Food prices coloured much of this week’s debate in Brussels over farm subsidies, says James Kanter in the International Herald Tribune, with some governments arguing that the fact they are now soaring justifies dismantling the whole system.
This isn’t a debate that is going to be settled anytime soon – the controversial Common Agricultural Policy (CAP) is not scheduled for major reform until 2013. Short term, there will be no change in the CAP budget of £32bn (which accounts for 42% of EU spending).
The current proposals envisage wealthy landowners having part of their EU subsidies removed and diverted to environmentally-friendly rural developments and traditional small farms, while compulsory ‘set aside’ payments to farmers will be scrapped to boost cereal production.
Lastly, milk quotas will be relaxed and eventually abolished to keep dairy prices down. However, for any of this to happen the proposals have to be approved by all 27 EU member states.
The current CAP debate pits France and Germany – in favour of safeguarding it – against Britain, whose chancellor, Alistair Darling, sent a letter to EU colleagues last week arguing for the virtual scrapping of the policy. He accused EU farm policy of contributing to global food-price inflation and called for an end to all restrictions and tariffs on EU food imports.
Opposing him, the French agriculture minister, Michael Barnier, highlighted the need for the CAP, which he called a “cornerstone of the Continent’s food security”. Barnier even suggested that the model should be exported to other parts of the world, such as North Africa.
“That’s ridiculous,” says Shada Islam in the Business Times of Singapore. Reinforcing the CAP can only exacerbate the food crisis ,since subsidies and import tariffs distort markets.
African agriculture has failed to expand over the past 50 years largely because it has been unable to compete with mollycoddled EU farmers: high global food prices now provide a “golden opportunity” to scrap the CAP. After all, European farmers can hardly “plead poverty when their produce is fetching record prices”.
Quite, says The Daily Telegraph, and underpinned by increasing meat and dairy consumption in Asia, combined with the loss of a third of America’s maize crops to biofuels, high prices are here to stay. Add a rapidly-expanding global population and climate change, says Ernst & Young in their report, Food for Thought, and Britain is “acutely vulnerable”: we export less food than we import.
Scrapping the CAP certainly has many benefits, says Shada Islam. If Europe “makes a serious move it will exert pressure on the US to dismantle its own protectionist architecture. Washington has long argued that it will end its agricultural subsidies when Brussels does the same.” But that’s not happening, warns Martin Hutchinson on Breakingviews. The latest American farm bill expands agricultural subsidies and boosts “inefficient domestic cartels for sugar and cotton”.
To see the damaging effects of the “complex and wasteful lattice of food rules, subsidies and pacts”, look no further than Japan, says Leo Lewis in The Times. Thanks to a “quirk” of World Trade Organisation rules that obliges Tokyo to buy, but not export, surplus rice, an estimated 1.5 million tonnes of high grade American rice is sitting in Japanese silos. If it were released – and Washington is thought to be about to permit Japan to do so – the move could “at the stroke of a bureaucrat’s pen, end the current food crisis”.