EU Farm Policy: 'Greening' Measures, Export Subsidies Under Fire

16 May 2012

EU agriculture ministers meeting yesterday in Brussels roundly criticised proposals from the European Commission that would condition farm subsidies on new ‘greening' measures from 2014 onwards, in a setback for environmental groups that have called for farm support to be refocused on delivering public goods.

Meanwhile, the rapporteur on the European Parliament's development committee has proposed that the bloc's controversial export refunds be phased out by 2017, a suggestion now being reviewed by other parliamentarians on the committee ahead of a deadline for amendments in two weeks time. The proposal runs counter to the Commission's insistence that no date should be set for ending the subsidies in the absence of a broader deal with trading partners - such as the accord foreseen under the WTO's Doha talks.

Under ‘co-decision' rules set out in the bloc's Lisbon Treaty, the European Parliament and farm ministers in the European Council are required to reach an agreement on the reform proposals tabled last October by the European Commission - prompting intricate political manoeuvring as various constituencies try to pursue different goals. (See Bridges Weekly, 12 October 2011)

"Member states are trying to stitch up deals between each other," one Brussels-based source told Bridges.

Greening: "menu approach"?

Farm ministers argued that a "menu approach" that would allow EU member states to pick and choose between options would be preferable to the greening measures outlined by the Commission in October.

The Commission had initially outlined plans to introduce a new ‘green' payment that would depend on farmers diversifying their crops, maintaining permanent grassland, and setting aside seven percent of arable land as ‘ecological focus areas.'

Several member states argued that the proposed criteria in all three areas should be made more flexible, with a number arguing that various types of farming should be considered ‘green by definition.' The Commission had originally proposed that organic farming alone should be classed in this way.

A working document prepared by Luxembourg at the end of April foreshadowed many of the arguments raised by ministers in yesterday's meeting - also proposing an ‘a la carte' approach to greening measures that farmers could adopt, and broadening the definition of farmers that would be considered ‘green by definition.'

The environmental group Birdlife International was strongly critical of the draft. "If such a deal goes through, it would signal the end of any legitimacy of EU direct payments to farmers," Ariel Brunner, head of EU policy at the organisation, said in a statement.

New loopholes

In remarks to Bridges, one government official who had been involved in the discussions acknowledged that environmentalist groups may be right to fear that the countries supporting the Luxembourg proposal could open up loopholes in new subsidy rules that would be hard to close.

"Those worries are well placed," the source admitted.

On Friday, the Commission responded to the Luxembourg working document by circulating a confidential ‘concept note' indicating that some elements of the original proposal could be made more flexible.

Farmers and others taking part in agro-environment schemes could be considered as fulfilling the greening requirements, the Commission suggested in the note. At the same time, additional flexibility could be introduced to the proposals on the maintenance of permanent grassland and crop diversification.

Commission "gives no ground"

At the same time, the Commission "gave no ground" on the push to establish a ‘menu' of options which member states could choose between, one government source told Bridges.

"The strength of the three proposed greening measures lies in the fact that they are compulsory for almost all farmers, apply to the entire relevant area of their holding, and ensure a level-playing field in the Union," the note says.

Countries espousing a menu approach included Finland, Hungary, Lithuania, Slovenia, and the UK, sources said - although some also argued that more discussion over how best to pursue ‘greening' was needed.

"Member states should be taking stronger environmental measures, rather than working at forming a consensus behind closed doors that will sink the Commission's proposal," Tony Long, director of WWF's European Policy Office, said in a statement.

"The Council is intent on sacrificing the seven percent of Ecological Focus Areas, despite the best scientific advice," he added.

Proposals for farmers to set aside seven percent of land as ecological focus areas - including land left fallow, terraces, landscape features, buffer strips, and afforested areas - have been criticised by a number of countries. Sources said that Hungary, Latvia, Sweden, Finland, Bulgaria, Italy, Greece, Ireland, Luxembourg, the Netherlands, and Spain were unhappy with the current plans.

Farm groups: Ministers' views are "welcome"

In contrast to environmentalists, farm groups expressed satisfaction to the direction of the debate. COPA-COGECA, the main lobby group for European farmers and cooperatives, said in a statement that the agriculture ministers' views were "very much in-line with our demands."

"We must ensure that measures to further green the CAP do not have a negative impact on farmers' production capacity or costs," Copa President Gerd Sonnleitner said. "And we must ensure that the greening measures are simple, practical, and fair."

Export refunds: phasing out?

Birgit Schieber-Jastram, the rapporteur for the European Parliament's development committee, has tabled a set of four draft opinions intended to bring the Commission's new proposals in line with goals on international development. The opinions are due to be presented to the parliament's committee on agriculture and rural development on 18-19 June, along with other proposed amendments tabled by the environment committee rapporteur.

The rapporteur's draft opinion on the Commission's proposal on the common market organisation for farm products states that "export refunds should be phased out by 2017." Export subsidies have been widely criticised by developing country governments as well as by aid groups, who argue that these measures undermine the production capacity of local farmers in poor countries.

Other clauses affecting trade with developing countries include those stating that "specific attention shall be paid to eliminating unnecessary obstacles to exports from developing countries, and communicating changes of particular interest to these countries in due time," and provisions affirming that subsidised exports "should not jeopardise the food production capacity and long term food security of developing countries."

The proposals were welcomed by European development agencies such as CONCORD. "It's perfectly feasible to phase out export refunds," said Laust Leth Gregersen, CONCORD Denmark's Policy Officer, in remarks to Bridges. Agricultural export subsidies were "damaging developing countries, and costly to European taxpayers," he said.

Academic experts have also questioned the logic of the European Commission's position on linking agricultural export subsidies to a wider Doha deal. "Export subsidies are a very expensive and costly way to provide support to farmers regardless of the outcome of the Doha Round," Professor Alan Matthews of Trinity College Dublin has argued in an online commentary.

While the Commission's original proposals would have provided scope for member states to continue providing some direct payments that are ‘coupled' to production, and therefore more trade-distorting, Schieber-Jastram also tabled an amendment that would prevent governments from providing these payments after 2017.

Two further proposals relate to the functioning of the European Agricultural Fund for Rural Development and to the financing, management, and monitoring of the Common Agricultural Policy.

Parliamentarians in the development committee have until 29 May to make any amendments to the rapporteur's proposals before the opinions are presented to the agriculture committee in a month's time.

Video of the European Council public debate on agriculture is online here.

ICTSD reporting.

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