Reaping the benefits of reform?

Article published on Dec. 12, 2005
Article published on Dec. 12, 2005

This article has not been vetted by an editor at Paris HQ

European farmers fear for their future as the prospect of further liberalisation of the agricultural market looms on the horizon.

At the World Trade Organisation summit in Hong Kong this week, the future of the world’s agricultural markets hangs in the balance. The talks coincide with the news that the European Union proposes to reduce tariffs and direct subsidies on agricultural products; news which has caused considerable unrest amongst EU agricultural workers. These measures would affect the 10.4 million European agricultural workers who work the farmland which constitutes 40 per cent of EU territory, and if they go ahead they would essentially reinforce the major reform made in 2003 to the Common Agricultural Policy (CAP). This reform focused on three areas: payment for EU farmers, independent of the amount they produce; payment linked to the respect of strengthened environmental and food safety standards; and the creation of a new rural development policy.

The break-up of the farming community

Despite the fact that the European Union is a major producer of cereals, fruit and vegetables, it is at the same time the world’s largest importer of agricultural products from the Third World. It is also faced with competition from large agricultural producers like Brazil and Morocco, which could lead to further difficulties in the agricultural world. As Juan Manuel Peiró, technical coordinator for the Valencian Farmers’ Association explains, “the problem with market liberalisation is that one can only compete with prices; the quality and added value of the product isn’t taken into consideration. There is very little that one can do when much cheaper farms are operating in other countries.”

The reduction in production subsidies also worries farmers, who foresee a gradual “break down in the agricultural community”, as José Luis de Miguel, agricultural policy coordinator at COAG (the most important farm workers’ organisation in Spain), puts it. In addition, radical liberalisation of the agricultural market “threatens thousands of jobs” says Claude Soudé, agricultural policy supervisor at the French Féderation National de Syndicats d’Explotation Agricoles (FNSEA). According to the FNSEA, in France, the livelihood of 15 per cent of the population depends directly or indirectly on agricultural activity, and, as a result, they receive 22 per cent of the CAP budget. In Soudé’s opinion the removal of subsidies “would have a catastrophic effect on the farming world.”

A level playing-field

The WTO defends the liberalisation of the agricultural market by arguing that it redistributes wealth and enables products from the poorest countries to compete on the world market. However, this explanation fails to convince the vast majority of European agricultural producers. José Luis de Miguel from COAG believes that “the measures don’t improve the agricultural situation in the poorest countries because they oblige these countries to produce without the necessary [environmental, hygienic] conditions and infrastructure.” According to de Miguel, “small and medium-sized companies in the rich countries won’t benefit from this reform and neither will the agricultural workers in the poor countries. Those who’ll actually reap the biggest rewards will be the multinational agricultural producers and distributors.” Indeed, Juan Manuel Peiró believes that in the future there will be “a European oligopoly of four or five supermarket chains controlling all production.”

Agricultural workers feel severely disadvantaged because, as they see it, other markets aren’t subjected to the demands that the European Union makes on agriculture. European farmers pay taxes and social security contributions and comply with environmental regulations, which don’t exist in other countries. For these reasons they demand a level playing-field on which to compete.

The call for regulation

However, European agricultural producers and cattle farmers still have one trick up their sleeve in order to compete on the open market, and that is the guaranteed quality of their products, which undergo strict controls. As Claude Soudé of the FNSEA warns “there will always be producers who offer products at a lower price, but that’s because they are not subjected to such strict regulations. We only have to look at the United States and at the meat available on the market from cattle treated with hormones.” It is precisely because of this kind of practice that there is a call for the creation of regulations to differentiate from cheaper products on the market, which haven’t passed through controls.

The need to establish a minimum price for their products has been another one of the commonly agreed demands to come from European farmers. According to Albert Castelló, an organiser from the Asociación Agraria de Jóvenes Agricultores (Catalonian Young Farmers’ Association), European producers have “had their freedom taken away from them” because they have no say in the price of products.

But whilst the general outlook seems to be of doom and gloom, an important Italian agricultural organisation, la Coldiretti, has decided to look on the bright side, declaring in the Giornale di Brescia newspaper that the CAP “provides an ideal opportunity to relaunch the ‘Made in Italy’ quality brand”. Albert Castelló agrees with this positive attitude to the situation and believes that the situation should also be seen from an entrepreneurial perspective: “we have to take a risk and compete on the international market”. Castelló believes that when looking towards the future and the increase in the world population, in actual fact the European agricultural market is “not threatened by liberalisation”.