Agricultural policy is ripped up by the roots

THE ECONOMIC interests of 8 million very different individuals, ranging from the Queen down to the lowliest Greek goat producer are being fought over as European agriculture ministers go into battle in Brussels this week.

Founded at a time when memories of Second World War food rationing were still fresh, the highly wasteful Common Agricultural Policy (CAP) is in desperate need of a shake up.

It costs pounds 30bn a year, nearly half the total European Union budget, and is responsible for generating millions of tonnes of surplus beef, grain and milk which have to be dumped on world markets at a huge cost to taxpayers, not to mention the higher cost of food in our shops.

Now with big, poor agricultural nations like Poland and the Czech Republic queuing up to join, a huge crisis for the entire system of EU financing is looming. Extending the CAP with its artificially high food prices and lavish "cheque in the post" payments to countries where farming is still at the horse and cart stage would simply bankrupt the Union.

But while every EU government recognises the need to rein in spending, no minister wants to go home on Friday telling his own farmers they have to take the biggest hit.

In Britain's case the Queen's envoys, led by Nick Brown, are negotiating to defend big landowners, such as the Queen and the Prince of Wales, against proposals for an annual ceiling on the amount of direct cash aid any one farmer can receive.

About 4,000 British farms would be hit by proposals to begin limiting subsidies oncepounds 100,000 a year has been claimed. A handful of British farms each year cash EU cheques worth around pounds 1.5m.

Apart from the proposed ceiling, big farmers have little to fear from the European Commission's proposals. They would slash prices by 30 per cent but this would be good news for intensive producers capable of competing with Americans and Australians on world export markets.

But the plans are bad news for smallholders, hill farmers, the environment, food quality and the traditional European family farm.

France, the traditional champion of the CAP and its biggest beneficiary, is incensed by what it sees as Germany's betrayal. In a dramatic break with an almost four-decade-long Franco-German alliance in defence of farmers, the government of Chancellor Gerhard Schroder is demanding that part of the cost of subsidising farmers must be borne directly by taxpayers in the member states. This proposal to devolve, or re-nationalise, part of the CAP budget would strike at the heart of the 36-year-old policy, and some say at a pillar of the Union itself.

In an attempt to deflect the Germans, the French are countering this week with plans to curb the level of direct aid farmers would receive over time. Cutting payments would represent a dramatic shift, particularly for the French, but is now seen as the only way to mollify a German public fed up with footing Europe's bills.

As the negotiations opened last night, however, Bonn was still clinging to its demand for "co-financing", a move which seems guaranteed to provoke a French veto. With the firecrackers and chants of French farmers ringing in their ears French ministers will have enormous difficulty returning to Paris at the end of this week if they have signed up to the dismantlement of the CAP as we know it. Yet in the new climate of Euroscepticism in Germany, nothing less, it seems, will do.