The disproportionately high amount of subsidies which go to big farmers is one of the criticisms of the Common Agricultural Policy analysed in a new report from the EU Court of Auditors.
The court says 40 per cent of the EU's £12.5 billion annual subsidies to arable crops goes to only 4 per cent of producers, and 70 per cent to 10 per cent of farmers. Less than a third of all the cash goes to 90 per cent of farmers.
The Irish representative in the court, Mr Barry Desmond, who says that three Irish farmers are in receipt of over one million ecus (£780,000) a year in arable aid, argues that previous CAP reform has been marginal in its effect on farm-income disparities.
EU aid should be focused on farmers in need, not those who could survive without subsidies, Mr Desmond says, and he wonders why the issue is not addressed by Irish farm organisations.
A series of far-reaching critiques of Commission proposals for the reform of the CAP after 2000 is set to add to an already intense debate between member-states.
Radical criticism of the beef and milk quota regimes and of the failure of the Commission to propose measures which will curb farm spending in the long run will be of particular concern to Ireland, which received some £1.5 billion last year in farm guarantee payments.
The report on Agenda 2000, specially commissioned by the Council of Ministers, says the Commission's proposed price cuts will be inadequate to get EU products on to the world market and calls for savings through the capping of payments to the minority of wealthy farmers who get a disproportionate share of subsidies.
The court also warns that any attempt to renationalise CAP payments should take account of the social and economic effects of such a move. This will be grist to the Republic's mill. It receives just less than 4 per cent of GNP in farm guarantee payments while the Germans, who support such changes, receive only 0.3 per cent.
The "option" suggested by the Commission of renationalising up to 25 per cent of farm guarantee payments as a means of rebalancing Germany's allegedly excessive net contributions to the EU budget is strongly criticised by the court. It says the option would do nothing to reduce the overall cost of CAP or assist farmers.
And because such national contributions would be compulsory, the court warns that the effect of renationalising part of the CAP cost could have severe budget implications for some memberstates, even to the point of jeopardising their budgetary obligations under the single currency stability pact. In Ireland's case such payments could add a dramatic 1 per cent of GNP to the government deficit.
The Agenda 2000 proposals on agriculture continue the reforms started by the former farm commissioner, Mr Ray MacSharry, in switching support from prices to farm incomes through "cheques in the post" to reduce prices closer to world market levels.
The reforms are necessitated by the reality that restrictions on subsidised exports under the current and next World Trade Organisation rounds mean that most surplus production must either be destroyed or put into intervention. Without the world market outlet the Commission predicts the necessity for record levels of grain storage within five years.
But the court warns that, because of the Asian crisis and a reduced growth potential in Russia, the Commission's proposed price cuts will be inadequate, pushing the annual cost of CAP up by as much as £800 million a year.
The court criticises the generosity of the beef and veal premium payments, which it says will not contribute to a long-term balance between supply and demand and hence result in a substantial surplus by 2005, and yet more spending to take it off the market.
The surplus will be exacerbated by the effect of increasing the milk quota by 2 per cent, the court says, an increase which also creates a milk surplus of up to two million tonnes by 2005. The Commission should review the economic justification for the milk quota system, the court says.
It also criticises the assumptions in the Agenda 2000 plan that the acceding countries of central and eastern Europe will benefit only from price support and not direct income payments; an assumption which reflects the EU's own negotiating position but is opposed by the acceding states, which demand parity of treatment with EU farmers.
Should they receive income supports, the court says, the cost of accession would go up.
