When Franz Fischler unveils reform proposals for the CAP tomorrow, he will encounter a barrage of criticism, writes Denis Staunton in Brussels
It swallows up almost half of the European Union's budget each year and arouses more passion than any other EU policy. Its advocates argue that it is an essential element in the success of European integration, while critics complain that it is costly, unfair and condemns the Third World to poverty.
So when the European Agricultural Commissioner, Mr Franz Fischler, unveils reform proposals for the Common Agricultural Policy (CAP) in Brussels tomorrow, he will almost certainly face a barrage of criticism, much of it from Irish farmers.
Ireland, along with France, is the staunchest defender of the present system of farm subsidies and the Government will resist any move that threatens it.
The Minister for Agriculture, Mr Walsh, meets his French counterpart at least once a month, and Dublin and Paris will work closely together to resist Mr Fischler's overhaul.
One of the oldest European policies, the CAP was originally designed to protect farm incomes and ensure the food supply. The policy guaranteed prices for farm produce by buying surplus stocks (a system known as intervention), subsidising exports to the world market and imposing levies on imports from outside the Community.
As a result of CAP, European farmers enjoyed prices that were generally higher than elsewhere in the world. But by the 1970s, the policy came under growing criticism for its creation of beef and butter mountains and wine lakes.
Prof Brigid Laffan of University College Dublin, who has written extensively on the funding of the EU, argues that the CAP has been subject to extensive reform since the 1970s. But she identifies as most significant the reforms introduced in 1992 by Ray MacSharry as agriculture commissioner.
"It was making more explicit the fact that the CAP was essentially a welfare policy," she said.
Mr MacSharry addressed the problem of farmers producing heavily subsidised but unwanted produce by partially shifting subsidies away from production. He introduced a system of direct income support to farmers, called direct payments and made the payments dependent on quotas and set-aside policies to curb production.
Although Mr MacSharry's reforms were important, they had the effect of increasing rather than reducing the amount the EU spent on agriculture. The prospect of countries like Poland and Hungary, with large farming sectors, among the possible 10 new member-states joining the EU in 2004 has made those member-states which contribute most to EU funds - led by Germany - to demand further change.
The launch of a new round of World Trade Organisation talks in Doha last year, has added to the pressure on Brussels to change the way it subsidises farmers. Poor countries complain that EU export subsidies are pricing their farmers out of home markets and the US is demanding an end to all EU farm subsidies.
Mr Fischler will propose a 20 per cent shift away from product support to rural development over six or seven years. He will attempt to address the fact that 80 per cent of EU funds go to the 20 per cent of farmers with the biggest acreage, by capping direct aid to each farm at €300,000 each year.
Subsidies would be linked to environmental standards, animal welfare and food safety, rather than to the sheer quantity of beef, milk or wheat produced.
And Mr Fischler will make clear that, for the first time, direct payments can go down as well as up.
Germany is broadly supportive of Mr Fischler's proposals, although the chancellor, Mr Gerhard Schröder, fears that the €300,000 cap on direct payments could affect large farms in eastern Germany. Agriculture is one of the few sectors in the formerly communist east that is flourishing.
France and Ireland will resist change but by postponing reform of subsidies on wine and olive oil, Mr Fischler could succeed in neutralising opposition from Spain, Italy and Greece.
Prof Laffan points out that farming is now a much smaller part of the Irish economy than it was when Ireland joined the Common Market in 1973. But she believes it is unlikely that the Government will waver in its support for maintaining farmers' subsidies.
"They are still politically significant and highly organised. The Government is unlikely to want to take them on," she said.
Mr Fischler's reform proposals must be approved by the 15 member-states before they come into effect. But they could have an immediate impact on the negotiations with countries hoping to join the EU.
Germany, Sweden, Britain and the Netherlands are blocking a deal that would extend direct payments to farmers from new member-states, phasing them in from a level of 25 per cent of the payments paid in existing member-states.
Mr Schröder is the strongest opponent of extending the payments but he has indicated that his approach to the issue, which will be discussed at a summit in Brussels in October, could be determined by the Commission's proposals for agriculture reform.
British and Swedish support for Mr Schröder's position is already lukewarm, and Mr Fischler's proposals could be enough to persuade Germany to sign up to the common EU position.
If that happens, Mr Fischler will have helped to avert a major crisis on the path to enlargement. Whether he will succeed in persuading Europe to overhaul its farm subsidy system remains anybody's guess.
Denis Staunton is European Correspondent of The Irish Times