NCPA - National Center for Policy Analysis

End Of The Line For Europe's Farm Subsidies?

March 18, 1999

For decades farmers in Europe have luxuriated in vast subsidies -- none more so than French farmers. Now the European Union must cut those handouts to finance the entry of a dozen nations -- mostly former communist countries -- into the union over the next decade, or risk bankrupting its budget.

Observers say the fight is not a pretty one. In February, 40,000 farmers converged on the EU headquarters in Brussels to demand continued supports.

  • There are 8 million farmers in the EU -- with France being the biggest agricultural producer in the 15-nation economic block and the biggest beneficiary of EU agricultural spending.
  • Keeping guaranteed farm prices at artificially high levels costs the EU $45 billion a year -- half of its total budget.
  • The EU's head office has proposed price cuts of up to 30 percent -- which resonates like a declaration of war among farmers, but a figure others find too modest.
  • Politically, Europe's farmers have long been more powerful than their dwindling ranks would suggest -- a mere 5 percent of the EU workforce.

Germany and the Netherlands are just two of the countries that complain they pay too much to the EU. Spain leads a southern camp demanding that regional development aid be boosted. And East Europeans will need help once they get in.

In world trade talks due to start this year, the U.S., Australia, Argentina and other trading partners demand a big decrease -- if not elimination -- of EU farm export subsidies.

Source: Raf Casert (AP), "Farming Is No Longer Fertile Field in Europe," Washington Times, March 18, 1999.


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