NCPA - National Center for Policy Analysis

Europe Fails To Kick Farm-Subsidy Habit

March 1, 1999

As 30,000 European farmer emitted howls of protest in Brussels last week, European heads of state met in Bonn, Germany, in a fruitless attempt to reduce the continent's enormous farm subsidies. Further meetings are planned this month.

  • Farm programs constitute nearly half of the European Union's $100 billion budget.
  • German Chancellor Gerhard Schroder -- whose country contributes nearly $25 billion to that budget each year -- is pushing hard to scale back subsidies and production quotas for milk, beef and scores of other products which keep consumer prices artificially high.
  • The subsidies stand in the way of admitting Central European countries such as Poland, Hungary and the Czech Republic to the EU, because farm prices there are far below those of Western Europe -- and admission would create unmanageable imbalances.
  • As long as their agricultural markets remain highly protected and artificially overpriced, European officials argue, their bargaining position will be weak against big agricultural exporters like the U.S. and Canada.

Germany contributes to the EU more than twice what it gets back in economic or social programs, while France receives by far the most farm support. So French President Jacques Chirac disagrees with Schroder's contention that individual governments should pay for more of their farm subsidies on their own.

Source: Edmund L. Andrews, "No Agreement on Reducing Europe Farm Subsidies," New York Times, February 27, 1999.


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