Are you sure?

EC unveils plan to shake up farm sector

The European Commission unveiled a plan to shake up the European Union farm sector in the wake of surging food prices.

The reform package, presented by EU Agriculture Commissioner Mariann Fischer Boel to the European Parliament in Strasbourg, was designed to further modernize and simplify the 27-nation bloc's common agricultural policy (CAP), including the farm subsidies that cost more than €40 billion a year.

It would remove remaining restrictions on farmers to help them respond to growing demand for food, the commission said here in a statement.

The so-called CAP health check would further break the link between farm subsidies and production and thus allow farmers to follow market signals to the greatest possible extent.

While 90% of farm subsidies are currently decoupled from production, the commission now proposed to remove the remaining coupled payments, with only a few exceptions.

In addition, aid to farmers was linked to the respect of environmental, animal welfare and food quality standards. Farmers who do not respect the rules face cuts in their support. This so-called cross compliance would be simplified, by withdrawing standards that were not relevant or linked to farmer responsibility.

The reform package also “aims to simplify, streamline and modernize the CAP and give our farmers the tools to handle the new challenges they face, such as climate change,” said Boel.

Among a range of measures, the proposals called for the abolition of arable set-aside and a gradual increase in milk quotas before they are abolished in 2015, and a reduction in market intervention.

“These changes will free farmers from unnecessary restrictions and let them maximize their production potential,” the commission said.

The commission already proposed in September for a temporary drop of EU rules requiring grain farmers to leave ten percent of their land uncultivated amid a bad harvest and higher food prices. This time, the set-aside requirement would be permanently discarded.

Under the proposals, milk quotas would be phased out before being eradicated by April 2015 with five annual quota increases of one percent starting in the 2009.

One controversial part of the proposals was to reduce subsidies to big farms and shift the money to support rural development.

Currently, all farmers receiving more than €5,000 in direct aid have their payments reduced by 5% and the money is transferred into the rural development budget.

The commission wanted to increase this rate to 13% by 2012. Additional cuts would be made for bigger farms, with an extra 3% for farms receiving more than €100,000 a year, 6% for those receiving more than €200,000 and 9% for those receiving more than €300,000.

France, the biggest national recipient of EU farm subsidies, has been against any change that would reduce the payments to its farmers, while Britain and some Nordic countries want to see an end to the costly spending.

Both sides claimed their position would be better for the EU to tackle soaring food prices under current circumstances.

The commission's reform package needs to be approved by EU governments and the European Parliament. Boel said she hoped a political agreement could be reached despite differences in November.

The proposals would also scrap in 2010 a €45 per hectare subsidy paid to farmers for growing crops used to make biofuels, which have been criticized as a driving force behind the food prices rise.

The amount of land a farmer has to own to be eligible for aid was raised to one hectare from current 0.3 hectare, less than the size of a football field. (Xinhua)