Study shows the EU does it better and cheaper with CAP

A renationalised agricultural policy would have cost member states around €23 billion more per year than agriculture spending does presently through the EU budget, according to an authoritative new study.

And farmers in Spain, Greece, Hungary, and Ireland would have lost out most, if agricultural policy was renationalised, according to researchers from Bertelsmann Stiftung, the Centre for European Economic Research, and RAND Europe.

They said these four countries would face large reductions in agricultural support if they depended on national rather than EU agricultural programmes.

The CAP creates European added value, because it prevents subsidy races between the member states, while also reducing political and economic distortion, said the researchers.

They claim their evidence-based calculations prove that transferring policies to the EU level, and funding them through the EU, saves national governments money.

They found this is the case in agricultural policy, but said it applies as well as to foreign policy and defence, which still remain the responsibility of individual EU member states.

Whatever about the latter two areas, which are so sensitive for each member state, the findings will hopefully be taken to heart by those member states who would willingly scrap much of the CAP.

This year, they succeeded in cutting the budget for the CAP. But if their progress gives them the heart to continue attacking the agriculture policy, they should consider the blindingly obvious finding that large-scale public projects with high fixed costs involve funding that exceeds the financial capacity of individual states.

And that by providing public services to a larger number of beneficiaries than national governments, the EU reduces the per capita cost.

It is easy to do the sums to show that only jurisdictions that exceed a certain size are able to provide public services.

Maybe the reason for anti-CAP or anti-EU attitudes in member states (led by the UK, due to have an in-or-out referendum in 2017) is that they would prefer to compete rather than share.

But competition between national governments is wasteful, compared to public spending at EU level.

Without a CAP, for example, national governments might end up paying subsidies to attract mobile food companies in a ‘subsidy race to the top’ (such as happens now to attract mobile IT and pharmaceutical giants).

With relatively short electoral cycles, national governments tend to adopt these short-sighted policies.

In contrast, policy-making and public spending decisions at EU level depend less on national electoral cycles.

According to the latest research findings, if the 28 member states were to increase harmonisation of foreign policy, through the EU, between €420m and €1.3bn could be saved per annum (6%-19% of total annual spending), by reducing the number of individual diplomatic missions and pooling consular services.

Per head of population, small countries like Ireland would save most on foreign policy. As it stands, Ireland has the second highest cost per head, if the smallest member states — Cyprus, Estonia, Luxembourg, Latvia, Lithuania, Malta, and Slovenia — are excluded from calculations.

The researchers said a common defence policy could save EU member states between three and nine billion euro in wages alone.

Member states presently maintain 890,000 soldiers, and these could be reduced to 600,000. Even if no country wants to give up its diplomatic or military independence, these examples show how the EU does it cheaper — even in times of austerity.