CAP -Swedish Left Party Report

in:

A report from the Swedish Left party´s working group on agriculture




Introduction

With the approach of the EU’s coming enlargement, the Left Party’s agricultural policy workgroup presents its view in this report as to how the EU’s agricultural policy should be changed. Partially in order to live up to consumer demands for reliable food products produced in a manner beneficial to the environment and with a large degree of concern for the well-being of animals. We believe that the following starting-points are necessary to achieve these goals:

·         Increase the environmental demands throughout the EU and change over to ecological agricultural methods: Environmental quality and ethics with regards to animal-life are important goals to be asserted in relation to the “free market”.

·         Encourage local production: Basic foodstuffs should be produced locally, both from an environmental point of view and to facilitate the control of one’s own daily needs. For ethical reasons, live animals should not be transported unnecessarily.

·         A diversified agricultural policy: The EU’s agricultural policy should strive to create the conditions for a long-range, tenable production of foodstuffs that take into consideration the different conditions as they exist in the member countries with regards to, for example, climate, structure and political ambitions.

·         Stop for export refunds: The EU should not continue to dump its surplus into developing countries and eastern Europe at prices that the producers within these countries cannot compete against. Therefore, all export subsidies should be abolished.

The report is presented in connection with the Council of Ministers meeting in Östersund on April 8, 2001, at which time the Left Party will arrange a seminar in order to further discuss the changes necessary in the EU’s agricultural policy in order to facilitate the eastward enlargement.

What is CAP?

The EU’s common agricultural policy, CAP, entails that trade with agricultural products is free within the Union and that price and aid policies are set jointly by the member countries. CAP is based upon the price level within the EU’s boundaries being maintained through the means of border protection and export refunds as well as direct aid to farmers. CAP also contains various types of environmental, regional and policy structure measures. The member countries through the EU’s common budget finance the EU’s agriculture policy. Close to 360 billion SEK, which is the equivalent to just under half of the EU’s total expenditures, is used for various aid schemes within these agriculture policies.

The goal of the common agricultural policy was set in the Rome Treaty and has its basis in the conditions that existed after the Second World War, where there was a shortage of food throughout most of Europe. According to the Treaty, the goal of CAP is: to raise agricultural productivity, to ensure a decent standard of living for the agricultural community, stabilise the market, safeguard employment opportunities and ensure the consumer access to goods at reasonable prices. The Treaty does not say anything about the means to achieve these goals. Within every country or region, there are different reasons to regulate the production of agricultural products. If the agricultural production within a country decreases, it means that the degree of self-sufficiency declines, which is often seen as a threat to national security. Therefore, it is not unusual for agriculture to be state regulated, with various aid schemes to ensure that the citizens receive sufficient foodstuffs. Within the EU, the aid scheme has resulted in an enormous surplus of agricultural products. The result of this is the so-called “mountain of butter” and “mountain of meat”. This surplus is then sold on the world market, and since the products are produced with the help of subsidies and aid, this means that the world market prices are lowered. This mainly affects the poor countries in the third world that cannot afford to subsidise their agriculture. Due to high import duties, especially on processed goods, it is even more difficult for these countries to access the European Market. 

What have been the results of CAP?

From a strictly economical perspective, CAP has entailed an encroachment in free trade. Trade barriers, in turn, lead to an inferior development in productivity and therefore lower economic growth. In order to summarise how this may be manifested in reality, it means, in principle, that production does not necessarily occur in the country or manufacturing location that is the most efficient. Since an overall aid is given to the agricultural sector, more resources are used in agriculture compared to if this aid was not given. There may have been better alternative uses for these resources. But on the other hand, this manner of reasoning is strictly economical in nature. Agriculture is a sector that not only produces foodstuffs but also plays a major role as a land and natural resource administrator and is a prerequisite for a living rural district. In its role as administrator, agriculture also has a large ethical responsibility for farm animals and the environment. It is due to these “alternative grounds for assessment” and administrative responsibilities that agriculture cannot be compared to any other form of production. Since the different goals often stand in opposition to one another, it is difficult to both define and apply a common agricultural policy.

The present agricultural policy has not only created a huge production surplus and allowed dumping on the world market that has made it more difficult for farmers in developing countries to compete on equal terms. EU’s agricultural policy has also favoured intensive, large-scale and specialised farming. 80% of EU’s agricultural aid has gone to the largest 20% of farms. The average size of the operational units has increased, while smaller farms and more extensive forms have not been able to meet the necessary margin of profit. Structural streamlining leads to an increased intensification of animal breeding and methods of breeding that allow less consideration for the animal’s natural behaviour. Animals are transported over long distances under unacceptable conditions in order to reach the cheapest facilities for slaughter. In Great Britain, animals are sent all over the country in this manner because EU’s regulations, for example, allow sheep that have been in Wales for only two weeks to be sold as Welsh lamb even if they were born and raised in another area of the country. This is considered to be one of the reasons for the extensive spread of foot-and-mouth disease that has occurred in Great Britain.

This development does not correspond with the consumer’s increased awareness in regards to the environment and to quality. The demand for ecologically produced foodstuffs is constantly increasing, and more and more people want to know how their food has been produced and how animals have been treated. At the same time, the general knowledge concerning agricultural conditions and food production as a whole has decreased because fewer people have direct experience in these areas. This leads to an increased gap between the consumer and the producer, and at times a lack of mutual understanding. The long-term goal of agricultural policies should be to provide agriculture with the means to act in a market where the consumer and the producer have good relations. The connection between the environment and foodstuffs must be clear. A negative affect upon the environment should be reflected in a higher price, but today the exact opposite is true. Large-scale agriculture, steered only by economical forces combined with large EU aid, leads to neglected animal and environmental considerations and results in the price the consumer pays in the shops not reflecting the true costs of production.

When you try to discern how well the original goals for the common agriculture policy have been fulfilled and the other negative effects that CAP has created, the result is that in spite of the reforms, there has been little success. In other words, CAP today is characterised by poor target fulfilment, high budget costs, a considerable negative effect on the environment and a system that is difficult to administer. Firstly, taxpayers and consumers pay the agricultural aid by means of the various price aids, which favour intensive production, and then via direct aid and environmental aid in order to reduce the intensity and encourage the farmer to refrain from producing. It’s obvious that this method is not very efficient. What the various reforms to improve and strengthen CAP that have already been implemented have in common is the lack of a vision and a goal that also includes an environmental and animal protection perspective. Instead, the concentration has been on solving existing problems by refashioning and changing the prevailing system. The result of this has been a system that is immensely complex and difficult to understand with many areas of conflict. A reform of CAP is therefore necessary for many reasons, not only so that the enlargement can be accomplished in a manner that is just and exhibits solidarity.

EU’s enlargement

EU is at the brink of an enlargement that will entail great strain on the common agricultural policy. We believe that it is necessary that the central- and eastern European countries (CEEC:s) as new members be allowed to participate in the agricultural policy completely and not be assigned special rules with a lower rate of compensation. The agricultural conditions vary between the different applicant countries, but the same regulations must apply in the entire union with the potential for adjustments based upon the countries different conditions when it comes to, for example, climate, the structure of their agricultural and political ambition. It is not reasonable that certain farmers within the union are compensated for lower prices while other farmers do not share this compensation even if they receive a comparable price. One consequence is that the joint agricultural budget will have to be increased, as more countries become members. A reform of the agricultural policy can dampen this increase but it is not likely that it can lead to the cost level of today being preserved or lowered. An increased expense for the common agricultural budget will lead to an increased member charge for Sweden, which the Left Party opposes.

There are some drastic measures that could be implemented to avoid increased expenses. One method is to not grant the farmers in the applicant countries the same level of compensation as the farmers in the present member countries. For reasons of fairness, this is not an acceptable solution. Another method is to force the applicant countries to drastically reduce the number of farmers in their countries by means of a swift structural change. This would lead to a massive elimination of farms and a high level of unemployment and is therefore equally unacceptable. It would also mean that the values placed on nature that remain in effect in large areas of the central and eastern European farming communities would be seriously threatened, since the preservation provided through the small scale farming of today is a prerequisite of this diversity. A third method is the speedy abolishment of agricultural aid throughout the entire EU. This is problematic in part because of the powerful political power that the farmer’s movements wield and in part because it would lead to difficult readjustment problems for agriculture within the present member countries as well. This could lead to enormous negative social consequences for people as well as the impoverishment of rural districts and an unacceptable threat to the biological diversity.

Below, we have defined those areas where we believe the biggest conflicts of EU´s eastward enlargement will arise:

Trade

The commercial treaty between the CEEC:s and the EU has been to the advantage of the EU. Instead of facilitating export from the CEEC:s, these countries are encountering an increased competition from the EU in their own domestic markets. The enlargement entails that the applicant countries will probably be admitted in two rounds. With only certain CEEC:s as members of the EU, there is an increased risk that the pressure on the other countries will be intensified. With the low level of work and production costs in central and Eastern Europe, many see an advantage in an enlargement. One problem in this context is that the relatively low price of land in central and Eastern Europe could lead to financially strong interests in Western Europe acquiring large land areas and in this way drastically changing the structure of the current agricultural system in central and eastern Europe.

The environment

On the whole, the enlargement will entail certain environmental improvements since many “old sins” must be rectified, such as the sanitation of contaminated ground and the improved treatment of sewage and other discharges. Within the agricultural sector on the other hand, an implementation of CAP would entail that the values placed on nature that still remain intact in large areas of the Eastern European agriculture would be seriously threatened. In many of the applicant countries, primarily in the Baltic States and in Poland, there is still a biological diversity that was lost to Western Europe long ago. Maintaining this through the often small-scale farming of the present is a prerequisite for this diversity. To permit the individual member countries to take their own responsibility in order to ensure that these values are preserved by means of the environmental aid contained in CAP at present would not be sufficient, since the structural changes themselves are the greatest threat.

Employment

Averages of 22% of the applicant countries’ citizens are employed within the agricultural sector, even if this varies between the different applicant countries. Poland is one of the applicant countries with a large number of small-scale operations, with an average farm size of approx. 7-8 hectare. Within the whole of the EU, the degree of employment within agriculture is approx. 5%. Through the implementation of CAP in the CEEC:s and the rationalisation of agriculture that CAP entails, we see a major risk that many farmers may lose their means of earning a living.

Four starting points for a reformation of CAP

1.       A diversified agricultural policy

A common market for agricultural products does not presuppose a general common agricultural policy, controlled in all details. On the contrary, it could be an impediment to a well-functioning market. A diversified agricultural policy increases the possibility of avoiding the negative effects of a common market while at the same time making use of the advantages that a common market can give. Agricultural aid should therefore strive to offset the differences in the prevailing conditions that exist between countries. The following are a few examples of such reasons:

·         A difference in climate and other natural conditions that effect farming.

·         Structural reasons where certain regions/countries maintain farming on a smaller scale and, for various reasons such as social aspects or the character of the farming landscape do not have the prerequisites to change these conditions.

·         Changing political ambitions with regards to the affect on the environment, animal protection and the physical-working environment for the farmer.

More concretely, the differences in a dependant form of agriculture consist of the local conditions inherent in nature, primarily in the form of soil and climate. A farm in Norrland cannot be compared to a farm in Skåne, which in turn cannot be compared to a farm in either Italy or Poland. The differences in the existing conditions will, with CAP in its present form, lead to the farmer in the growing competition being forced into taking untenable production methods in order to compensate for this, and the ecological consequences will naturally be a problem. For example, artificial fertiliser and a shortage of water can offset poor quality soil by irrigation. In the long run, most of these situations are untenable. EU’s agricultural policy must be changed from being based upon compensation for lower prices and export aid to remuneration for collective usefulness, such as environmental actions and aid to regions with poorer farming conditions. The goal of these changes in the agricultural policy must be to preserve agriculture throughout the whole of the EU and make a system of production possible that can maintain ecological and social values.

 

2.       Increase the environmental demands throughout the EU and switch to ecological farming

The quality of the environment and the ethics regarding animal life are important goals to maintain in relation to so-called “free” commerce. Otherwise, you accept that these goals are dismissed as trade barriers. An increased proportion of ecological production within the EU would lower production per unit area, which theoretically would reduce the surplus while at the same time larger acreage would be needed, even in the so-called “less favoured areas”.  To keep agricultural activity profitable in these areas is not only important for the rural development and employment; it also means a greater amount of locally produced foodstuffs with less transport and an increased biological diversity. This requires a clear common goal within the EU for an increased proportion of ecologically farmed land. More and more, consumer demands have altered to include demands for guarantees that foodstuffs are produced in a manner that shows consideration for the environment and for animal welfare. The ethical aspects of what we eat and how our food is produced has taken an increasingly central roll, which must also be reflected, in the agricultural policy.

 

3.       Encourage local production

Staple foodstuffs should be produced locally, both for reasons of transport and to facilitate the control of daily food requirements. Inexpensive transport is one of the main reasons for increased international commerce with agricultural products. Transports are heavily subsidised in that they do not bear their own national economic costs with reference to the burden upon the ecology that today’s transports entail. A transport policy requiring transports to bear their own national economic costs would encourage a local and regional foodstuffs market and limit the environmental problems that growing commerce with agricultural products lead to.

When it comes to animal transports, a comprehensive grasp must be taken both for economic and ethical reasons. It is not enough to impose further rules and restrictions on the transports. If animal transports must also bear their own national economic costs, it would no longer be economically profitable to transport animals over long distances. Nor from the perspective of health can the transport of living animals be recommended. The control of contagious diseases becomes complicated and more difficult. In a number of instances, we have seen examples of fearsome diseases being spread over vast geographical areas due to the many transports. The most important reason for not transporting living animals unnecessarily is animal welfare. It is not ethically justifiable to allow economic interests to take preference over the suffering of animals. For this reason, live animals should be exempted from EU’s free trade principles since it is not acceptable to treat living animals in the same manner as other agricultural products.

 

4.       Stop for export refunds

The EU should not continue to dump its surplus into developing countries and Eastern Europe at prices that the producers in these countries cannot compete against. Nor should the EU be a net importer of foodstuffs and thereby compete with the citizens of developing countries over the production of their foodstuffs. The goal of EU’s agricultural policy should be that products which is exported from the developing countries to Europe should preferably be processed products and not raw products, this in order to facilitate progress in the developing countries that export foodstuffs. The situation today is the reverse. We import primarily raw-material crops from the developing countries and then export our processed products to them. At the same time, we actually import a number of unprocessed foodstuffs from the third world – for example, cacao and coffee, which we ourselves are unable to produce. In these cases it is necessary that this commerce occur under equitable conditions, primarily so that the developing countries shall have the chance to build up their own processing industry.

 

Proposals for a reform of CAP

A reformation of CAP must primarily be based upon a formulation of a new policy goal. The goal should be a competitive agriculture that creates the conditions for long-range tenable foodstuff production and which takes into consideration the various conditions that exist in the member countries with regards to, for example, climate, the structure of the agriculture and the political ambitions. This must be accomplished in a way that does not lead to an increased elimination of farms, with social consequences, threats to the biological diversity and the impoverishment of rural districts. A guiding principle for the agricultural policy should be that society should primarily compensate the agricultural sector for its production of collectively useful items. This collective usefulness can, for example, include keeping the countryside open and maintaining a valuable cultural environment and favour the production of foodstuffs within areas with poorer growing conditions with respect to the social and economic functions that farming there entails. It is the production of these collectively useful items that motivate permanent aid. The remaining aid should, in the long term, be abolished and resolved by the actors on the market; the producers and the consumers.

The reform that we propose should be based upon the transference of the money in the agricultural budget from being a general aid to environmental compensation and rural development. The individual member countries should be given the opportunity to adjust this aid to their own national preferences and needs and it should also presuppose national financial contributions. By insisting upon national financial contributions, an overly large cost for the joint agricultural policy can be avoided. While at the same time the overall efforts aimed at farming (national + common resources) guarantee a level of aid that permits a satisfactory effort to be aimed at the development of the environment and the rural districts. Different types of measures may entail different degrees of financial contributions, and the individual country’s economic situation should also be taken into consideration when setting the extent of the financial contribution. In this manner, the common resources can be better allocated to those countries or regions where the need to improve the agriculture are deemed to be particularly urgent. In combination with this, it is important that we formulate clear goals and high demands at Community level with regards to the environment, reliable foodstuffs and a high level of animal protection.

If CAP were to undertake such a change of direction, it does not imply that EU’s enlargement necessitates an increased Swedish member charge to the EU. A gradual abolishment of a number of types of direct aid in favour of measures directed towards environmental and rural districts should help reduce the total cost of agriculture for the EU. This should also entail a greater degree of national influence over the formulation of the agricultural policy. Even without this reform, it is important for increased national efforts in the field of agriculture when you consider that today’s environmental aid is insufficient to meet the environmental goals that have been set for agriculture. This would be facilitated by the reform that we recommend.

An abolishment of direct aid in favour of an increased effort aimed at environmental and rural development can contribute to an improved situation for farmers in applicant countries. By creating the prerequisites that would allow smaller scale farming to continue to be a profitable alternative in this manner, both in today’s EU and in the East, we achieve several goals. Employment opportunities in the agricultural sector need not be reduced quite so drastically, better consideration for the environment can be taken in production and animal welfare given a higher priority.

 

Our proposal for a reformation of CAP

·          Formulate clear goals at Community level for the environment, reliable foodstuffs and animal welfare.

·          Transfer resources from general aid to directed measures for environmental and rural development within the framework of the Rural Ordinance.

·          Measures that support export aid should be abolished.

·          The individual member countries should be granted a large degree of influence over the aid contained in the Rural Ordinance.

·          Demands should be made for national financial contributions in order to be allowed use of the aid contained in the Rural Ordinance. The degree of financial contribution should depend upon the type of measure and should also be able to be based upon the individual member country’s economic and social situation

The Swedish Left Party: Phone: +48-08-654 08 20 Address: Box 12 660, S-112 93  Stockholm, Sweden , E-mail: info@vansterpartiet.se

http://www.vansterpartiet.se