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Wednesday, 24 August 2011

EU agriculture reform: Direct payments lack rationale, says expert

There is no sense in continuing direct payments to farmers as a part of the Common Agricultural Policy of the EU, says Professor Ulrich Koester from Kiel University. Instead of falling market prices for EU goods, Koester holds that European farmers have seen rising market prices since 1993, when direct payments were introduced. According to an OECD-FAO study from 2011, market prices in 2020 will be even higher than in 2011. Hence, in Koester’s view, the original idea reason for direct payments, namely to compensate farmers for falling market prices, is no longer given.

If direct payments are maintained, Koester argues in favour of different rates for different countries. Not only have the new member states seen politically-dictated price increases, but farm payments should also be seen in comparison to other sectors in the same country, not to the farm sector in other European countries. “No one suggests that, for competitiveness reasons, government officials in all EU countries should receive the same salaries,” says Koster. “Why, then, should it be necessary to equalise the income to land?”