How the EU is destroying smallholder agriculture inside and outside Europe.

by Carla Weinzierl

The history of the CAP in the context of the international agricultural and trade regime

The history of the European Union’s Common Agricultural Policy (CAP) has its roots in the post-war era. Introduced in 1962 with the objective of restoring food security for the countries of Europe and guaranteeing stable incomes for farmers, it was built around a central political consensus of achieving independence from imports and avoiding the undesirable experience of the pre-war decades: overproduction, price collapses and consequent threats to production structures in Europe. Agricultural production was generally protected from cheap imports by means of high tariffs, though there were a few exceptions – feed imports from the USA, for example, which laid the foundations for the future dominance of the grain, oilseed and livestock industry in Europe. In addition, a process of long-term increase in production was triggered, with price guarantees and structural changes driving a shift from many small farms to a smaller number of large, industrialised ones. The number of people employed in agriculture was reduced in order to free up the labour force for the reconstruction and industrialisation of Europe.

The design of the CAP resulted in an enduring, systemic overproduction crisis. Subsidisation occurred in the form of price support, with producers receiving more money the more they produced. With no restrictions placed on production volume, overproduction was inevitable. Though restrictions had been laid out in the GATT (the predecessor of the WTO) to prevent dumping and the subsequent destruction of agricultural systems in the importing countries, they were not observed by the EEC. The “butter mountains and milk lakes” of the 1980s were one manifestation of this structural crisis. The EEC responded, but only by introducing export subsidies. It was only with great reluctance and in a small number of areas (most notably, milk production) that quotas were introduced.

After that, the CAP underwent several reforms to bring it into line with WTO rules – provisions, that is, designed primarily by the EU and the US for their own and for corporate interests. Dumping was redefined by the WTO as the export of goods at prices below internal prices. From that point onwards, the EU no longer rendered subsidies in the form of price support, but as direct, WTO-compliant payments to farmers. With the end of price support, internal prices were ostensibly brought into line with the world market. In reality, however, if we consider that dumping occurs wherever goods are sold for lower than their production costs, the effect of these direct payments was clearly to facilitate its continuation. On the basis of this redefinition of dumping, the EU succeeded both in maintaining its own protectionism while simultaneously promoting the liberalisation of markets in the Global South for the benefit of agricultural corporations.

The basic problem of structural overproduction in the EU persists even today, with developments in the dairy market serving as a prime example: after raising the milk quota in 2003, the EU re-introduced export subsidies in 2009 and abolished the quota completely in 2015. The consequences were oversupply, a fall in prices to half of the cost of production, the further decline of dairy farmers and increased pressure to industrialise milk production, which in turn fuelled the overproduction crisis further. Yet policymakers continue to respond with “business as usual” – that is, with a heavy focus on exports and thus also on a dumping-centred strategy.

It is on this basis that the CAP can be seen as a part of the broader international agricultural and trade regime. This regime is based on a number of factors, the first being the liberalisation of agricultural markets worldwide (and with it, the integration of the Global South into the world economy) and the second being massive imbalances in the subsidisation of agriculture in North and South. This latter factor is also designed to benefit corporations. A third aspect is the increasing industrialisation pressures in the Global South, which are based on unfair import competition and the accompanying misconception that hunger is an underproduction problem rather than a distribution and equal access one. A fourth aspect is that ever fewer, ever larger transnational corporations are monopolising the entire food chain. The overall result is a multi-layered crisis with enormous social, ecological, political, cultural and economic repercussions across both the Global North and South.

The effects of the CAP and the demands of civil society

The design of the CAP favours agricultural and food corporations and industrial agriculture over small-scale production. Across the EU, 80 percent of direct payments (which account for the majority of CAP funds) go to the largest 20 percent of farms by area; the lowest-earning 10 percent of farms receive just 0.5 percent of the money, while the highest-earning receive 55 percent. This promotes a policy of “grow or perish”, an approach which has seen a third of small farms in the EU close in the last decade alone.

These displacement processes are also taking place in the Global South, where free trade agreements and surplus production in Europe are destroying local production systems. People are losing their livelihoods and self-determination, while poverty and unemployment are leading to rural exodus and the formation of slums. Dependence on food imports is increasing, as are hunger crises, since these imports are subject to severe price fluctuations. The progressive industrialisation of agriculture is devaluing and destroying local and traditional knowledge, leading to the loss of climatically and culturally optimised production methods and seeds and to inhumane working conditions in the agricultural industry. Industrialisation is damaging the environment and the health of humans and animals. It is causing soil and water erosion, destroying biodiversity and massively fuelling the climate crisis.

In the face of these upheavals, emancipatory movements such as the Nyéléni movement for food sovereignty call for radical agricultural change based on the concept of food sovereignty. They advocate for a coherent food policy rather than an agricultural policy that exists in isolation from trade, social issues and the environment. The basic premise is that food production that is socially equitable, ecologically sustainable and adapted to the local culture, climate and soil conditions should take precedence over export promotion for corporate profits.

The vision of such a coherent, democratic food policy geared towards achieving food sovereignty worldwide is clear: money is paid only to farms that produce food in a socially and ecologically sustainable fashion. Public spending would fall, since the costs of industrial agriculture and supposedly “cheap” food are actually sky-high. Subsidies would be reduced and capped in line with increasing farm size in order to preserve and promote small-scale farming structures, which would also necessitate the reform of farmers’ social insurance systems. In addition, subsidies would be linked to working time requirements rather than farm area. In the medium term, the aim would be to dedicate taxpayers’ money to operations that are located in particularly unfavourable areas and provide socially beneficial services such as avalanche protection or the preservation of cultural landscapes, biodiversity and recreational areas.

At the same time, the prices farmers would receive for their products would enable them to earn a secure, stable income, thanks to the regulation of the food market and the dismantling of the power of agribusiness (including retail). Public money would be earmarked for promoting regional economic cycles – in the context of community-supported agriculture, for example. From an ecological perspective, the sale of agrochemicals such as industrial fertilizers and pesticides would be limited and the use of antibiotics in livestock farming significantly reduced. The production of energy from biomass would be promoted only insofar as it had been proven to be ecologically sustainable and efficient by independent studies. Feed imports into the EU, which are responsible for land grabbing and rainforest clearing in Latin America in particular, would be decreased, and EU export subsidies would be abolished with immediate effect. In the medium term, trade policy would be realigned based on the principles of subsidiarity and complementarity to ensure that trade was not destructive to local food production.

What can we expect from the EU?

In view of the EU Parliament’s strengthened decision-making powers, many people had high hopes for the most recent CAP reform in 2014. Yet it was entirely underwhelming: environmental regulations were introduced only reluctantly and in a completely inadequate fashion, and a move away from the export focus was nowhere to be seen. The next reform promises similarly little hope of a CAP realignment. Driving this approach is the power of global agribusiness, whose aim is to gain access to new export markets and cheap raw materials through further industrialisation. The EU is implementing these interests as effectively as it possibly can, just as it did when it came to establishing the WTO.

In many countries, the EU has become a scapegoat and is regarded as forcing market laws on national agriculture. In fact, the respective agricultural ministers of these countries are the very people who sit on EU bodies and decide this policy. The mainstream farmers’ associations and the conservative parties and corporate interests that back them dress up the policy in a deceptive guise and call for high subsidies based on the plight of smallholder farmers. In reality, most of the money goes to big farmers and, indirectly, to the food industry and agribusiness.

The EU is clearly an obstacle to an emancipatory agricultural policy. Yet the same power structures also exist in the member states, from which we must conclude that a return to the nation state is by no means the solution. Instead, new forms of cooperation and coordination are needed, some of which are being co-learned as part of the growing Nyéléni movement for food sovereignty: more and more people are taking part in alternative, people-powered models of production, consumption and cooperation. In so doing, they are bypassing the EU institutions and the “unholy trinity” of large-scale farmers’ associations, agribusiness and conservative ministries of agriculture. Contrary to the interests represented by the EU and national agricultural policies, the core of this movement is international solidarity.

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