EU: Farm Subsidy Split Sparks Summit Breakdown

28 November 2012

Divergent views over farm subsidies and other priorities prompted EU leaders to call off talks on the bloc's trillion-euro budget for 2014 to 2020, after discussions in Brussels failed to make headway last Friday.

With deep divisions emerging among governments over how best to allocate scarce resources at a time of economic stagnation and national cutbacks, the talks on the seven-year budget were postponed indefinitely.

A brief statement from the European Council simply noted that there was enough convergence among leaders for the discussions to resume again "in the beginning of next year."

"We must get it right," cautioned Herman Van Rompuy, president of the European Council, in remarks after the meeting. The top EU official, who chaired the high-level talks, warned that governments would need "more time" to finalise a workable solution.

Farm subsidy stumbling block

Revised draft figures tabled by Van Rompuy last Thursday restored €8 billion that had previously been cut from the outline budget for market-related agricultural spending and direct farm payments - bringing the total to just under €278 billion. A separate category for rural development spending remained unchanged in the revised draft, at almost €84 billion.

France - supported by countries such as Italy and Spain - had pressed Van Rompuy to maintain farm subsidies, despite pressure from the UK, Sweden, and the Netherlands, which favoured cutting spending in this area instead.

At the same time, the president was under pressure from Poland and other countries with below-average income levels to maintain spending on ‘cohesion measures' such as transport and environmental projects.

Van Rompuy said his proposal "includes increases in agriculture and cohesion funds," although he added that the totals were lower than those previously proposed by the European Commission. Cuts in other areas would compensate for these increases, he explained.

While Germany and France have both historically defended spending on the bloc's Common Agricultural Policy (CAP), press reports said that German chancellor Angela Merkel is seeking budget reductions that go beyond current proposals. Farm subsidies would still represent just under four-tenths of the total draft budget set out in the bloc's multi-annual financial framework.

"I think the positions are still far apart and if we need a second round we will take the time to do it," Merkel told reporters.

While successive reforms have substantially reduced the impact of EU farm subsidies on trade and production, the size and focus of support measures remain controversial within the EU and among the bloc's global trading partners.

European Parliament: talks delayed

The European Parliament's committee on agriculture - which under current rules must decide along with the Council on the bloc's future farm policy - met in a closed session on Monday to discuss progress in moving towards consensus on thousands of proposed amendments, and to consider the impact of the budget talks on the reform process.

Some parliamentarians have argued that the current budget must be maintained if farmers are to be asked to adopt new ‘greening' requirements proposed by the European Commission - crop rotation, maintenance of permanent grassland, and protection for ecological focus areas. Others say that clear environmental goals are needed to justify the continuation of subsidies for agriculture. (See Bridges Weekly, 13 June 2012)

Agriculture ministers in the European Council were also set to meet today to discuss the reform proposals - some of which they had harshly criticised in previous meetings. (See Bridges Weekly, 16 May 2012)

The European Parliament's agriculture committee recently delayed its vote on the reform proposals until 23-24 January, in the hope that by then its members would know more about the future budget for agricultural support payments. The breakdown of talks amongst EU leaders on Friday could now compel the committee to vote on reform proposals - including ‘greening' - without access to this information.

"There are too many question marks in the equations," said one Brussels source who spoke to Bridges about the process.

If European governments are unable to strike a budget deal before February, some parliamentarians may wish to make further changes when the European Parliament as a whole is due to reach agreement on the proposed reforms on 11-14 March, the source added.

However, committee members are under pressure from farm groups to avoid delays that could affect when the reforms are implemented.

Reactions

While EU farm groups reacted angrily to Van Rompuy's initial proposals for farm subsidy cuts, they extended a cautious welcome to the revised draft tabled on Thursday.

"We are pleased to see that member states have proposed improvements which would reduce the blow to the farm sector," Pekka Pesonen, Secretary-General of EU farm group Copa-Cogeca, said in a statement.

The organisation called for agriculture spending to be kept at current levels until 2020. "We urge heads of state and government to make a rapid and positive decision on the European budget for the period 2014-2020," Pesonen said.

However, environmentalists described the breakdown in the talks as a relief. The proposals on the table would have cut rural development payments that are "crucial for achieving biodiversity and climate objectives," according to Birdlife Europe, "while largely wasteful farm subsidies would have been allowed to continue with no strings attached."

"At a time of budgetary pressure, quality of spending should be paramount," Ariel Brunner, the group's head of policy, said in a statement.

ICTSD reporting; "UK, Germans say deeper cuts or no deal in EU budget," REUTERS, 23 November 2012.

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