Sunday, October 10, 2004

Booker column

Today’s picture story in the Booker column is important – not that it will be universally recognised as such.

While starting off with a classic "red-tape funny" in the Booker mould, it actually describes the consequences an important development in the history of the CAP and of the EU in general.

The "funny" then is Colin Flux, who farms on the Suffolk-Essex border, who recently received details of the new ‘Single Farm Payment’ scheme for paying agricultural subsidies. When he saw them, he got a shock. 300 acres of his farm, which he has been farming for 15 years, he holds under a tenancy. And under the new EU rules, which switch subsidies from production to a farm’s land area, the chief beneficiary will now be the owner of the land, because until 2002 Mr Flux only farmed it under contract.

Thus, the owner of the 300 acres, now retired, will receive £26,000 in the first year, and £100,000 over seven years; while Mr Flux, doing all the work, will only get £2,400 a year. He finds this so odd that he wrote about his plight to his MP, to ministers such as Margaret Beckett and Lord Whitty, to the shadow agriculture spokesman Tim Yeo and several more. Most didn’t reply, and none could explain how such a situation could have arisen.

Now we get down to the serious detail. What Mr Flux did not realise was that he is only a pawn in a much larger game, involving what has come to be known as ‘Franz Fischler’s poison pill’. Booker continues:
For years the EU’s Common Agricultural Policy has been one of its biggest headaches, taking up nearly half the EU’s budget and representing easily the largest single component in its expenditure. Furthermore Brussels has for years been trying to find ways to curb the surpluses created by subsidising food production. Much of these are then dumped on the world market, thus inflicting severe damage on the economies of poorer countries unable to compete with produce which is cheap only because it has been subsidised by EU taxpayers.

With the approach of ‘EU enlargement’, the need to curb the EU’s agriculture budget became more urgent than ever. But any attempt to cut farm subsidies would be blocked, not least by its main beneficiary, France. So Franz Fischler, the EU’s agriculture commissioner, came up with a cunning plan.

First, instead of subsidising production, he would simply make payments to farmers based on how much land they occupied. They would no longer have to produce anything, but would receive their money regardless, so long as they ‘cross-complied’ with 18 directives on such matters as affording protection to wildlife and animal welfare.

The appeal of this system was that it would seem wonderfully ‘environmental’, would reduce those surpluses and would comply with WTO rules against subsidising production. Yet, because it would not reduce the overall level of subsidies, the farmers would not complain. They would in effect be paid for doing, if not nothing, then at least much less.

Herein, however, lay Fischler’s real cunning. He knew that when the penny began to drop that farmers were no longer being paid to produce cheap food, there would be outrage at the whole system. Why should farmers be subsidised at all, when the original justification for those subsidies had been removed?. The CAP would become so indefensible that it would be possible to slash the entire budget, freeing billions of euros a year for other purposes.

Mr Flux’s misfortune is that he is merely an early victim of Fischler’s ‘poison pill’. He is expected to farm virtually without subsidies, but to sell his produce in a market where all his competitors are still subsidised. But eventually, when that pill has done its work, we shall see it being argued that his competitors should lose most of their subsidies as well. Right now he may not see that as much consolation.
In the fullness of time, we will see a lot more stories of this nature but few, if any, will have the depth that this article offers. Reading the agricultural press as I do, I have seen acres of stories on this so-called "mid-term" review and I can say with some conviction that none that I have seen get anywhere near what is going on.

The problem with CAP commentary is that the generalists and political commentators who deal with the EU regard this subject as "technical" and leave it to the specialists. The specialists, on the other hand, look at the technicalities and either ignore, or do not understand, the politics. Thus, analysis of the CAP falls through a huge gap in EU coverage for, although it is a technical policy, its driving force is entirely political.

Where the technical commentators fail is in assuming that there is some sense in the provisions that have come out of Brussels. They seek to explain the details as if it was a coherent policy, with an internal logic. Yet, the policy has no logic – no technical coherence. It is a policy designed to fail, a policy so absurd that, once its full implications become known to farmers, the public, and the politicians, they pressure for change will become irresistible. That is the diabolical cleverness of it and one can only admire Herr Fischler for his skill and cunning.

Moving from the deliberately ridiculous to something which is just ridiculous, Booker, in the wake of the Conservative Party conference, then deals with Michael Howard and his policy on "Europe". Readers will perhaps not be surprised to find that the issues Booker raises have been rehearsed in this Blog but, as always, he expresses them more succinctly and adds his own distinctive touches. Readers might also want to look at Sean Gabb’s analysis of the Tory’s EU policy, which can be found on his website. We will review his article later today.

Back to the column, Booker offers an interesting perspective on NUTS and then records Conwy council somewhat idiosyncratic view of "cradle to grave" services. As always, he provides an unmissable read.

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