Sunday, July 19, 2009

European 'farm' subsidies often aimed at rural development, non-farmers, new public data show

In debates over farm subsidies in the United States, global trade and European subsidies sometimes come up, but we bet few Americans know much about European farmers and their subsidies, details of which have been obscured by a veil of secrecy. Here's a chance to learn.

"This year for the first time, all of the 27 nations in the European Union were forced to disclose how they distribute the money from farm subsidies," Stephen Castle and Doreen Carvajal report for The New York Times and the International Herald Tribune. "The data underscore the extent to which the subsidy program has evolved beyond its original goals of increasing food production and supporting traditional farmers as they dealt with market fluctuations. It also illustrates how the European Union has moved to emphasize rural development instead of price support and production incentives, and in the process has decentralized the system, giving countries more discretion over the dispersal of subsidies."

The E.U. hands out 50 billion euros(€), or $71 billion, a year in farm and rural subsidies. Three-fourths of the money goes to farmers and landowners, but recipients also include a Spanish construction company, €1.59 million for rural roads; a German candy manufacturer, €332,000 for the sugar in its gummy bears; and an Italian caterer that serves cruise ships, €148,000. The story has many more examples of how the system works.

"European officials and some economists believe that much of the cash from those subsidies ultimately trickles down to local farmers, since without them companies might buy cheaper food elsewhere," Castle and Carvajal report. "But the rebates have a powerful effect on global trade by depressing world prices and undercutting poor farmers outside Europe, whose incomes are damaged. It is another form of price support, economists say, a vestige of an old system that encouraged overproduction of food and one that the E.U. authorities hope to end by 2013." (Read more)

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