BRUSSELS, Belgium – Reports about the impending collapse of the European Union’s rich farm subsidy program last year turned out to be greatly exaggerated.
On May 1, 2004, the EU added 10 new countries and four million new farmers and the subsidy-generous Common Agricultural Policy did not implode as some had warned.
It was not expected to be an easy amalgamation. The agricultural sectors that the new members brought with them, many of them holdovers from the Soviet Bloc era, were far less efficient and organized than the EU 15 with their agricultural powerhouses of France, Germany, Italy, Spain and Denmark.
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There were fears in Poland, Hungary and Czechoslovakia that products from the original 15 would overwhelm their smaller farms and less developed processing sectors.
There were fears in the established EU that a 60 percent increase in the number of farmers would bankrupt the farm support program that has sustained the European agricultural sector since it was started in 1958 on a pledge to make Europe self-sufficient in food.
Clearly, some economic upheaval and political turmoil is on the horizon as the development is implemented, but for the moment, more than a year later, all seems calm.
“There were very big concerns in the new countries and the old,” said Franz-Josef Feiter, secretary general of Europe’s powerful farm lobby COPA. “Everybody thought it was bad for them. It turned out better than everyone thought it would.”
It is a judgment widely shared, even though expansion raises the prospect of some reduction in support for farmers in the original 15 members as a frozen CAP budget must be distributed among millions more farmers. There are European Commission predictions that over the next half dozen years, the value of farm supports for producers in the original 15 member countries will drop by close to 20 percent.
But the official EU message about the expansion is all positive.
“Initially there were fears both ways,” said European Commission agriculture spokesperson Michael Mann. “The new members feared they’d be swamped with goods and driven off the land. The EU 15 farmers feared they would be competing against cheap eastern goods and see their CAP supports lost or sharply reduced. Both sides saw their worst fears unfulfilled.”
For the new entrant countries, it helped that the CAP poured the equivalent of $2.6 billion Cdn into their poor farm economies in 2004, a figure that will quadruple by 2013 to more than $10 billion. It is money spent on land-based income support and investment in infrastructure and restructuring.
“According to the World Bank’s quarterly report on the economic state of the Central and the Baltic Europe, farmers have benefited the most from the accession of these countries to the EU,” said a late July report back to European Commission offices. “Their earnings have considerably grown because the prices of agricultural produce have increased and the market has expanded. They also receive support from the EU CAP.”
Austrian farmer Rudolf Schwarzbšck, president of COPA, said July 28 in Geneva that while there may be some grumbling among farmers in the EU 15 about reduced subsidies because of expansion, there will not be outright hostility.
“The EU is based on solidarity,” he said. “The rich know they have to help the poorer regions.”
