Ag sector unhappy with EU plan

Poland's agricultural sector - which accounts for less than 3% of the country's gross domestic product but more than 27% of total employment - last week protested a European Union (EU) proposal to phase in farm subsidies, calling the plan unfair and potentially damaging to businesses. The proposal set up a political showdown among farmers, Poland's leaders and the EU, which Poland wants to join in 2004. "Polish farmers will shred their politicians, if they agree to the European Commission's proposals," said Jerzy Majchrzak, spokesman for Sokołów meat producer and processor, the biggest publicly traded food company on the Warsaw Stock Exchange. The EU's policy-making body proposed that in 2004 farmers in new member states receive direct aid at a rate equivalent to only 25% of the subsidies granted to their Western European counterparts. The common agricultural policy (CAP) funds would gradually increase to reach 100% in 2013, according to the commission's proposal. Polish politicians across the political spectrum knocked the plan, including some of Parliament's strongest pro-Europe leaders. "The 10-year transition period for direct payments is unacceptable," said Józef Oleksy, chairman of the Sejm's European Integration Committee and a former prime minister. "Poland would then have the right to protect its own market with instruments of customs policy and with its own subsidies (for farmers)." The commission defended the overall enlargement financing proposals revealed last week, saying that Poland and other candidate countries would be unable to digest larger amounts of aid and still effectively restructure an inefficient sector. EU officials added that the political and economic bloc - which still must formally OK the plan - could not afford to be more generous. "This offer strikes the right balance between the expectations of the candidate countries, which will become full members of the European Union, and the budgetary limits of the EU," said Enlargement Commissioner Günter Verheugen in a statement. "In other words, this represents the best possible deal and not an invitation for haggling." All together, EU-wide agricultural funds account for nearly 50% of the EU's budget. The enlargement plan projects some €1.7 billion ($1.46 billion) in 2004 to support Polish agriculture, which is to include €600 million ($516 million) in direct payments to Polish farmers. The 10 new members' agricultural sectors would receive €3.3 billion ($2.84 billion) in 2004, some 7% of the EU's common agriculture budget. Polish farmers said that is not enough. "We will not be able to stand up to the competition of Western European farmers," said Piotr Lachowski, an owner of a cattle and pig farm some 100 kilometers away from Warsaw. "If they receive the full amount of subsidies, they will be able to reduce their prices, and we won't." Room for negotiations Sokołów's Majchrzak said that while the EU budget for 2000-2006 is already adopted and cannot be changed in favor of Polish farmers, the subsidies after 2006 are negotiable. He was pleased that Polish farmers were formally promised direct payments from as early as 2004. "In the first stages of negotiations, the European Union didn't even consider the possibility of providing direct subsidies to Polish farmers," Majchrzak said. "These proposals aren't satisfactory but it is major headway." The SLD's Oleksy agreed and said that he would still advise farmers to give a go-ahead to the accession in a future referendum. "Regardless of their amount, these will be new funds, which have so far not flown to Polish farmers," he said. "And as for the competition from the subsidized EU farmers, Poles have always had to struggle with it anyway." The National Association of Farmers and Farmers Organizations, with more than a million members, picketed the office of the EC's delegation to Poland on Friday, demanding greater support from Brussels. "Many were saying before that we're entering the union on our knees but now it looks like we're crawling," said Bernadetta Niemczyk, a member of the association's board. Polish farmers must be given equal conditions in the EU, she said. "We are in an awful situation now," Niemczyk said. "It's impossible not to join the Union, but we have to be tough in the negotiations." Generous formula for regions The EC last week also suggested a three-year transition period for structural fund allocation. Poland would be assigned €2.5 billion ($2.15 billion) in 2004, the funds would rise to €3.5 billion ($3.01 billion) in 2005 and to €4.5 billion ($3.87 billion) in 2006. The funds are designed to eliminate regional income and development disparities. Polish reaction was muted to the relatively more generous proposal.