EU Economy
US farm subsidies face cuts; Europe's sacred cows safe despite rising food prices
By Michael Hennigan, Founder and Editor of Finfacts
Apr 12, 2011 - 4:45 AM

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With the US farm economy booming, Washington is set to tackle some sacred cows including farm subsidies. However, in Europe there is no appetite to tackle the farming lobby despite rising food prices. The biggest battle there is dividing up the Common Agricultural Policy budget - - one of the the world's premier socialist programs  -- that accounts for over 40% of Brussels' annual budget.

In a signal of business as usual in Europe, last month agriculture ministers refused to cap payments to big farmers and companies, which take the lion's share of the welfare budget. However,  there was a concession on a fairer share-out of funds between farmers in eastern and western Europe.

French Agriculture Minister Bruno Le Maire said negotiations on a new share-out would likely be "very tough."

Multinationals and big landowners are the biggest beneficiaries and in 2009, 434 Irish-based individuals and companies received more than €100,000 each under the welfare scheme. Across the whole EU, it is the big farmers and companies at 20% of the population who receive 74% of funding.

Glanbia Ingredients received over €3m in 2009 and total Irish receipts were €1.9bn.

Europe's agriculture commissioner Dacian Ciolos said in an interview last month that "it is difficult to explain to outsiders that a few farmers are paid hundreds of thousands, or even millions of euros."

Farm payments account for roughly €55bn of the EU's €120bn annual budget and every year around €42bn is given in free handouts to farmers in Europe. Beef baron Larry Goodman received more than a half million euros in 2004 and the direct payment is made even if only for watching the grass grow on his 1,600 acre estate.

In the UK, the Queen gets a welfare cheque to support her Sandringham estate.

Finfacts article: Large Farms in EU: Less than 1 % of European farms occupy 20 % of usable land

The OECD says subsidies provide 23% of farm income in the EU compared with 9% in the US and 61% in Japan.

France is the biggest recipient of CAP funds at about 20%, with Spain, Germany, Italy and the UK all receiving significant amounts (two-thirds of the total between these five countries in 2006). Greece and Ireland receive the largest per capita payments.

Member countries that joined from 2004 initially receive 25% of the rate of the older members. However, payments will converge by 2013.

The Wall Street Journal reports that Republican House Budget Committee chairman Paul Ryan's blueprint for the fiscal 2012 budget puts agriculture subsidies in the cross hairs, seeking to cut $30bn over a decade - - starting when the next farm bill is passed in 2012 - - out of a total of some $150 billion in total expected spending on farm subsidies.

The Journal says $5bn in direct payments to farmers accounts for a third of the roughly $15bn in total farm subsidies last year, according to government data.

The US Department of Agriculture estimates net farm income this year will be the second-highest in 35 years and who has heard that Irish farm income surged 39% in 2010? There were no tractorcades to hail this good news!

Irish State Secret!: Ireland's farm incomes rose a stunning 39.1% in 2010

Global food prices rose for eighth straight month in February; Real food cost at lowest since Great Depression

Government support to farmers rises slightly in OECD countries to $252.5bn or 22% of total farm receipts in 2009

Number of EU Common Agricultural Policy millionaires rises 20% in 2009

Some Irish land will have to be dezoned says planning board head; Ireland has 88 planning authorities for population of 4.4m

Irish Farmers and Sacred Cows

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