Health Check Attacks Peripheral Ills

It is difficult to say anything new about the CAP Health Check proposals because they have been leaked so extensively. What they amount to is finding a patient who has a number of chronic long-term illnesses which require radical treatment, but then proposing to concentrate attention on the patient's toothache and Athlete's Foot.

The proposed capping of payments to large farms is intended to increase the popularity of the policy by reducing transfers from taxpayers to those who are already propserous. It thus would enable the Commission to portray the policy as one that primarily helps small, marginal or peripheral farmers, albeit in a very inefficient fashion. The issue of why there should be subsidies at all for commercial aspects of farming activity is thereby evaded.

The industry's protectionist subsidy seeking mindset has not actually helped it. It has diverted attention from the needs of the customer and the opportunities presented by higher value added products. A recent example is to be found in efforts to get more Government purchases of food sourced from Britain. Presumably more is not being so sourced because of price/quality problems. Why not identify and tackle those problems?

I never expected much from the Health Check. But there is a need to aim for a more radical reform of policy in the run up to 2013.

EU warns Romania on farm payments

Romania has been told to tighten controls in its farm payment systems or face a severe cut in it subsdies next year from the EU. The European Commission said that independent auditors Deloitte had found 'major deficiencies in the software module designed to ensure that payments are made correctly.'

The Commission said that Romania could lose about €180m in subsidies next yar if it failed to correct problems in its software systems. It delivered the warning amid persistent complaints from some of the EU's western European members that Romania was not fully prepared for the challenges of EU membership when it became a member last January.

The financial stakes are high because Romania is due to recive €443m in direct payments next year, part of a grand total of €4.3bn between now and the end of 2013. Agriculture accounts for about 40 per cent of employment.

New Farm Bill 'offers no reform at all'

At one time in the 1990s it seemed as if the USA might lead the way in reducing farm subsidies. Not any more. A new version of the US Farm Bill, just approved by the Senate's Agriculture Committee, has been attacked by acting US farm secretary, Chuck Conner. The long-awaited Senate version of the Bill, which follows one from the House of Representatives in August, provides plenty of goodies for American farmers for the next five years. For example, there would be a permanent $5bn 'disaster' fund.

Mr Conner said bluntly that the draft Bill offered 'no reform at all'. The lack of a meaningful cap on payments would allow millionaires to continue to participate in farm programmes. Just how widespread this practice is has been illustrated by our friends at CAP Health Check by superimposing the number of beneficiaries on a Google map of New York City. Other wealthy areas in cities like Los Angeles also contain their fair share of sofa farmers.

It's a story all too familiar in Europe: take away money from taxpayers and consumers on average incomes or less and give to wealthy landowners.

CAP still takes up nearly 47 per cent of budget

The CAP still took 46.7 per cent of overall allocated EU expenditure in 2006, compared to 46.2 per cent in 2005, according to figures released by the European Commission. However, this represents a decrease on the 49 per cent figure in 2003. It also accounted for 0.44 per cent of GNI.

The ten accession states received 9 per cent of overall CAP funding including 27.4 per cent of the Rural Development Budget. France remains the individual member state with the largest share of spending but this was down from 20.7 per cent in 2005 and 21.6 per cent in 2004.

68.4 per cent of the money was spent on direct aids, roughly half of which went on the SPS in the EU-15. Spending on export refunds and intervention dropped to just 5 per cent and 1.5 per cent of the CAP budget respectively.

Five member states (Austria, France, Ireland, Portugal and Spain) are net beneficiaries of the CAP budget, as are virtually all new member states (Malta got only €9.4m in agricultural spending). Their share of spending will increase in the coming years with the phasing in of the SFP.

More details at: Finances