Sweden wants the European Union to cut the subsidies it gives to farmers when it takes over the bloc’s presidency in July, the country’s agriculture minister said, setting the stage for a huge fight with some of its biggest countries, who want to protect farmers at any cost, a stance which has led to feuds with the United States as well and blocked World Trade Organization talks too.   “The Swedish government holds that the share of the Common Agricultural Policy (CAP) in the whole EU budget has to be decreased,” Eskil Erlandsson told journalists in Brussels after a meeting with EU counterparts. Sweden also wants the EU to reduce the amount of money it pays directly to farmers, instead spending more on projects designed to boost the economy in rural areas. This would “make the CAP more legitimate among taxpayers, but also make farmers more competitive,” Erlandsson said.
Such proposals are likely to provoke a fierce duel with France, Spain and Germany, whose farmers currently receive close on 50 percent of all the EU’s direct payments. Agriculture represents one of the biggest areas of EU subsidies, even as there has been criticism it has been misused, abused and a source of fraud.
Sweden takes over the EU’s rotating presidency on July 1, for six months before handing the baton on to Spain on January 1. Any reforms to the CAP would only enter into force from 2013. “We have to start the debate now so we have a solution by 2013,” Erlandsson said. About one-third of the EU’s 120 billion Euro (USD 168 billion) annual budget is spent on aid to farmers, with a further 10 billion Euros allocated to rural development.
The CAP is one of the EU’s most controversial, as well as costly, policies. Proposals to reform or reduce it regularly lead to heated confrontations between member states. A row is especially likely because Sweden also wants to end the current set up whereby farmers in the EU’s older, Western European states receive more EU support than their counterparts in the Central and Eastern European countries which joined in 2004. “We need to find new methods for distributing the money,” Erlandsson said.
Sweden’s EU presidency comes at a time when Europe’s milk farmers, in particular, are crying out for more protection against a slump in prices, launching simultaneous protests in Belgium, France and Germany. The farmers want the EU to scrap a decision to phase out quotas for milk production, scheduled for 2015. France and Germany have already called on the EU to consider a new system for protecting milk farmers, if the abolition of quotas causes prices to plunge. But Erlandsson gave the proposals short shrift. He also rejected the idea that the EU should pay its farmers to export their products, saying, “We have to bring down export subsidies from the US and the EU.”
As a sign of just how important farmers are, EU officials said they could receive their Single Farm Payment (SFP) two months early, under plans which would let them get up to 70 percent of their payment from October, EU Agriculture Commissioner Mariann Fischer Boel said. The plans are being finalised by officials at the Directorate-General for Agriculture and Rural Development – the EU’s civil service – before they can be put before Ministers. Fischer Boel said the early payments are necessary because of serious financial and cash flow difficulties facing dairy farmers as well as those in other sectors as a result of low agricultural prices and high input costs. It would be up to individual EU countries to decide if they want to take advantage of the early payments.
However, farmers will have to wait until after the recession for a fair deal on international trade as protests have forced the EU to speed up subsidies for exporting dairy farmers, a move that Australian Trade Minister Tim Groser called a “slippery slope” toward a proliferation of trade barriers that would squeeze already-low international dairy prices, according to Business Day in New Zealand. The EU and the US have adopted subsidies for dairy farmers struggling to survive with low export prices.