha round," he said yesterday. Mr Fischler acknowledged that the proposed reforms were likely to lead to a fall in production of beef and cereals. Commission studies estimate that overall farm income in the EU would rise by 1.7 per cent and that beef producers would see their incomes rise by 4 per cent.
Farmers' organisations dispute these figures and Mr Fischler will have a tough job persuading those opposed to reform that his changes represent the best future for farming in Europe.
Mr Fischler insisted yesterday, however, that those who wanted to postpone reform were not representing the best interests of farmers.
"If we move early and take a pro-active approach to the WTO negotiations, we can fight to protect the European model of agriculture, making it easier to obtain the concessions we are seeking on non-trade issues.
"By waiting until later to move, we instantly place ourselves at a disadvantage as regards pressure from others, and also weaken our hand.
"Times have changed, and so has the CAP in many ways. Simply to avoid reforming the CAP until the next crisis comes along would be to do our farmers a disservice," he said.
