NCPA - National Center for Policy Analysis

Farm Subsidies: EU Politicians Begin to Get It -- Even if U.S. Politicians Don't

July 11, 2002

The European Union wants to reduce farm subsidies of some $43 billion annually and refocus attention on food safety and rural economic development. The current subsidies -- which are responsible for massive food surpluses that have depressed world agricultural prices -- have long been criticized by the U.S. and other countries.

But the U.S. stand in that debate has been greatly tarnished by new, gigantic, market-distorting farm subsidies in the recently enacted agriculture bill, according to observers.

  • The reform proposed by the European Commission, the EU's executive arm, initially amounts to a 3 percent drop in subsidies to farmers and will save roughly $200 million by 2006.
  • But it also calls for additional cuts of as much as 50 percent in price supports for soybeans, rice, corn and wheat.
  • The commission also wants to replace its milk-quota system with quotas based on world market prices.
  • The coming admission to the EU of up to 10 new member states from Eastern Europe -- countries which include many poor farmers -- helped set the reform proposals in motion.

The EU farm lobby denounced the plan as a betrayal of promises to leave farm subsidies untouched until 2006. France and Spain immediately opposed the plan.

Source: News Roundup, "EU Seeks to Reshape Its Massive Farm Subsidies," Wall Street Journal, July 11, 2002.


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