European Union: Issues and Policies - Research Paper Example

This paper seeks to answer question three according to the module issued. The nature of the engagements of the European Union has been that there is consensus which is arrived at before any policies of a controversial or sensitive nature are adopted. If this is a strong point, then in some ways it is also the Achilles heel. This opens up the process to endless negations and eventually delayed legislation and policy. This is not good for anyone within the European Union. There are several issues that are of importance at any one time. However, some take precedent more than others. This is certainly the case currently with the Common Agricultural Policy (CAP as it’s more commonly referred to). This is currently one of the raging debates in the European Union precisely because the CAP is about to be effected. The CAP, however, like all policies that are engulfed in selfish interests is always the subject of great controversy. This paper shall seek to look into the CPA. In doing so the objective will be to identify the areas of controversy and suggest remedies. The paper will not stop there either. There shall be an effort to define the challenges of implementing the CPA in its current form. It shall be noted that the CPA is as good a policy as can come out of a process of negotiation but which requires several changes to make it even better. The road leading to the CPA has been a long and winded one too. Its original aim, which still stands today, was to raise the living standard of the farmers within the European Union. Closely tied to that objective was the fact that it was also geared towards ensuring a safe and stable supply of food. Finally, there was the angle brought in with regard to consumers. This is the angle where the CPA was geared towards making food more affordable for the citizens of the European Union and the whole world in general. These are the three tentacles that define the Common Agricultural Policy (Ackrill 2000). These are all very noble goals and therefore the question arises, why should the member countries disagree on such un-contentious issues? That question shall also be addressed ahead. It is therefore important to point out here that the CPA was conceived in the year 1962. Its aims today are three, just like at the beginning. However, they have changed a little perhaps to reflect the challenges of the times. Today they are to ensure viable food production, sustainable management of natural resources and the balanced development of rural areas within the European Union. The impact on the environment and rural to urban migration clearly informed the changes in aim (grant 1997). The European Commission has several bodies that offer advice with regard to the various proposals that are suggested from time to time. The proposals are then deliberated on by the Council of ministers, made up of the agriculture ministers in each of the 27 member nations. The European Parliament also gives its own input. This long process and other bureaucratic red tape are part of the reason that it takes long to arrive at any agreements. That too shall be explored ahead (Mathews 2012). ` The other important issue relates to the funding of the CPA. The annual budget is decided on by the Council of the E.U in conjunction with the European Parliament. There are several bodies that audit expenditure but the main one is the European Union Court of auditors. They determine not only what amount is spent but also on what projects. The budget is spent in various ways. Among the biggest expenses is income support for farmers or subsidies. This accounts for close to three quarters of the total budget. The remaining quarter is either spent on rural development or market support. This is less than a tenth of the budget but still very substantial (Grant 1997). At the time of the founding of the CPA, there were only six members of the European Community, the equivalent of today’s European Union. There was great disagreement at the time. The CPA was in place but was barely functional. The main disagreement was whether there needed to be free enterprise or the countries should intervene individually on behalf of their own farmers, a position held by France. France was protecting itself against the more established Germany. Therefore the first CPA has always been looked at as a compromise between these two nations. However, it shall be interesting to note that the same disagreements remain, only that the warring nations are now different (Grant 1997). It has already been mentioned above that the bulk of the E.U agricultural budget goes either to subsidies or to farmer support of one kind or the other. This is set to be enforced further by the CAP. This is unsustainable. Farming is now turning to be a cash cow for many. There are several subsidies after all and almost any person can qualify for one. There must be an effort towards making farming a labour of love rather than a means to wealth. This is what has affected farming for a long time. It results in farmers cutting corners for a quick profit (Lecture 7). A barrier to trade The other reason why the subsidies must be abolished is that they have a largely negative effect on the world market. Not many nations can afford to subsidize their farmers as much as the E.U does. Already there are grumblings about this on the international stage. The food products from the EU as a result are cheap in international markets and those from smaller nations cannot compete (Boysen and Mathews 2012). These huge subsidies have only helped to further reinforce what many have for long referred to as unfair competition. This means that the EU is not genuine about its efforts to respect the need for the agriculture in other places to grow. Growth cannot be witnessed if the E.U competes form a position of increasing proivilege against countries which have no subsidy programs to start with. This is made even worse by the fact that most developing nations are even more dependent on agriculture than Europe. The economies in Europe are better developed and diversified. So far, there has been little support for the total abolition of the subsidies from within Europe. The only country in Europe to distance itself against these controversial subsidy programs is Sweden (BBC News). There have been efforts to reduce the effects of the trade barriers otherwise called subsidies. The European Union has done this with nations whose markets it also wishes to access. This is what has been referred to as preferential access under different trade agreements. There has also been some movement with regard to this issue in the Doha Round of talks. These are talks that are sponsored by the World Trade Organisation. However, a fixed date for the end of such subsidies has not been arrived at. Knowing how well the situation suits Europe at the moment, there is unlikely to be any meaningful movement in that area in the near future (BBC News). After all, Europe is grappling with a huge financial crisis on its hands at the moment. Unemployment is a huge concern too. Eliminating the subsidies will mean that some farmers will get little incentive to stay in farming. This means that they will add to the unemployment figures. Having this in mind therefore, the best option at the moment is to reduce the size of these subsidies. This shall help level the field a little more for the poorest of the world. After all, it is well known that agriculture is the source of livelihood for over 70% of the poorest people of the world (Ackrill 2000). The table below, drawn from the BBC offers closer insight into employment in agriculture in all the 27 EU nations. Finally, on the trade barriers, the CAP seems not to have been designed to address this huge anomaly. It should therefore be changed to reflect the interests of other international producers. Not many countries can afford the sort of subsidies that the European Union offers. Even when they have access to the European market, their products are subject to tight conditions that at times make business untenable. This has to change under the CPA. After all, this is the document that is going to determine the agricultural policy of the European Union over the coming decade. In that time there is going top be increasing focus on the huge trade imbalances that have sustained the power balance unfairly in favour of Europe in the agricultural sector (Ritson and Harvey 1997). Violation of free market ethics Another very sensitive issue is the way in which the CAP allows obvious violation of free market ethics. The example in mind here has to do with the fact that the CAP seems to have some favourite products. The CAP allows the demand for such products to be pegged artificially high relative to market demand. These products include butter and milk. The European Union every year purchases such products while they are in supply. This means that they do the purchases at very low prices. The products are then kept and sold to other developing nations. This is what can be called a form of speculation in the food industry (Ackrill 2000). In the year 2006 for instance the EU Public Stock amassed over 13,000,000 tonnes of cereal, rice, sugar and milk products and over 3,500,000 hectolitres of wine. These are humongous amounts indeed. This discovery led to a lot of criticism but the practice never stopped. These are the sort of amounts of food that could weather a food crisis. They are however kept for ‘a rainy day’. One can almost argue that if the European Union had not maintained such huge food reserves, the food crisis could not have been as severe as it was (European commission 2005). ‘Price fixing’ Then there is the issue of food prices being set artificially high. This is a controversial issue considering that in some places it is a matter of life and death. The CAP provides for price intervention. This is done through very subtle pieces of legislation. One of the most common is setting the import tariffs as high as possible. This has the effect of making goods coming from outside the European Union more expensive compared with those manufactured within. This especially limits the market presence of producers from developing nations in Europe, a lucrative market by all standards (Ackrill 2000). Intervention purchases Then there is the other controversial issue of intervention buying. This is the preferred method by governments when responding to an anticipated crisis. Large amounts of food are stocked for the impending crisis. This helps prices to remain fairly stable even after the crisis sets in. This in a way is price fixing. However, it has positive sides to it. The only change that should be instituted is to make these products available even to those outside the European Union at the same prices or at reasonable rates. The CAP in a way allows those products to be sold to non-EU countries at very high prices (Boyysen and Mathews 2012). Public health concerns Then other is the issue of public health. This has come under the microscope when it emerged that food labelled as beef in several supermarket shelves was instead horse meat. This is a huge anomaly. It shows that buyers are being hoodwinked and are not getting value for their money but are instead buying products whose quality and originality are unknown. Public health should therefore be at the core of the CAP. Such a mismatch could lead to disease outbreaks which could spread fast across the Union (Tracy 1997). The supply should therefore pay more attention to obesity, cardio vascular diseases, cancer among others. Diet has a role to play in the alleviation of such diet based diseases and so it must be taken into consideration. Analysis from ‘farm to fork’ has shown a number of inefficiencies and structural deficiencies that have made interventions at the consumption end very rampant. One of the most cited reasons is that there has been more attention paid to quantity or the production side to the neglect of the quality or the consumption side. The final product is not well enough inspected. This is not well addressed by the CAP. Bodies like the European Public Health and Agriculture Consortium should be strengthened and involved even more (Tracy 1997). Effects on small scale farming The other effect of the CAP is on smaller farmers. The CAP is in many ways a Godsend for the larger producers. There are several economies of scale to be drawn from production on large scales. Family farms and farming on smaller scale on the other hand is not rewarded as well. It is equally important. The fact is that one family that produces food for their own consumption reduces the burden on the European Union. Instead the CAP tends to look at such a family as ‘one too few’. It is time that people came to the realization that it is individual families and other small scale producers who help the most in achieving the agricultural goals of the European Union. Unfortunately there are not many of them because there is little to gain from agriculture (Boysen and Mathews 2012). Another angle with regard to the small scale production has to do with health and nutrition. In terms of health, production on a smaller scale is healthier simply because those producing the food products know that they are the ones who are going to consume them. This is in contrast with large scale production which in a way can be compared to factory farming. There is the need to finish the production as soon as possible and earn a profit on the product. This leads to various interventions like applications of various chemicals that are designed at hastening growth. This of course has a direct impact on the nutritional benefits of the product (Boysen and Mathews 2012). The advantages of small scale farming also extend to the arena of hygiene. Most foods that are produced on large scale follow what might be referred to as the ‘assembly line model’. They are processed ‘en masse’. This cannot have the same benefits as food that is grown on a small scale and attended to more closely. Effects of poor hygiene can pass on from producers in such a case to the consumer. This can cause an epidemic. The rationale behind supporting small scale farming therefore exists and the CAP should be reformed to reflect that. There should be a lot more support for small scale farmers (Ackrill 2000). Environmental sustainability The next issue is the environmental sustainability of farming as set out in the CAP. The CAP primarily aims at an expansion in agricultural production. Farming at the scale anticipated by the CAP rarely happens using innate means. There has to be the use of fertilizers and pesticides many of which are not environment friendly. Under the CAP, farmers will not receive the subsidies on a silver platter. They shall have to meet some minimum environmental targets if they still wish to benefit from this scheme. However, they are not obliged to be environmental conscious. This needs to happen. The CPA needs to ensure compliance by attaching consequences to those who fail to consider the environment in their farming. After all, when they turn a blind eye to the environment, the consequences of their actions affect all and sundry (Ingersent and Rayner 1999). Effect on animal life There is also a noted decrease in some farm animals as a result of the different farming methods that have been introduced over the years. The ecology has to take the well being of animals into consideration too. The animals most affected by this are the birds. Their populations have dwindled since for instance the removal of hedgerows and the start of farming over meadows. Several agri-environmental policies need to be included in the CAP to make it more environment friendly (Ritson and Harvey 1997). Equality of states under the CAP Then there is the issue of equality, or lack of it under the CAP. Countries that have vast agricultural sectors receive equally vast rewards under the CAP. This has reinforced the disparities that exist with regard to agricultural production across state lines. A scheme should be worked out where the countries that depend less on agriculture are encouraged to do more production. Otherwise production will stagnate at some point since the producing countries could have reached their limit (Ackrill 2000). The table appearing below drawn from the BBC website offers a glance at how inequalities are sustained through allocations. ‘Targeted subsidies’ Then there is the other sensitive issue of what I might call ‘targeted subsidies’. This is because subsidies in general have been explored above. The one subsidy that comes to mind is the cotton subsidy. The CAP does not address the cotton sector in even the slightest detail. This spells doom for those outside the EU who wish to compete with other cotton farmers within the EU. These are farmers from some of the poorest regions of the world, notably Africa and Asia. Cotton subsidies need to be eliminated since this sector is not faced by any danger (Ackrill 2000). Concerns over veiled protectionism There is also the issue of protectionism. This is written all over the CAP proposals. Government is not supposed to intervene in a free market system unless a sector seems to be facing mortal danger. However, the EU has made it a formality to forever protect its markets and farmers to the disadvantage of others elsewhere. A free market system would ensure that those who invest the most would reap the most. Protectionism is also closely linked to overproduction. Farmers are assured that regardless of the amount of crop they produce, it shall all be bought. Therefore market forces are not the determinant of production (Bureau and Mathews 2005). Sustainability of subsidies There is also the issue of the sustainability of the subsidy programs. The traditional members of the EU are also the most advanced technologically. They produce the most and their farmers are the most pampered. Newer countries are entering the EU. Their production sectors are not doing as well as the other members. These countries are mostly from Eastern Europe. They therefore have to receive large amounts of money to support their nascent sectors. Eventually it is the case that the new entrants seem to receive a lot more than they contribute. This means the EU cannot be able to balance its books if more of these members join (Mathews 2013). Contribution of farming to the EU economy Finally there is the question of how much benefit is drawn by ordinary citizens of the EU from schemes of this kind. Most of the population in this developed continent is employed in the service industry. They do not engage in farming therefore. Such a scheme would make even more sense in a continent like Africa where most of the population depends on farming in one way or the other. Less than 5% of EU citizens work on farms while the agricultural sector accounts for slightly less than 2% of the GDP. Is farming worth all this trouble therefore? If the continent would sign agreements and fund such schemes in developing nations, wouldn’t they surely kill two birds with one stone? (Grant 1997). The table below, also from the BBC, gives clear evidence of the limited role of agriculture in the economy and ordinary lives of the citizens of the EU. On the whole, the discussion about the suitability of the CAP will continue long after it comes into force. The CAP has several benefits for the continent. However, there is a feeling that the CAP is not a significant step forward. The CAP has retained most of the provisions that were already existent under the previous regime. As a result there has been little learnt from the 2007-2008 world food price crisis. Some of the causes of the crisis like the huge subsidies are yet to be addressed. In this age of environmental decline, it is surprising that there is still an emphasis on increasing production under the CAP. Focus should instead shift to environmentally sound farming. The limited support offered to small scale farmers is a concern too. Not to mention the fact that public health has been relegated to the back burner as size of produce continues to rise. All these are reasons why the CAP should be reviewed. There needs to be a radical departure from the old ways of doing things that did not work. There also has to be concern for other countries’ agricultural sectors. If all these are addressed, then the EU would indeed be the bread basket of the world. References Grant, W.(1997) The Common Agricultural Policy (European Union), London: Palgrave Macmillan Mathews, A. Post-2013 EU Common Agricultural Policy, Trade and Development :Issue paper 39. Retrieved from http://ictsd.org/i/publications/115162/ Lecture 7. The E.Us Common Agricultural Policy: origins, institutions and financing Retrieved from http://www.tcd.ie/Economics/staff/amtthews/FoodPolicy/LectureTopics/EUAgriculturalPolicy/frameset7.htm Online article titled ‘For an Ambitious Reform of the Common Agricultural Policy: 2010 Declaration by Agricultural Economists’. Retrieved from http://www.reformthecap.eu/declaration BBC News article of 12 October 2011 titled ‘Q&A: Reform of EU farm policy’. Retrieved from http://www.bbc.co.uk/news/world-europe-11216061 on 10th May 2013 Bureau, J. C. and Matthews, A.( 2005).EU Agricultural Policies: What Developing Countries Need To know, IIIS Discussion Paper No. 91, Trinity College Dublin. Ackrill, R.( 2000) The Common Agricultural Policy, Sheffield: Sheffield University Press. Ritson, C. and Harvey, D.(eds).(1997) The Common Agricultural Policy, 2nd edition, Wallingford: CAB International Ingersent, K. and Rayner, A.( 1999) Agricultural Policy in Western Europe and the United States, Cheltenham: Edward Elgar. ARTS 338.1094 N9 European Commission, Agriculture in the European Union: Statistical and Economic Information, 2005. European Commission DG AGRI, 2005, Prospects for Agricultural Markets in the European Union 2005-2012, Ciaian, P., Kancs, A. and Swinnen, J. (2010) EU Land Markets and the Common Agricultural Policy, London: CEPS Paperbacks Retrieved from http://www.ceps.eu/book/eu-land-markets-and-common-agricultural-policy on 10th may 2013 Boysen, O. and Mathews, A. (2012) Impact of EU Common Agricultural Policy reform on Uganda Retrieved from http://www.odi.org.uk/publications/6942-impact-eu-common-agricultural-policy-reform-uganda on 10th May 2013 Tracy, M. (1997) Agricultural Policy in the European Union, Brussels, APS Agricultural Policy Studies, Chap. 1. Read More