A "vocation" in need of rethinking ” “

Agriculture is a fundamental sector for the economy of the EU, but also a sponge that soaks up over 40% of the EU budget. It is an important social and environmental aid and a guarantee for consumers, but also a source of recurrent “scandals”, from production surpluses to milk quotas, down to the so-called “mad cow” crisis. Agriculture and the CAP (Common Agriculture Policy) have recently returned to the centre of attention in the EU, after the clash between French President Jacques Chirac and British premier Tony Blair: Blair, current President of the European Council, has advocated the need to reduce the financial support to the CAP, of which France is the main beneficiary, in order to invest in other fields, including infrastructures, research and new technologies. Is it really possible to move in this direction? And what will be the role of the CAP in the future of the European Union? To seek answers to these questions, SIR interviewed Alessandro Banterle , of the Department of Agrarian Policy at the State University of Milan. What role have agriculture and the CAP played in the wider process of EU integration? “I would say a fundamental role. Ever since the 1950s the founding countries of the European Community devoted themselves to developing two major sectors together: that of coal and steel, and that relating to agriculture and animal husbandry. It should be recalled that during this period agriculture still represented an essential part of the economies of the individual states and that Europe found itself in an overall situation of food deficit. Therefore the establishment of a common market for Europe’s agricultural produce and the policy of agricultural subsidies pursued thanks to the CAP represented an important factor for cementing European interests, also at a time when the EEC at the political and institutional level was going through crises rather similar to the current one”. But the fact is that the contribution of agriculture to gross domestic product and employment has been gradually decreasing over the years… “That’s true. Industry and services have been developed with greater dynamism over the last fifty years. Yet it should not be forgotten that some countries today, especially in Eastern Europe, are still based on a prevalently agricultural economy. Undoubtedly, once food self-sufficiency in the EEC was achieved around the mid-1970s, the problem emerged of a CAP that absorbed an enormous quota of the Community budget. From an importer of food products, the EEC had become a net exporter; yet a system of price support that required ever-increasing resources remained in force, and led in turn to the phenomenon of production surpluses. Some corrections made in the following years (including milk quotas and the ceiling for cereal production) did not lead to the hoped-for results”. Were we faced by an excessively protected sector? “We can speak of protectionism in a twofold sense: due to the duties imposed on imports and due to the subsidies granted to exports. But more comprehensively the framework of reference had changed: production per hectare and per head of livestock had increased significantly due to technological improvements; in the meantime demand had been stabilized”. At that time did the CAP even-handedly support all farm produce? “A preference was always shown for large-scale production of cereals, milk and meat; wine, oil and fruit and vegetables were also beneficiaries of the system. It should be observed, however, that the CAP has always shown a preference for the farm produce of central and western Europe at the expense of that of the Mediterranean. That was largely due to the political clout of France and Germany”. How did the present CAP system develop? “During the 1990s onwards a series of major reforms gradually revamped the sector and corrected at least some of the distortions. The first reform was that of Irish Commissioner Ray MacSharry in 1992, which had the merit of imposing a new funding system, through three joint innovations: the progressive reduction of farm prices, to the advantage of consumers; per-hectare support for farms, in partial compensation for the reduction of prices; and a form of support linked to the obligation to leave a percentage of farm area uncultivated (so-called set aside), so as to curb surplus production. That was followed by Agenda 2000; it was especially devised in view of EU enlargement, but entailed significant reforms to the CAP, which was reorganized along two lines: the first aimed at market policies (that absorbs 90% of the funds), the other at rural development. This is a new development that should be emphasized: it means that the EU was finally beginning to intervene to foster eco-compatible agricultural practices, such as biological farming. Forestation is also being promoted; it leads to a further reduction of farm produce and at the same time tends to improve the environment and the landscape. Incentives are provided for technological investments and machinery, and aid is available to support young farmers. The final step in this process was the mid-tern reform of Agenda 2000 in 2003: it consists of a real reform that introduces new criteria for the funding of the agricultural sector”. The CAP is accused of excessive protectionism. Do you share that accusation? “The protection is undoubtedly there. But it’s also true that agriculture is subsidized in all the industrialized countries, since it is an intrinsically weak sector. Moreover, agriculture does not only have an economic, but also a social, environmental and employment function. It should lastly be recalled that the EU has signed preferential accords in this field with many developing countries, including those of the ACP (Africa, Caribbean and Pacific): what’s needed is to monitor how effective they are”. Is it really possible to envisage reducing funding to CAP in the short term? “A reform of investments in the CAP is undoubtedly possible, also to eliminate some obvious distortions in this field. It is enough to think that some large modern farms receive mountains of subsidies. But the fact is that the CAP receives so much money today because the Union has not consolidated other major expenditure policies: if, for example, defence policy or research policy were to receive more funding tomorrow, this would de facto make it necessary to cut the funds to the CAP. In my view, however, there is another question that should not be underestimated; in this phase the European Union is faced by a crisis of identity that can be overcome only by clarifying what the member states intend in future to do together: the EU must rethink its ‘vocation’, its great objectives. Once that is done, it will be easier to reform the role of the CAP and adjust the allocations to it accordingly.