The CAP and rebate conundrum
There has been a lot of press and blog coverage of the CAP/UK rebate in the last few weeks. For my first big politics post in a while, I thought I would discuss some of the issues that seem to have been forgotten. I was in favor of keeping our rebate and the only way I would be happy for it to be given up is if France (and others) give up the gravy train known as the CAP. In fact, my preferred outcome was no CAP, no rebate and an overall EU budget divided by two.
But let's just look at the figures before making any rash decisions.
Agriculture accounts for a variable percentage oF EU GDP, depending on who you ask. The BBC claim agriculture accounts for 1.6% of GDP whereas the CIA claim it is 2.2%. I could not find a consensus, so let's assume it is 2% (1). European GDP is 9060bn Euros (2), so agriculture accounts for 182bn Euros. Critics of the CAP argue between 40 and 50% of the EU's budget is spent on it, corresponding to 49bn euros (3). Now that is a *lot* of subsidy going into agriculture considering its constribution to GDP. On the other hand, if you take a look at the social security budget of Germany - one country within the EU - dwarfs the 49bn spent on CAP! There are arguments for and against the CAP and I was swayed by those against, but now I sincerely doubt the answer lies with these macroeconomic figures. One must look at the human cost, too.
There were 12,218,600 family members(4) and 6,352,690 full time employees (5) working on 6,770,690 farms (6). With just over 2600 euros going to each and every farm worker (or alternatively over 7700 euros to each farm), it would make a big dent in their pockets if the CAP was scrapped. The average income (7) for a farm in Germany is 33,600 euros, so stopping the CAP would be the same as reducing the farm's income by 22%. Would it be worth being a farmer in Germany? I would say not. Removing the CAP subsidies would decimate the landscape of Germany (8), and I would wager the rest of Europe too. Farming would be unsustainable.
We all remember what happened to those UK areas dependent on mining in the 80's and I for one would not welcome such drastic changes again. Although I think the state subsidy of the UK coal industry was wrong, I also believe that the way Margarate Thatcher went about changing the subsidies system, by having 20 uneconomical coalmine closures announced (20,000 jobs) which led to a yaer of strikes, was disastrous.
I have changed my mind. For me, the best outcome of Tony Bliars presidency of the EU is a stalemate. I don't know what the solution is, but at least in the short term, it can't be abolishing the CAP.
Notes:
(1) The BBC numbers are for 2005, CIA for 2004. It is highly unlikely there would be a decrease in agricultural GDP of 0.6% in 1 year - that corresponds to 50bn euros. We would know about that level of reduction!! More likely is that the calculations to estimate GDP are based on different methodologies.
(2) Figures for 2000 and 15 member states.
(3) Figures for 2005
(4) Of working age in 2000.
(5) Sum of all employees, including part time employees in 2000: e.g. two part time employees working 50% each have been summed up to make one full time employee.
(6) In 2000. The smallest 1% of farms were not surveyed.
(7) Figures for 2003/4. It seems a lot, but considering that there are on average two family members and one employee for each farm, that's 10,000 euroes each - about £7000!
(8) In Germany, 54% of the land mass is used for agriculture.
But let's just look at the figures before making any rash decisions.
Agriculture accounts for a variable percentage oF EU GDP, depending on who you ask. The BBC claim agriculture accounts for 1.6% of GDP whereas the CIA claim it is 2.2%. I could not find a consensus, so let's assume it is 2% (1). European GDP is 9060bn Euros (2), so agriculture accounts for 182bn Euros. Critics of the CAP argue between 40 and 50% of the EU's budget is spent on it, corresponding to 49bn euros (3). Now that is a *lot* of subsidy going into agriculture considering its constribution to GDP. On the other hand, if you take a look at the social security budget of Germany - one country within the EU - dwarfs the 49bn spent on CAP! There are arguments for and against the CAP and I was swayed by those against, but now I sincerely doubt the answer lies with these macroeconomic figures. One must look at the human cost, too.
There were 12,218,600 family members(4) and 6,352,690 full time employees (5) working on 6,770,690 farms (6). With just over 2600 euros going to each and every farm worker (or alternatively over 7700 euros to each farm), it would make a big dent in their pockets if the CAP was scrapped. The average income (7) for a farm in Germany is 33,600 euros, so stopping the CAP would be the same as reducing the farm's income by 22%. Would it be worth being a farmer in Germany? I would say not. Removing the CAP subsidies would decimate the landscape of Germany (8), and I would wager the rest of Europe too. Farming would be unsustainable.
We all remember what happened to those UK areas dependent on mining in the 80's and I for one would not welcome such drastic changes again. Although I think the state subsidy of the UK coal industry was wrong, I also believe that the way Margarate Thatcher went about changing the subsidies system, by having 20 uneconomical coalmine closures announced (20,000 jobs) which led to a yaer of strikes, was disastrous.
I have changed my mind. For me, the best outcome of Tony Bliars presidency of the EU is a stalemate. I don't know what the solution is, but at least in the short term, it can't be abolishing the CAP.
Notes:
(1) The BBC numbers are for 2005, CIA for 2004. It is highly unlikely there would be a decrease in agricultural GDP of 0.6% in 1 year - that corresponds to 50bn euros. We would know about that level of reduction!! More likely is that the calculations to estimate GDP are based on different methodologies.
(2) Figures for 2000 and 15 member states.
(3) Figures for 2005
(4) Of working age in 2000.
(5) Sum of all employees, including part time employees in 2000: e.g. two part time employees working 50% each have been summed up to make one full time employee.
(6) In 2000. The smallest 1% of farms were not surveyed.
(7) Figures for 2003/4. It seems a lot, but considering that there are on average two family members and one employee for each farm, that's 10,000 euroes each - about £7000!
(8) In Germany, 54% of the land mass is used for agriculture.
posted by Lascivious @ 10:18 AM
2 Comments:
At 12:51 AM,
Imagineyoung said…
You are assuming every farmer gets an equal share of the CAP. Seem to remember that most goes to big farmers.
Why do you assume that cutting subsidies would decimate the countryside. It would definitely change from the manicured garden that we have learnt to call nature, and in the UK we would probably need to put more planning controls into the hands of local communities to allow for creativity and growth, but see no evidence for decimation.
At 10:38 AM,
lascivious said…
Thanks for posting.
Yes the assumption is a large one and may be incorrect. Unfortunately, without spending a lot of time and going into considerable detail, this is the only way to quantify the effect that scrapping the CAP would have on farmers. I am not a social/political scientist - just a blogger - so I can't justify that level of work. I might be wrong because of it, but until someone persuades me otherwise, I'll stick to my guns.
With regard to decimating the countryside, I meant decimating countryside life. By making farming unsustainable, not only do you effect the people who are directly involved (the farmers, farm hands...), you also effect the secondary industries (tractor mechanics, vets, seed distributers...) and the tertiary industries (the local tea shop, pub, cinema...). I live in a rural area and about 30% of the workforce are directly or indirectly (secondary industries) employed in agriculture. End the CAP and you stand a very good chance of ruining the local economy. Then the subsidies have to come from elsewhere - social security - and this would be more expensive than the CAP.
Exactly the same thing happened in the 80's with coal mining. 10% of the population of a town would be employed down the pit. The pit closes and the whole town suffers. Some areas are still suffering 20 years on. I am not saying the pits didn't need to close - they were uneconomical - but closing them obviously caused a lot of suffering. The same will happen with the CAP unless a lot of care is taken. I don't trust our politicians, or those in Europe, to take that care.
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