EU Farm Subsidies More Skewed than Ever: Report

12 May 2010

More than 1,200 beneficiaries of European farm aid received payments worth at least €1 million last year, according to recent analysis from farmsubsidy.org, a transparency group. Sugar processing companies topped the list of recipients, while producers in France were granted the highest total levels of support.

All of those payments were made through the European Union's Common Agricultural Policy (CAP), which doles out €55 billion - or roughly 40 percent of the EU budget - each year to support farmers across the 27-nation bloc.

Jack Thurston, co-founder of farmsubsidy.org, hopes that the group's analysis will help spur reforms to European farm subsidies. "The EU needs to define its objectives - whether they're social, environmental, or food production - and then design [farm subsidy] policies which clearly meet those objectives," Thurston said in an interview. "At the moment what we've got is a bunch of policies which are essentially legacy policies from a bygone era of production support," he said.

The next set of reforms to the CAP will not take effect until the beginning of 2014, but the European agriculture commissioner has already launched an official public debate on what changes might be needed to the 50-year-old programme. (You can participate in the debate here.)

"Certainly, there are criticisms. There are imperfections. There are hopes for reform. All of these must be taken into account," Agriculture Commissioner Dacian Ciolos said at the time.

Farmsubsidy.org noted that so far the group's analysis has revealed 1,212 "subsidy millionaires" - individual recipients who collected at least one million Euros each last year (the list is available here). That beats the 2008 figure of 1,040 millionaires, and the data are still rolling in. As of midday on 11 May, farmsubsidy.org had analysed nearly €40 billion of the CAP's €55 billion budget, Thurston said.

The analysis of European farm subsidies turned up some unexpected recipients. An accordion club in Sweden got a check for €59,585.10 from the CAP; Amsterdam's Schipol Airport received just shy of €100,000 in "farm" support; and a billiard club in Denmark collected more than €30,000 to help fund its purchases of beer and soft drinks.

But such payments were dwarfed by the handouts received by several of Europe's major sugar processing firms. The single most generous CAP payment in 2009 went to the French sugar company Tereos, which collected €178 million in support. St Louis Sucre, also of France, nabbed second place with €144 million, while Poland's Krajowa Spolka Cukrowa took third with €135 million.

The CAP's focus on sugar companies is in part a by-product of recent European reforms in that sector. A WTO panel ruled in 2004 that Europe's sugar support programme violated international trade rules. Subsequent reforms aimed at bringing the subsidies into compliance have been accompanied by restructuring aid for European sugar producers.

Part of that aid has included "one-off payments" to prod firms to move out of the sectors, Roger Waite, spokesman for the European Agriculture Commission, explained in an interview. Such measures "were funded by a levy on the sugar producers or the sugar factories staying in sugar, so one could argue that these are self financed rather than taxpayer financed," said Waite.

European dairy farmers also scored significant CAP disbursements, thanks in large part to a steep tumble in the price of milk last year. Tens of thousands of farmers went on strike to demand stronger EU intervention, pouring millions of litres of milk onto their fields in protest. To quell the outcries, European officials used CAP funds to purchase surplus stocks, help pay for private storage, and provide dairy farmers with export refunds, Waite said. "Everyone seems to agree that these measures were very important in putting a floor in the market and stopping that fall in the milk price," he added. But he also noted that such measures should be seen as extraordinary.

"What happened in the dairy sector last year was a reaction to the market situation, which means that it will probably not - touch wood - happen again," he said.

In conducting their analysis, the farmsubsidy.org researchers relied on data provided directly from EU member governments. (New EU laws require the bloc's member states to disclose the beneficiaries of EU funds.) Twenty-one governments had handed over complete - or nearly complete - data by 4 May, Thurston said; another five had submitted partial data.

The United Kingdom, however, was more than a week late in providing its farm support information. A short note posted on the website of Britain's Department for Environment, Food and Rural Affairs offered an explanation: "Due to the General Election campaign, this website will not be updated with the 2009 figures until after the election." Britons went to the polls on 6 May; the UK's subsidy information was posted five days later. Scotland, however, shared its information independently.

The UK's decision to delay its data on CAP disbursements did not sit well with Commission officials, who aired their complaints in writing. "Basically we sent a letter saying ‘these are the rules and you need to comply,'" Waite said. "We don't want people to use politics as an excuse for not publishing figures."

Farmsubsidy.org only looked at agriculture subsidies in the European Union, but the distribution of farm payments is similarly skewed in the United States.  A recent report from the Environmental Working Group, a Washington-based NGO, revealed that, between 1995 and 2009, just ten percent of US farmers collected nearly three quarter of all of the government's subsidies. The three most heavily subsidised crops over that period were corn, wheat and cotton. A searchable database of US farm subsidies is available online at http://farm.ewg.org/.

ICTSD reporting; "UK delays publication of EU farm subsidy details till post-election," THE EU OBSERVER, 3 May 2010; "Who received EU farm subsidies last year? Whitehall won't say," THE GUARDIAN, 5 May 2010.

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