WHEN Ray MacSharry started his refarm of the Common Agriculture Policy it was clear that it was only the first of several stages. The process of reforming this giant which consumes half the EU's annual spending and 0.5 per cent of EU GDP must roll on.
Two irresistible forces will ensure that the process of reform continues, enlargement of the Union to embrace the countries of central and eastern Europe and the remorseless rise in production ahead of EU market demand.
The question is not if but when. The agricultural sector and its political masters are notorious for not grasping the nettle until the last possible moment.
While the EU has seen a dramatic decline in the food mountains held in intervention (until the BSE crisis last year there had been no beef intervention since 993), the trends for the future are potentially disastrous. Unless the Union's cereals regime is reformed, the Commission predicts, the unchecked growth in production will result in the Union needing to store 58 million tonnes by 2005, twice the previous record level.
The situation is as bad for beef: one and a half million tonnes in factory cold stores by the same date.
What makes the situation particularly critical, moreover, is that such stocks could never be disposed of: the last GATT (General Agreement on Tariffs and Trade) round agreed to gradually reduce subsidised exports. By the year 2000 subsidies must come down by 21 per cent. The next round will inevitably go further.
The extension of CAP in its present form to new EU members from Central and Eastern Europe could cost up to £10 billion a year. It could also flood the EU market without producing the structural modernisation that is critical to the long-term future.
What new members need, the Commission argues, is not price support but targeted assistance to provide training, land-holding consolidation, capital and new market infrastructures. Such a programme would also be affordable to the EU.
Internally, the move away from price support will also have to continue. Direct compensation payments to farmers have risen as a share of aggregate family farm incomes from 25 per cent in 1991 to 60 per cent in 1997.
But EU prices are still well above world levels, and the Commission is determined to bring them down further. How far is not clear, but Europe's surpluses can only be disposed of on the world market, and access to that will be conditional on substantially ending the subsidy system.
Compensation will continue, but its scale must be in doubt. On the one hand the next World Trade Organisation round is certain to see the payments raised by Europe's trading partners as an indirect form of price subsidy.
The failure of farm ministers to cut compensation payments to farmers when it became clear that expected falls in prices were failing to materialise has also provided powerful ammunition to the opponents of CAP, notably the British.
The Commission is acutely sensitive to such criticism and to the fact that in the past aid to farmers has been seen to be insufficiently targeted at those most in need. A refocusing could help Irish small Farmers.
The hope of the Agriculture Commissioner, Mr Franz Fischler, is to complement extension of the MacSharry CAP reform with a new emphasis on broader rural development. The current 1994-99 budget provides For some £24 billion in spending on the EU's 100 million rural dwellers. It Falls under three headings, and thus three commissioners: regional, social and agricultural guidance.
Mr Fischler argued in an important speech in Cork during the Irish presidency that such spending should be integrated into one Fund to give coherence to the Union's work.
He pointed out that the drift From farming will inevitably continue, and that even today farmers represent only 8 per cent of rural dwellers. One in two farmers is over the age of 55, and half of these have no successors.
The survival of rural life depends on finding new ways of earning a living, and if necessary paying farmers to be custodians of the environment.
Mr Fischler, however, faces a stiff fight from the Regional Affairs Commissioner, Ms Monika Wulf-Mathies, who is proposing radical reform of structural funds with a much tighter geographical rather than sectoral focus.
