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BRUSSELS BRIEFING No. 3 OCTOBER 2004
STRUAN STEVENSON (MEP for Scotland)
Europe's Influence on the Scottish Rural
Economy
The New Commission
The appointment of Jose Manuel Barroso as the
new President of the European Commission is an
inspired move. Largely unknown prior to his sudden
bound onto centre stage last July, Mr Barroso
has proven to be a man of vast intelligence, both
cultured and multi-lingual, and certainly not
prepared to be bullied by anyone. When pressed
by the French and Germans as to whether he would
appoint super-commissioners responsible for all
trade and economic affairs, his rather enigmatic
answer was that he wanted all 25 members of his
Commission to be super commissioners!
Mr Barroso is a Conservative. He is seen as being
a pro-American, liberal free-trader. He is firmly
committed to the Lisbon agenda - making Europe
the leading knowledge-based economy in the world
- and, as the former Prime Minister of Portugal,
is well-placed to understand its importance.
Mr Barroso will remain in charge of the Commission
for five years, stamping his authority on the
future shape and direction of Europe, following
the disastrous Romano Prodi regime.
Barroso’s team will include some tried
and tested Commissioners such as Margot Wallstrom
from Sweden, formerly the Environment Commissioner
and now taking over the Industrial Relations and
Communications (propaganda) portfolio, and Gunter
Verheugen from Germany, currently in charge of
enlargement, but taking over Enterprise and Industry
in the new Barrosso Commission. Given Germany's
4.5 million unemployed and dire state of their
economy, perhaps his appointment to this particular
portfolio may be regarded as somewhat ironic,
to say the least.
Amongst the new faces in Brussels will be SIIM
KALLAS from Estonia, well placed to head up the
European Commission's new anti-fraud office, after
18 years as a member of the Estonian Communist
Party. He will be joined at the Commission table
by our very own PETER MANDELSON whose astonishing
qualifications include having been sacked not
once, but twice as a Cabinet Minister by his great
pal Tony Blair.
Mandelson is not alone in this respect, as Ireland's
new Commissioner - CHARLIE McCREEVY - also had
to resign as an MP during his parliamentary career,
after a failed bid to oust Charlie Haughey as
Taoseoch, so he should find a soulmate in Mandelson!
Then we have DANUTA HÜBNER from Poland,
in charge of Regional Policy, where she will have
control of structural funds and Europe's massive
economic aid budget. Granting this portfolio to
a Pole is like giving cake to a glutton and is
bound to cause great consternation in the Mediterranean
countries who will hate to see their lavish subsidies
heading eastwards!
However, of key interest to farmers in Scotland
is the new Agriculture Commissioner – Marian
Fischer-Boel. She was until recently Agriculture
& Fisheries Minister in the Danish Government
and is a farmer, by profession. I got to know
her quite well while I was Chairman of the Fisheries
Committee and thought she was first class.
I was convinced she’d be a breath of fresh
air compared to the burly and brusque Franz Fischler,
who is returning to Austria to spend more time
with his memoirs! However, she interviewed very
badly at her hearings in Brussels and now the
socialists, Greens and some other groups intend
voting against her appointment. I think she will
still win a majority vote in Strasbourg, but this
is a somewhat shaky start for her, to say the
least.
Enlargement and its impact on the CAP
The enlargement process itself is going to have
a huge impact on rural Scotland. Of course we
are all prepared for a change in direction for
structural funding and subsidies. We know the
flow of cash will move towards the east. The ten
accession states are all much poorer than any
of the existing 15 Member States, so this is a
natural consequence of enlargement. On the other
hand, as with previous enlargements of the EU,
there are also many advantages for existing members.
The accession countries have to spend their new
found wealth purchasing goods, services and intellectual
property.
We have to make sure they are signing contracts
with Scottish businesses and not with our competitors
in the rest of Europe, far less in America, Korea
or Japan. While the accession of Poland, where
25% of the 40 million population work in agriculture,
is going to have a huge impact on the CAP budget,
nevertheless that is not the end of the story.
The enlargement process has not finished yet.
Not by a long shot!
The big debate now is whether to allow Turkey
to become a full member of the EU. But to offer
full membership to Turkey could sow the seeds
of destruction of the entire Community. Turkey
is not only very large, it is very poor. Its population
enjoys a standard of living roughly a quarter
that of the average across the existing 25 Member
States. It is predominantly an agricultural economy
with one third of its people engaged in farming,
so the impact on the CAP, currently straining
at the seams because of Poland's accession, would
be enormous. There simply isn't enough money to
go around. Even Commissioner Fischler sounded
stern warnings about Turkish accession in a recent
speech.
The UK is one of the big net contributors to
the EU budget. We pay in £4bn per annum
more than we take out. More than £2bn of
this goes directly to farm subsidies under the
much discredited CAP. In other words, we are subsidising
our direct competitors on the Continent and in
Ireland, while our farmers struggle to survive.
Incidentally, the Commission announced last week
that £1.8bn has gone missing from the CAP
budget. This is money that has been fraudulently
claimed, mostly by fictitious olive growers in
Italy or non-existent wine growers in France.
The money has just disappeared. It cannot be reclaimed.
Can you imagine how much worse the situation could
become after Turkish membership?
According to the Commission, Turkey would absorb
up to £18.4 bn a year in subsidies when
it joins the EU. That is £160 a year for
every 4- person household in Europe. Turkey's
farmers would get £5.5 bn a year in subsidies.
The Commission says that for at least the first
ten or fifteen years of membership, Turkey's economic
contribution to the Community would be minimal.
In other words it would destroy the CAP and possibly
destroy Europe. The impact on Scotland’s
rural economy would be disastrous. There must
be another way.
If Europe continues to pursue the Franco-German
vision of a politically integrated European Superstate
as envisaged by the EU Constitution, then I believe
that Turkey must not be allowed to join. On the
other hand, we should welcome Turkey into a Europe
shaped by the Conservative vision - A Common Market
- a Europe of independent nation-states working
together to create a flexible, dynamic single-market,
taking down the barriers to trade and creating
jobs and prosperity for all.
A European Superstate dominated by France and
Germany would be bad enough. A Superstate dominated
by Turkey, France and Germany would be intolerable,
unworkable and ultimately would destroy the community.
Short-term prospects for Scotland’s
farms
So much for the long-term political outlook,
which could directly impact on Scotland's rural
economy. But lets look at the short-term prospects.
The CAP has been an utter disaster, especially
for UK farmers. It devours almost half of the
entire EU budget – an estimated 55 billion
Euros for 2005, up from 50 billion this year.
And yet this huge, bloated monolith has failed.
Not only has the CAP failed to sustain rural
employment, it has impoverished our farmers and
caused an exodus from the land, putting at risk
our great rural heritage and the vibrant rural
communities it sought to promote.
Certainly it has succeeded in the objective of
de-coupling subsidy from production at least where
it applies to UK farmers. The single farm payment
will be reduced year after year, in a bid to reduce
the budget. But don’t be deluded into thinking
that subsidy has been de-coupled everywhere else
in Europe.
Go and ask Europe’s tobacco farmers if
they’ve been de-coupled from the 1 billion
Euros of subsidy they received last year. Ask
the EU’s wine growers if they’ve suffered
de-coupling of the 1.2 billion Euros they receive
every year. (I never realised it was so difficult
to sell a bottle of wine that it has to be subsidised!)
Ask the Olive Oil growers from Italy, Spain and
Greece if they’ve been de-coupled from the
2.3 billion Euros they are due to receive this
year.
Nevertheless we should look upon de-coupling
as a welcome freedom from the shackles of an oppressive
regime. I welcome the principle of a vastly simplified
system of support to our farmers that recognises
the farm as a whole business and rewards the delivery
of environmental, social and economic benefits
that are not paid for through the marketplace.
However, there is an inherent dislike amongst
the farmers I’ve spoken to for the system
of modulation, which they see as diverting money
away from direct support towards nebulous rural
community projects, often of limited benefit.
The Single Farm Payment
But the main thing is that our farmers will be
free to produce for the market, with the confidence
that they can rely on their single farm payment
as bedrock funding. It would be foolish, nevertheless,
for farmers to think they can make a living out
of the SFP. Farmers must show a farm-gate profit
by offering higher quality, better traceability,
supply consistency and improved marketing.
The long-term solution to Scotland’s rural
prosperity has to be found in the market. The
market is King. The market drives everything.
For too long we have been lulled by a sea of subsidies
into producing commodities which the market did
not want or was already over supplied with. Those
days are gone.
Farmers must identify niche or global marketing
opportunities and produce goods, which the consumer
wants or needs. They can do this individually
or collectively, through marketing co-operatives,
producer groups or similar organisations. Farming
cannot survive unless it is able to meet the challenges
of enlargement and globalisation. The challenge
will be to match supply to consumer demand, the
age-old law of economics.
Right now, Scottish farmers and growers produce
a wide range of high quality agricultural outputs
to high environmental and animal welfare standards.
However, a similar level of competence in marketing
does not always match their production skills.
For many producers, a greater understanding of
the operation of the food chain and the significance
of customer/consumer demand in driving market
change, and the requirement of today's major buyers,
are essential for future competitiveness.
It is important to recognise that farmers in
the EU are responsible for around 80% of the total
landmass of the Community. Their primary role
is to supply high quality and fresh foodstuffs
while at the same time, preserving and protecting
our landscape heritage.
Stricter labelling
Safeguarding and strengthening our domestic and
international market position for agricultural
products will mean placing ever-greater emphasis
on quality. An important part of future marketing
campaigns will involve labelling, ensuring that
consumers have a clear knowledge of the source,
production methods and quality of the goods on
offer.
It is of particular importance that labels tell
the consumer where a product has been sourced.
There is no advantage for our farmers in adhering
to the most stringent welfare and hygiene standards
in the world, if the UK simply throws open its
doors to cheaper imports from countries who don't
pursue the same standards. Clear labelling is
the way forward.
Direct marketing
Direct marketing of agricultural produce and
the stimulation of regional market services will
also play an important role in developing and
securing new outlets for farm produce. Farmers,
hoteliers, restaurateurs, butchers and shopkeepers
will all benefit from the strengthening of the
market. In particular, small and medium-sized
enterprises will regard the diversification and
differentiation of products to be an opportunity
to safeguard their enterprises and their jobs
on the farm.
New opportunities of income growth result first
and foremost from farm-based direct marketing
programmes, from accommodation of paying-guests,
from organic farming, from the production of plants
for energy generation and from contracting out
communal services.
Direct marketing can bring a range of benefits
for a family farm such as:
* Spreading risk through having several different
income bases.
* Safeguarding jobs on the farm.
* Adding higher value to products.
* Promotion of creativity, self-initiative and
sole responsibility.
* Promotion of regional identity.
The most common form of farm-based direct marketing
is farm shops, farm-gate sales and farmers' markets.
Although there is increasing evidence of growth
in this area, scope exists for considerable further
expansion. It is commonplace in France, for example,
to find leaflets in most village shops advertising
every individual local commodity from cheeses,
garlic, and foie gras to bread and wine. Farms
and shops offer 'tastings' and guided tours, thus
benefiting from exploitation of the tourist potential
from food production.
All of this is a far cry from the traditional
farming methods we have historically pursued in
the UK, where most farmers regard their role as
primary producers and care little what happens
to their produce once it has left the farm or
been sold in the mart.
Diversity, based on agricultural and extra-agricultural
activities is the reality of many farm systems
throughout Europe. For example, the co-operation
of agriculture with the tourism industry and the
catering trade increases the attractiveness of
the countryside in many areas of the EU.
The production of regional specialities, combined
with direct marketing, has proved very popular
with visitors. Innovative and saleable products
can only be produced and marketed by means of
close co-operation between the farming, food,
beverages and grocery trades.
Marketing associations and producers' groups
increase the effectiveness of farm-based supply
and are necessary prerequisites for the long-term
success of alternative forms of marketing. And
we must get clever at accessing financial aid
from Brussels to pay for new marketing strategies
in Scotland. There is loads of money in the CAP
budget earmarked for this purpose, but very little
of it ever finds its way here. All that must change.
We must do everything possible to promote and
encourage the entrepreneurial spirit of our farmers.
If we are to secure a sustainable future for the
EU agricultural sector then we must give a high
priority to protecting the interests of those
who live and work in our rural areas. Only by
so doing, can we hope to lead the world in producing
high quality Scottish food in a healthy environment
and a beautiful countryside.
STRUAN STEVENSON MEP
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