From Dr Nicola Cantore and Ms Sheila Page.
Sir, The common agricultural policy damages developing countries as a group, and the proposed reforms will damage even those previously favoured. As Gail Soutar admits (Letters, August 22), the purpose of the CAP is to “allow European Union farmers to compete globally”. The budget for this remains about €50bn, and the CAP instruments, such as export subsidies and direct payments, are supplemented by still high tariffs.
While the exact impact of each of these measures can be debated, it is frankly inconceivable to suggest that the current €50bn spent on existing European farmers, without asking them to change their behaviour, and with some farmers deriving more than 50 per cent of their incomes from CAP, is, first, money well spent to achieve the valid objectives of the CAP and, second, not affecting trade and production patterns globally. EU agriculture policy directly affects growth and income distribution in and among developing countries.
Moreover, in the current context of increasingly volatile food prices, CAP instruments may exacerbate the negative effects for developing countries. If the CAP is successful in stabilising European markets, this can only mean price fluctuations are transferred to international markets.
Ms Soutar’s argument that “export subsidies amounted to less than 0.5 per cent of the EU agricultural budget in 2010” does not incorporate the recent request by Poland to reconsider the reintroduction of export refunds to dairy products as fast as possible. The argument that “more than 90 per cent of domestic support is decoupled from production and therefore regarded as non-trade-distorting” is questioned by many research studies, which identify distortions from decoupled payments – for example, they lead to an excess of liquidity of farmers in the credit market.
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