EU Reaches A Deal On Farm Aid

The European Union (EU) will double the portion of farm subsidies it steers away from farms to other rural businesses. France, the current holder of the EU presidency, abandoned their fight to boost subsidies rewarding farms for producing more. The UK, Sweden and Latvia all objected to the final French draft on EU farm policy after 2013.

France argued that increasing production, with government aid, would help alleviate recent food price increases. But critics said the move also would reverse a decade of work cutting Europe’s state-subsidized agricultural output, which has hampered the agricultural development of poorer nations elsewhere, The Wall Street Journal reports.

The EU decided to go in the other direction and double the portion of the $75 billion- a-year farm subsidies that it steers to non-farm rural businesses, to 10% by 2013 from 5% this year. The EU also will increase paying farmers their subsidies as lump sums regardless of what or how much they grow. France also conceded defeat in agreeing to phase out direct aid for tobacco farmers by 2010.

Still, France prevented any cuts to the EU’s overall farm budget until at least 2013. It also watered down the proposal shifting funds to rural development, allowing France to keep up direct payments to sheep and goat farmers, and to buy up to three million tons of wheat for bread per year from French growers.

This is the EU’s most significant reform of farm support policy since 2003. Two of the central decisions dealt with cutting subsidies and systematically raising milk quotas for before production limits expire in 2015. Other revised measures will take effect in 2009 and run till 2013. ❖