Subsidy plan that succeeded too well

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The Independent Online

The European Union's Common Agricultural Policy is a vast funding scheme which basically pays farmers to stay in existence. It was originally set up to preserve the social structure of the countryside in France and Germany, where there were many more small farms than could survive in a genuine free market, or were needed to produce food. Britain became part of it with our accession to the EU in 1973.

The CAP became the victim of its own success, as it encouraged farmers to produce far more food than was necessary, and got them used to subsidy and insulated from the reality of world markets. But the trade liberalisation presided over by the World Trade Organisation is now moving towards the phasing out of agricultural subsidies.

The EU has attempted to reform the CAP, but vested interests – not least of farmers – are such that reform has not got very far. The end of direct subsidies, however, is on the horizon, whether farmers like it or not, and only those who can compete in a subsidy-free world will survive.