Tag Archives: farming subsidy

EU draws up list to solve farming subsidy leak

For years, airports and sport clubs have been on the beneficiary list of the EU’s agricultural budget. With the Common Agricultural Policy undergoing a new reform, ‘sofa farmers’ will immediately be excluded from the subsidies.

By Isabelle Gheldolf and Mette-Sofie Sommer

“Please take your boots off before entering,” says a note on the door to farmer Carl Jørgen Haugård’s office. He is sitting inside, patiently waiting for the cowshed outside to fill up with the next load of motley colored cows, whose bursting udders are ready to be milked.

Haugård receives a grant of €218.669 from the EU once every year. He needs the money to run and maintain the farm, that holds over 700 milking cows.

Not far from the farm is Randers Fjord Golf Club. According to the website of the Danish Ministry of Foods, Agriculture and Fishery, the golf club received a grant of €22.892 in 2011 from the EU. The spokesperson from the club was not interested in explaining what the money was spent on.

These grants are part of the direct funding of the Europe’s Common Agricultural Policy (CAP). At the moment the CAP is undergoing a reform in the European Parliament and on March 13, 7000 amendments were voted on in the sitting in Strasbourg. The Parliament were especially concerned with improving the targeting and distribution of the direct payments.

The spirit of the law

The grant Randers Fjord golf club received is just a little over 10 per cent of what Haugård receives, but looking down the Ministry’s list you find hundreds of other examples of “sofa farmers”; schools, kindergartens and pony

clubs, who also receive farming subsidies. They gain the right to payment by owning land, that is not used for production.

”To me it seems very strange that those who do not produce foods or crops receive subsidies too,” says farmer Haugård.

In Belgium, the vast amount of €600.000 was granted to the Dutch airline company KLM for ‘export of agricultural products’ subsidies, because they transport food during flights.

“From a technical point of view this is food exporting, but this is not the spirit of the law,” says Bart Staes, Belgian MEP and member of The Greens, who have been pleading for a reform for years.

Christel Schaldemose, Danish MEP from the Social Democrats,  agrees.

“In the treaty of the CAP, it is defined as an income support for farmers. But now it has developed into support for big companies,” she says.

Struggle to define active farmers

It is hard for the EU to ensure that payments directly go to farmers.
It is hard for the EU to ensure that payments directly go to farmers.

This grey zone of receivers is a consequence of the 2003 reform of the Common Agricultural Policy (CAP). The EU farm ministers introduced the decoupling of the direct payments; a scheme that allowed for a much wider use of non-production land.

“The golf courses, for instance, receive funding because they are giving rural areas some kind of activity. But they do not fulfill the typical definition of farmers. This is a grey zone we should not have,” says Henning Otto Hansen, Senior Advisor from the institution of Food and Resources Economics at the University of Copenhagen.

But Ministers of Agriculture struggle to agree on a definition of an active farmer, that will cover all EU’s farmers, which is why golf clubs and schools have benefited from the CAP’s 40 billion budget for years.

“The funding should reach the farmers, not just the big landowners,” Bart Staes says.

Bart Staes, MEP of The Greens. "The funding should reach the farmers, not just the big landowners."
Bart Staes, MEP of The Greens. “The funding should reach the farmers, not just the big landowners.”

Easier to define sofa farmers

The inability to agree on a definition has led to the second-best option; instead of defining who should receive aid, the EU determined who should not be subsidised and drew up a list of landowners, like airports and sports clubs, that should automatically be excluded as beneficiaries.

“Making this list with organizations that should be excluded from funding is better than nothing, but I was in favor of making a clear definition of an active farmer,” says Christel Schaldemose, Social Democrat and Danish MEP.

According to Schaldemose, this list is a step back in reaching the goal of a common agricultural policy.

“The EU will get into a situation where in some member states it will be possible for a transport company or an airport to receive money from the CAP and in others not. This is not the way to go,” she says.

To improve the honesty of the funding, the Parliament also agreed that the beneficiaries and the amounts they receive must be published.

Butter mountains and milk lakes

This reform is just one of many the CAP has been subject to.

Before the reform in 2003, farm payments were coupled to production. This meant that the more farmers produced, the more they received in subsidies.

“This laid at the root of the surpluses of agricultural products, also known as the European Union’s notorious butter mountains and milk lakes. The farmers were not making production decisions based on market prices and conditions, but on the program, ” says Kim Martin Lind, Senior Research Fellow from the institution of Food and Resources Economics at the University of Copenhagen.

The decoupling of the direct payments caused new issues for the European Union. Beneficiaries whose main businesses had nothing to do with farming became entitled to farming subsidies too, which is what the Parliament had to deal with in the new reform.

Still a long way to go

Mairead McGuinness, the European People’s Party Group Rapporteur and MEP, who leads the negotiations in the Parliament, has warned that a long road lies ahead in terms of achieving a final CAP agreement.

“In all Member States, we need to openly debate how best to use the direct support payments, how to target them, including the possibility of coupled payments for sensitive sectors, especially livestock production,” McGuiness said in a press release on March 13.

In late March and early April the trilogue negotiations between the EU Parliament, EU farm ministers and the Commission will start and the final shape of the CAP 2014-2020 will be decided. They will try to get a final deal on June 24 and 25.

The CAP is expected to enter into force in January 1ste 2014.

[box] What is the CAP

The Common Agricultural Policy is one of the European Union’s oldest policy. The CAP is a collection of rules and mechanisms which regulated the agricultural production.

Why was the CAP made?

After the second world war people were suffering and starving. Europe had to create their own food supply system.The policy was first defined in the Treaty of Rome in 1957 and launched in 1962.

Why do we need a CAP?

The overall goals of the CAP are:

To enhance competitiveness by improving the position of farmers in the food supply chain.

To ensure that food reaches consumers at reasonable prices.

To assure the availability of supplies.

To increase agricultural productivity.

Stabilize markets

Budget of the CAP

Total Budget: 122.230 million euros (2010).

56.776 million euros goes to expenditure which consists of direct payments and rural development support. [/box]

Farminsubsidy.org is a database with information about who receives EU’s farming subsidies. Founder of the website, Nils Mulvad, explains the importance of transparancy and how hard it has been to get the data.