Brussels: European Union (EU) governments agreed late on Thursday India time to overhaul the way the trade bloc distributes tens of billions of euros in subsidies to farmers.
The measures, which cover the period from now to 2013, are aimed at revamping a decades-old system in which farmers automatically earned money for farm products whether there was market demand or not. That system has been attacked at the World Trade Organization for making Europe less likely to import more competitive farm products from outside the bloc.
Resisting reforms: Tobacco growers protesting against planned subsidy cuts in Brussels on Wednesday. Sebastien Pirlet / Reuters
Critics said the measures, which were hashed out on Thursday morning after all-night talks in Brussels, were only a partial shift in policy rather than a wholesale reform of the €43 billion (Rs2.69 trillion) subsidy system.
“I regret what has been conceded in order to secure a deal which will lead to some new distortions in the short term,” said the British environment secretary, Hilary Benn. “We want to see further changes for the benefit of farmers, consumers and the environment and will continue to press for this.”
The Common Agricultural Policy absorbs more than 40% of the annual EU budget of more than €100 billion although the bloc's 13 million farmers represent only about 3%of its population.
Britain has led arguments that freer trade is the best way to tackle food crises linked to sharply increased prices over the past year.
France, which gets the biggest slice of EU farm subsidies, worth about €9 billion a year, has opposed a radical restructuring of the system, saying rising food prices underscore the need for a robust programme of regional support for farmers.
Such polarized views meant change was bound to be incremental. Even so, EU officials said the measures would free farmers to produce more food based on market demand and redirect money to more relevant uses like preserving the countryside and protecting the environment.
The reforms are “all about equipping our farmers for the challenges they face in the upcoming years, such as climate change, and freeing them to follow market signals,” said Mariann Fischer Boel, the EU commissioner for agriculture and rural development. “I'm pleased we managed to find a compromise.”
The measures also are positive for European trade relations, although the system still could affect prices and the way farmers produce, said Indhira Santos, a research fellow specializing in European agriculture at the Bruegel research organization.
“On paper these reforms make the European system more compatible with global trade rules,” Santos said. “In practice—although these changes might mean the payments are marginally less distorting—there's really little difference because most of the money still goes to the same people.”