Thursday, August 26, 2004

What comes round, goes round

As British farmers struggle with one of the worst harvests in living memory, spare a thought for those poor benighted French farmers, who are going a little er… tomatoes.

Upset (if that can be the right word to describe French farmers) by falling income due to oversupply and imports, they are resorting, in the time-honoured way, to disruptive protests as a means of extorting support (i.e., money) from their government.

At the forefront are the tomato growers who have been hit by the double-whammy of poor weather – which means that the French have been eating fewer salads – and imports from cheaper countries such as Morocco that are undercutting their business through impossible-to-match wage differences.

But, in common with British farmers, they are also getting increasingly miffed at the disparity between the prices they are being paid and the prices of their produce in the supermarkets. Figures published in Le Monde have shown that French consumers have been spending increasingly more on fresh produce over the past four years, while farmers have been paid less.

Milk producers made their point by invading supermarkets in Lyon and other cities, putting stickers on milk cartons and bottles showing the prices they were getting paid versus the retail price. In Nancy, groups of farmers pushed shopping carts full of dairy products into the street without paying for them and handed them out to passers-by.

Farmers also partook in their more traditional sport of dumping tons of tomatoes, peaches, nectarines and melons in front of government buildings, this time in the south-western towns of Perpignan and Montauban.

All of this puts finance minister, Nicolas Sarkozy, on the spot. Much of the support for his UMP comes from the farming community and he is preparing his bid to become leader of the party.

In response to the farmers' ire, therefore, he has suggested imposing a minimum price of 0.85 euros per kilo - up from the current 0.30 market price – which wholesalers and supermarket groups would be obliged to pay. This has drawn the reaction from the head of the union representing tomato farmers, Pierre Diot, that such a move would be "suicidal" without state subsidies for unsold stocks.

But Sarkozy's problems are only just starting. Minimum-price arrangements and government subsidies would almost certainly fall foul of the EU competition rules, and could even fall foul of French competition rules – a particular embarrassment as Sarkozy also heads the state consumer and competition agency, the DGCCRF. Tactfully, it has so far not aired any public views of its boss’s plans.

Taking a historical view of Sarkozy's potential embarrassment, it is rather ironic that the rules for commodity payment scheme under the CAP were in fact devised by France, which forswore national payments in return for community funding, paid mainly by Germany and other member states.

Now that CAP funds are not so easily forthcoming, France appears to want to return to national subsidies. As they say, what comes round, goes round.

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