EUROPEAN DIARY:As the country struggles with recession, a reduced EU budget for agriculture could have drastic consequences
COMING SOON in Brussels: a battle royal over the EU’s €59 billion annual agriculture and rural development budget. The question for Ireland is whether the Government can preserve its €1.8 billion share of the pie. It will not be easy.
After years of relative calm, the perennial agriculture question surfaces again because of a looming negotiation of the EU’s overall budget for the years from 2014 until 2020. Although the Common Agricultural Policy (Cap) raises a clutch of interesting questions as to what the EU is for and about, money dominates the debate.
And money is dreadfully scarce. Farm incomes are down, national budgets throughout Europe are under severe strain, and a series of massive bailouts for the banking sector are an additional burden on the public coffers. A rescue plan for Greece flows from extraordinary pressure on the euro and the fear of contagion taking hold in financial markets.
As EU Commission chief José Manuel Barroso tries to recast the European economy as a haven for the development and production of advanced technologies, all signs point to serious pressure on agriculture spending.
This was the thrust of an internal commission document, leaked some months ago, which referred to “a further significant reduction in the overall share of the EU budget devoted to agriculture, freeing up spending for new EU priorities”. It set off alarm bells in Dublin.
Concern intensified when Barroso’s grand plan for the EU economy, set out in his Europe 2020 document, made no direct reference to agriculture. This galvanised Taoiseach Brian Cowen to campaign for a specific reference to the importance of agriculture in the written conclusions of the last EU summit, something his counterparts agreed to do.
Cowen received important support from the French and German leaders, suggesting the battle lines are being drawn in Paris and Berlin. The same goes elsewhere.
As the commission prepares to issue a “communication” on agriculture next November, and legislative proposals in June 2011, competing political tensions come into play. These centre on the size of the EU agriculture budget, and its distribution between and within member states.
On each front, Ireland faces acute pressure to hold the line in support of its established position. Whereas official figures show the Irish agricultural sector made a surplus in excess of €1.6 billion last year, the implication is that the sector would have incurred a €200 million net loss without the contribution from Brussels. As Irish commerce struggles under the weight of recession, a reduced agriculture budget is seen as something that could have drastic consequences.
It is more or less the same for all big beneficiaries of the Cap. Downward pressure on the EU contribution means national governments would have to increase their payments if they wanted to maintain agricultural expenditure. The pressures are obvious. Any “co-financing” of direct payments to farmers would be “unaffordable for Ireland”, according to a Government briefing document prepared for Irish MEPs.
Yet any refusal to step in would raise the wrath of the powerful farm lobby, which can send many thousands of protesters on to the streets with relative ease. Whatever the outcome, it promises to be a noisy debate.
While Ireland has allies in France, Germany, Spain, Italy and Poland in opposing any reduction in the agriculture budget, Barroso would not be without a willing band of supporters if he seeks to curtail it. These include Britain, Sweden, the Netherlands and Denmark, which are not major beneficiaries of the Cap and who typically argue for spending in other areas.
A key feature in the argument may be the relative weight of individual contributions to the EU budget, which could result in those who pay most having a bigger say. In the current budget period – 2007-2013 – Germany contributes 17.3 per cent of the EU budget, and receives 9.8 per cent of its receipts. France contributes 14.6 per cent and receives 10 per cent. Britain contributes 10.2 per cent and receives 5.6 per cent.
The question of the budget’s distribution between member states centres on demands from accession states for a rebalancing of the funding. On this question, the Government has told MEPs that “fair does not necessarily mean equal”. Because direct payments to farmers are income supports, the argument was made that the system should recognise that the cost of living and the cost of farming “vary widely”.
On the budget’s distribution within member states, the Government is wedded to a system that ties direct payments to farmers to their average annual production in the years between 2000 and 2002.
The credibility of the “single farm payment” system, in place in Ireland since the Government decoupled payments from production in 2005, has been questioned in many member states. However, Dublin argues it is the best way of underpinning income on small family farms.
With scant support for its position among the stronger member states, this system could well be revised. If that happened, there would be a battle at home over the carve-up, as players big and small sought to preserve and improve their position, and avoid any weakening.
It promises to be an intriguing debate – one in which arguments about the security of food supply and environmental protection are likely to be raised.
Support for agriculture and, by extension, rural life goes right back to the Treaty of Rome in 1957. In numerous treaty revisions since then, that basic commitment was never watered down. When the going gets tough, negotiations might well revert to the union’s founding document.
