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Scrap the cap

It's time to overhaul European agricultural policy
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June 4th, 2008 issue

By Bill Cohn

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On May 20, the European Union announced proposals to reform its Common Agricultural Policy (CAP). The EU agriculture minister said that Europe should provide its farmers with a safety net, not an easy chair. While these proposals are a welcome step in the right direction, they should go further in abolishing the market-distorting incentives of CAP.
In its current form, CAP does far more harm than good. Created 50 years ago out of concern that there might not be enough food for a growing population, and aiming to boost output and reduce reliance on food imports, CAP expenditures now account for more than 40 percent of the EU’s budget, costing European taxpayers more than 50 billion euros ($78.5 billion/1.26 trillion Kč) per year. While the costs are great, the benefits flow to only a select few — less than 20 percent of Europe’s farms receive 85 percent of CAP subsidies.
Recent developments have brought added pressure to scrap the CAP: high inflation in Europe; political instability in the world’s poorest countries caused by soaring food prices and, in some cases, food riots; and growing criticism that the EU’s biofuels policy exacerbates food scarcity and ecological damage.
The new proposals aim to make farmers more responsive to market forces by progressively cutting the subsidies for wealthy farms while promoting more environmentally responsible family farms. The plan also calls for milk quotas to be eliminated by 2015, the abolition of set-asides (paying farmers to leave land fallow) and the removal of a special biofuels subsidy. To become law, this draft policy requires approval by all 27 member states and the European Parliament.
Attitudes toward the current subsidies are driven mainly by the size of each country’s piece of the pie, rather than sound economic policy or the common good (for more details, see www.farmsubsidy.org). Thus, France, which leads the list of beneficiaries, has rejected the market position of the United Kingdom, Denmark and others. The French agriculture minister called CAP the cornerstone of the Continent’s food security, adding, “The solution to the crisis is not, first of all, through free trade.” Both France and Germany maintain that the current food crisis underscores the need for CAP to promote food security.
The United Kingdom, on the other hand, has called for an end to direct payments to farmers, noting that EU tariffs and subsidies hurt Third World farmers as well as European consumers. Studies by Oxfam and others have found that the vast majority of CAP’s annual 35 billion euros in direct payments go to the largest farmers, promoting inequality. Poor farmers cannot compete with heavily subsidized crop-dumping by rich farmers. Economist Jeffrey Sachs, director of the Earth Institute at Columbia University, argues that EU and U.S. trade subsidies and tariffs cost the world’s poor more than they receive in total foreign aid.
Ultimately, the debate concerns whether EU farm policy helps promote global prosperity. CAP critics maintain that it is hypocritical for Europe to preach but not practice the virtues of free trade. While protectionist policies may have a role to play in developing countries, the EU is the world’s largest trading bloc, not an emerging market.
Critics also charge that CAP insulates European farmers from global market forces, keeping domestic prices artificially high while failing to meet global demand. The net effect is to profit agribusiness, not feed people.
Testifying before the European Parliament in March, Josette Sheeran, executive director of the United Nations World Food Programme, described the “perfect storm” whereby record food and fuel prices, increasing climate challenges and decreasing food stocks “are coming together to hit the world’s most vulnerable –—the so-called bottom billion — hard at a time when food aid flows are at their lowest levels for 35 years, and with the food surplus disposal era clearly over.” She called on the EU to make access to food a priority at the highest political levels.
The silver lining in the food crisis is that agricultural policy is now getting more scrutiny than it’s received in decades. Consumers, more mindful that food does not magically appear in the supermarket, are questioning why the EU and the United States continue to redistribute public monies to farmers while neglecting the tremendous spillover costs this creates. Books like Michael Pollan’s In Defense of Food: An Eater’s Manifesto have us thinking globally and eating locally, realizing that there is a nexus between what we eat and the quality of our society and environment.
One example: Both EU and U.S. policy promote cattle and other livestock, resulting in overgrazing, soil erosion, desertification and deforestation. A cow produces hundreds of liters of methane a day, and the grain used to feed that cow would feed many more people than will the cow itself. Most of the world’s grain goes to feed animals, not people. Meat is a very inefficient use for that grain — it takes 10 pounds of grain to make one pound of beef. As Pollan writes, “There would be plenty of grain for everyone if we actually ate it as food and didn’t use it to make meat.” CAP has created huge surpluses of beef and butter, and the opportunity costs are great.
The recent experience of Malawi provides an alternative orientation, showing how a small investment in high-yield seeds and fertilizers can produce dramatic improvements in farming, turning a country that recently overcame drought and was hugely dependent on foreign food aid into a food exporter (“Malawi’s farming revolution sets the pace in Africa,” The Independent, May 5). Asia’s green revolution taught that same lesson 40 years ago. The EU can readily lift up others along with itself by overhauling its agricultural aid and trade policies.
A 2003 European Commission report characterized CAP as a “historical relic.” Like the 2003 CAP reforms, the new reforms are welcome, but do not go far enough. The time is ripe to organize for responsible food policy, and to keep the overhaul of CAP on the agenda until it gains approval by the European Parliament. If France, or any other country receiving large subsidies, adamantly opposes the overhaul, then ultimately it may be necessary to change the requirement of member-state unanimity for EU action.
The incentives must be for farmers to grow crops to meet human needs — feeding the world’s population is not a matter of insufficient global resources, but of inefficient resource allocation. Farmers should be encouraged to grow crops to feed people, not to feed cows and cars. EU policy is now headed in the right direction, but the forces which would reverse course are powerful.
CAP may well have served a useful purpose at its inception. But with radical changes in food demand and production under way, it is clearly time to scrap the CAP. Agricultural policy should help to produce food for people, not a windfall profit for agribusiness. All we need is the right incentives for farmers to realize their great potential.
— Bill Cohn is a lawyer, writer and lecturer at the University of New York in Prague where he teaches courses in law, ethics and logic.


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Reader's comments:

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[12:46 05/06/2008] : The main purpose of the CAP is not to help farmers but to provide a means for the criminals who run the European Union to skim money out of the EU budget.
It works much the same way that the military does in the United States. For this reason, it is unlikely to be reformed.
Margot Winston
Prague
[17:07 05/06/2008] : Exactly.
If Czech government officials would simply decide to convert swords into plowshares and apply their misguided enthusiasm for missile defense system into agricultural subsidies from the European Union for Brdy Mountain, we might not be on the verge of another international arms race.
Wouldn't it be wonderful to see a new line of organic fruits and vegetables in Czech markets grown from the Brdy region?

Paulette C. Will
Minneapolis
[15:51 08/06/2008] : There is not a single economic principle behind CAP. We have to subsidize farmers to overproduce, then buy overpriced products and, furthermore, pay export subsidies so that they can dump it on the Third World markets.

The best way to reform CAP is to eliminate it.
Tomas Temer
University of New York in Prague
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