Good news for some ...

Big farmers win again

PROPOSALS to curb the amounts of subsidy the richest individual landowners can claim from the CAP are regarded by critics as a joke. Many will still become millionaires just because they own thousands of acres of land. In 1995 alone three British farms shared cheques of over pounds 5m in aid before they sold even their grain.

The new CAP will introduce a direct aid ceiling. But it is set so high it is only triggered after the first pounds 60,000 a year and then the subsidies only begin to taper by 20 per cent. To lose a penny a farmer's cereals growing area would have to be at least 800 acres. Up to 3,000 British farms fall into this bracket.

For the biggest, most efficient farmers the stripping away of price supports and restrictions on the volume of cereals or milk they can produce at low cost is welcome. However, small farms will be hit by price cuts of up to 30 per cent which will be only partially compensated and many fear that, unable to withstand the exposure to competition, they will leave the business.

Supermarkets reap rewards

BIG supermarket chains like Tesco and Sainsbury look set to reap the biggest rewards from the latest EU effort to scale down the price support system enshrined in the CAP.

Like the grain traders and meat exporters who operate in the middle, the retail giants will see their costs come down substantially. Farm gate prices will no longer be supported in the way they have been thanks to the phasing out of "intervention" under which Brussels was legally committed to buying up any food which could not be sold at a minimum price. Cutting the price of cereals is pivotal because it lowers the cost of animal feed and affects the cost to industry of many basic ingredients.

Taxpayers still fund support

SAVINGS for British consumers from the farm reforms are put at pounds 80 a year for the average family. That adds up to pounds 1.53 a week which is cold comfort considering that the CAP adds pounds 20 a week on to the weekly shopping bill for a family of four.

Guaranteed prices to farmers are being slashed by 30 per cent but that has only a marginal impact on the price of food in the shops. Governments will end up shelling out even more public money to support agriculture as a result of the changes. The additional cost is estimated at between pounds 3bn and pounds 4bn a year, an increase of around 10 per cent.

Cost to the environment

THE strategy behind the reform is to allow EU farmers to compete in the global race for food markets. Critics say this will inevitably encourage high yield, intensive factory farming so that costs that are higher in Europe than in the US or Australia can be sliced.

On the one hand EU commissioner Franz Fischler is urging governments to make 20 per cent of farmer payments conditional on compliance with reduced use of pesticides and fertilisers and a reduction in the number of animals stocked per field. On the other he is to retain a pounds 1bn a year subsidy for producers of maize silage which is the key to cheap beef and milk production on the continent. Environmentalists regard it as the single most harmful measure in the CAP. It is connected with high use of pesticides which leach into the soil and water table.