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January 2003, Volume 9, Number 1

EU Agriculture

About half of the EU's budget is spent on agriculture, some E45 billion of the EU's E98 billion a year budget. The EU proposed that farmers, who are about five percent of European workers, should receive a maximum E300,000 a year, which would reduce payments to East German and British farmers. EU food prices are 44 percent higher than they would be without the Common Agricultural Policy.

In one summary report, "farm spending virtually defines the financial relationships among EU countries. The battle over farm subsidies is in many ways a proxy war between Germany and France to determine whether the EU will continue to be financed as it has since its earliest days, with Germany shouldering the greatest burden, partly as a tacit recognition of its belligerent past."

French President Jacques Chirac says: "Only a Common Agricultural Policy allows us to maintain farm incomes. France has led a permanent fight to maintain a certain idea of the CAP, while others want only to suppress it because they think it is too expensive and serves only our interests." France, partly because it receives so much farm money, pays less into the EU budget on a net basis than a relatively small country like the Netherlands.

Adding 10 more countries would increase the number of farmers in the EU by 50 percent, and raise the cost of EU farm subsidies by E5 to E10 billion a year; Poland has more farmers than France and Germany combined. The EU wants to provide them with lower guaranteed prices, only 25 percent of current EU levels when they join, and rising to 100 percent over 10 years, in order to save money, but this risks the development of a two-tiered EU.

Many aid groups have begun to criticize the CAP, alleging that it prevents farmers in poor countries from obtaining higher prices and incomes. One group asserted that the average cow in the EU received a subsidy of $2 a day, more than the income of half the world's residents

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