EU farm subsidies help only rich farmers, firms

: The European Commission has been fighting shy whenever the issue of farm subsidies is discussed at the WTO. It has been defensive on the issue of subsidies and offensive on gaining market access in the Third World.

A deliberately designed farm support system in the European Union has helped it emerge from a net food importer to a major player in the export market, particularly in the period 1975-88.

The escalated level of farm subsidies became legitimised with the formation of the WTO.

But who does the European Union seek to protect through heavy farm subsidies? It is certainly not the small and marginal farmers.

European subsidies are applied more to industry products than farmers’ produce. For instance, there is more support for butter, skimmed milk powder and cheese of the dairy industry and less for milk.

Export subsidies benefit the food industry and traders, the farmers get little. In the EU, 80% of subsidies are paid to only 20% farmers, most of which are cornered by large farms owned by rich landlords and corporations.

Export subsidies were deliberately instituted to dump the European products in the Third World.

European export subsidies amounted to $8-12 billion in the period 1988-94. Europe, today, is a major exporter of dairy products.

The Court of Auditors, in its special report no 9/2003 regarding the system for setting the rates of export subsidy and export refunds, notes "for significant periods covered by the audit, the Commission’s estimates show that the EU price net of refund is below the world price for certain milk products."

The European price, after deducting refunds, was found lower than the world price, indicating substantial gains for the dairy industry.

At the same time the dairy farmers did not receive any subsidy under the old Common Agriculture Policy, the report of the Court of Auditors indicates.

Another example of the miracle of European subsidies is sugar exports. The EU, today, with its exports of about 5 million tonne of sugar per year, is second to Brazil in marketshare.

Despite the high domestic price of sugar, the EU has been able to export through a combination of direct export subsidies and cross-subsidisation of exported sugar through a production levy paid by farmers. The European consumers suffer on account of high domestic prices.

The major beneficiaries of export subsidies are the corporate houses like Beghin Say, Sudzucker, Tate & Lyle, RT, Danisco and Nordzucker.

Supermarket chains also reap...