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Consumers and Third World pay for farm subsidies

THERE is a contradiction at the heart of the attempted rebuttal of my letter on EU subsidies and tax non-compliant farmers (May 15) by Liam Cashman and Munster’s IFA vice-president Sean O’Leary (Letters, May 19).

The EU remains deeply divided over CAP and its subsidies with a number of world organisations pointing to the detrimental side-effects of what they claim is massive over-subsidisation. Oxfam, for example, accuses the EU of dumping surplus subsidised products such as dairy and sugar on India, Jamaica and Mozambique, destroying the livelihoods of small farmers,.

In June 2003, CAP reform brought in a single payment to replace most — but not all — subsidies, with individual member states allowed dispensations on certain products if they chose to do so. In addition, single payment subsidies received by farmers are to run in parallel with the reference period 2000-to-2003, so nothing has really changed that much — if at all.

In fact, until recently the EU has been required to spend more on CAP than the its budget allows for by law.

The EU’s overall budget has been shrinking and many believe it is directed at putting pressure on countries to back off farming subsidies which have put a stranglehold on the budget. France has successfully led an agreement with the EU to fix CAP spending until 2012, ignoring a European Commission report in 2003 that described the EU budget structure as an “historical relic”.

In May 2007, Sweden took a position that farm subsidies should be abolished altogether, except for those related to environmental protection.

EU expansion in 2004 increased the number of farmers from seven to 11 million, with new members having immediate access to price support measures, export refunds and intervention buying, just like all the other greedy members of the EU agri-sector who have been on the pigs back for too long.

The OECD countries’ total subsidised payments amount to more than the entire GDP of Africa as one comparative example of too much in the one place.

The EU generally supports the idea of a free market.

However, the policy on food prices flies in the face of that with government intervention and farmers rushing to produce all they can while payments are guaranteed. Farming enjoys protection and subsidy in the EU and these, in the view of many experts, are the primary factors in rapidly increasing food prices and distortions in global trade. From May 2006, sugar reforms reduced subsidies by 36%, with corresponding reductions in production.

This shows up direct parallels between farm payments and production. Sugar within the EU stands at three times the global average market price, with no reduction whatsoever for the consumer since reform.

The official 2008 CAP budget puts agricultural expenditure and direct aid at €40.9bn, with rural development at €12.9bn and fisheries at €0.9bn, notwithstanding huge retrospective payments for decoupling in line with the 2000-’03 criteria which won’t see farmers out of pocket for quite some time.

Liam Cashman’s letter (‘The CAP saved a continent from starvation once and may do so again’, May 7) is by no means as comprehensive as he suggests.

It relies on superficial consumer price indices and peripheral economic issues, saying little about the numerous payouts farmers receive on the EU’s long agricultural gravy train.

Maurice Fitzgerald

Shanbally

Ringaskiddy

Co Cork


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