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New report by leading experts criticises Europe's agricultural policy for being bad for European consumers, bad for global trade and bad for developing world producers

(Wednesday, April 2, 2003 -- CropChoice news) -- From a news release. --

April 1 - Geneva - Launched today by Consumers International and European Research into Consumer Affairs ( ERICA), Cultivating a Crisis: The Global Impact of the Common Agricultural Policy - written by leading agricultural experts - provides damning new evidence and analysis to show that European consumers will pay a high price for Europe's much criticised scheme - The Common Agricultural Policy (CAP), when the European Union expands to include a further 8/10 countries, if it does not undergo radical reform.

The authors, Professor Marsh and Professor Tarditi, argue that the Common Agricultural Policy (CAP) will also further undermine trade talks at the WTO in Cancun, Mexico this September and compromise the interests of developing countries by continuing to subsidise agricultural exports and impose import restrictions. Proposed reforms, the report argues, do not go far enough and, if implemented, will only extend the burden already felt by current EU consumers to consumers in the new member states.


For consumers in the existing EU, the extra cost of applying the CAP to an enlarged Europe, will mean higher taxes and for consumers in the new member states, the cost will come in increased food prices of up to 10%. For central and eastern European consumers who spend a much higher proportion of their budget on food, this would mean a reduction in the amount of food consumed.

If applied in the new member states, the CAP, would also act as an incentive to central and eastern European farmers to produce more because they are guaranteed payment for their produce through direct payments and price fixing, with market price support growing from 14% to 35% of the international value of agricultural production, whilst payments to producers rise from 10% to 36%.

If present cap were not changed transfers to agriculture from consumers and taxpayers in new member countries would be huge. If referred to a full member household, they would raise on average from some EUR332 per annum to EUR838 if supply in the accession countries is limited, up to almost EUR967 per annum if a moderate expansion is assumed. For consumers in central and eastern Europe, "farmgate" prices could rise by 12% increasing food prices.

Farmers in the new member countries would receive more, with net transfers per employee rising from EUR1675 to EUR4600 or perhaps more. However, their incomes probably would not rise by that amount. Experience in the existing member countries suggests that much of the higher revenue would be swallowed up in higher costs, as the price of land and other inputs rise.

Undermining trade talks

The report shows that applying the CAP of 2001 to the new member states would lead to larger export surpluses for cereal crops, sugar, milk and beef. Such an outcome would be unacceptable to agricultural exporting members of the WTO and especially developing country producers who's livelihoods are being damaged by the import of cheap foods from Europe and America. If radical reform is not undertaken, this obstruct the WTO trade talks due to take place in Cancun, Mexico this September

Proposals for reform

The proposals to phase in direct payments in the new member states through 2013, would reduce the immediate incentive to produce more than if the existing CAP (CAP 2001) had been applied. But, assert Marsh and Tarditi, the proposed reforms do not go far enough to answer either the concerns of Europe's trading partners or the needs of consumers and taxpayers in Europe. In fact, the authors go on to suggest that implementation of these proposals in an enlarged Europe of 25 countries, is unlikely to reduce the burden of higher taxes and worse income distribution for EU15 consumers, and these negative effects of the CAP will be extended to new members.

The conclusion is that maintaining the CAP in an enlarged European Union will require a big increase in total subsidy which can only further undermine trade talks, compromise the interests of developing countries and have a detrimental effect on European consumers.

Consumers International will be calling for a radical reform of the CAP which goes further than the current EC proposals, and an end to agricultural subsidies in the lead up to the WTO Ministerial in Cancun, Mexico this September.

Report authors:

Professor Sir John Marsh (report author), CBE, Emeritus Professor, Department of Agricultural and Food Economics, University of Reading

Professor Secondo Tarditi (report author), Department of Political Economy, University of Siena, former Special Advisor to the European Commission for Consumer policy

Consumers International:

Consumers International is a federation of consumer organisations dedicated to the protection and promotion of consumers' rights worldwide through empowering national consumer groups and campaigning at the international level. It currently represents over 250 organisations in 115 countries. For more information, see: http://www.consumersinternational.org European Research into Consumer Affairs:

European Research into Consumer Affairs' mission is to improve life for Europe's consumers, especially the vulnerable. It does so through research leading to action and through consumer education. For more information, see: http://www.net-consumers.org/erica/index.htm