News - November 3, 2011

‘Better scrap income support for farmers altogether'

Dutch farmers receive an average of 450 euros per hectare in income support. That will change, if it is up to the European Commissioner Ciolos. He wants to cut subsidies by an average of 8 percent in the period 2014-2020, with the aim of distributing income support more fairly over the member states. Good idea?

‘The general drift of Ciolos's proposals is logical', says LEI researcher Petra Berkhout. ‘At present the subsidies per hectare are based on farmers' production in 2000-2002. At some point that doesn't make sense anymore. Ciolos's ultimate gaol is a flat rate per hectare. With the current budget that would come out at about 250 euros per hectare in 2027. That is not good news for the Netherlands, but it is good news for Romania, for example, which currently gets about 125 per hectare.
I think a total levelling of the agricultural support goes too far because it doesn't take into account the big differences in agricultural productivity. One hectare in the Netherlands or France produces far more than one hectare in Lithuania or Portugal. In the Netherlands, it is especially veal farmers, potato starch producers and intensive dairy farmers who get high subsidies per hectare. That is to do with the old regulations. Those farmers stand to lose a lot now and I can understand the sector organization LTO lobbying against it.
It is not just that the per hectare subsidy will go down; farmers can also lose another 30 percent of that lower subsidy if they don't meet European environmental requirements. For example, arable farmers are required to adopt a particular form of crop rotation and to leave land fallow. That makes for easy earnings in a country with plenty of marginal land, but it is not a logical option in a highly productive country such as the Netherlands. Actually, I don't think an agricultural policy should make any payments for leaving land fallow. It would be better to spend that money on an ecological main structure, because that creates far more natural landscape than fallow land.
I think we should gradually get rid of income subsidies. They are out of date and levelling them is a superfluous interim measure. Agriculture should be market-driven, and the EU should ensure stable markets and prospects for farmers. It would be better if they put their efforts into developing instruments for stabilizing price fluctuations in agriculture. A fund for the creation of more green space would be a good idea too, because nature and landscape are public goods so there's no avoiding public intervention. But that's something to leave to the member states rather than to the EU.'