EU subsidies deny Africa's farmers of their livelihood

British households pay an extra £832 a year in grocery bills due to the huge EU subsidy system that is also depriving tens of thousands of African farmers of their livelihoods, a charity warns.

Everyday goods such as bread, milk, sugar and chicken are all more expensive because of the payments made to British and European farmers. At the same time, dumping of subsidised produce in African countries is forcing local producers out of business.

Claire Godfrey, trade policy adviser for Oxfam, said: "Not only does the Common Agricultural Policy hit European shoppers in their pockets but strikes a blow against the heart of development in places like Africa.

"The CAP lavishes subsidies on the UK's wealthiest farmers and biggest landowners at the expense of millions of poorest farmers in the developing world. The UK Government must lobby hard within the EU to agree an overhaul of the CAP by 2008 to put an end to the vicious cycle of overproduction and dumping."

The £30bn-a-year EU agricultural subsidy regime is one of the biggest iniquities facing farmers in Africa and other developing counties. They cannot export their products because they compete with the lower prices made possible by payments.

In addition, European countries dump thousands of tons of subsidised exports in Africa every year so that local producers cannot even compete on a level playing field in their own land.

Meanwhile, governments of developing countries come under intense pressure from the World Bank and the International Monetary Fund to scrap their own tariffs and subsidies as part of free trade rules.

World trade talks aimed at reaching agreement on subsidy reform have stalled because of the EU's intransigence over its CAP.

The CAP costs British taxpayers £3.9bn a year and also adds £16 a week - £832 a year - to the average family of four's food bill.

The £1.34bn-a-year EU sugar regime was ruled illegal by the World Trade Organisation last year and European countries were found guilty of dumping too much subsidised sugar in developing countries under-cutting local farmers.

But at the moment, proposed reform of the regime will only end up hurting the poorest African and Caribbean farmers who currently have special access to European markets and will be denied any compensation for the losses generated by the changes.

European farmers are guaranteed a price for their sugar three times higher than the world price and there are restrictions on foreign imports - backed up by import tariffs of 324 per cent. Export subsidies, meanwhile, allow surplus EU sugar to be dumped at bargain prices in African countries.

Mozambique loses more than £70m a year - equivalent to its entire national budget for agriculture and rural development - because of the trade distortions and South Africa also loses £31m a year.

While chicken producers in Europe do not receive direct payments, the grain that feeds the birds is subsidised, substantially reducing the cost of farming.

The effects

* SUGAR

Farmers in Europe are guaranteed a price for their sugar which is three times higher than the world price. Mozambique loses more than £70m a year because of restrictions on importing into Europe coupled with the dumping of cheap exports at its door, while 12,000 workers in Swaziland have lost their jobs because the local industry cannot compete.

* WHEAT

Kenya, Nigeria and Senegal have been hit by cheap, subsidised imports from Europe while the £30 paid to British farmers for every tonne of wheat they produce inflates the price of breakfast cereals, bread and other goods in Britain.

* MILK

Thousands of tonnes of surplus powdered milk from the EU are dumped in West African countries such as Mali at a cheaper price than local cattle owners can sell at, holding economic growth back. The dairy subsidies have driven farmers in India and Jamaica out of business.

* CHICKEN

Our preference for chicken breasts and legs means that thighs and wings are often frozen and exported to Africa where they are sold for rock-bottom prices. Chicken farmers in Senegal and Ghana used to supply most of the country's demand - now their market share has shrunk to 11 per cent because subsidised imports are 50 per cent cheaper.