EU to hold back on payments to farmers

The European Union (EU) should not immediately introduce full direct income payments to Polish farmers when the country joins the political and economic bloc, according to a European Commission (EC)-sponsored report released last week.

The final recommendations reinforce the EU's stance toward Poland and other candidate countries. Under the previous government, Poland demanded immediate access to common agricultural policy (CAP) funds; the new government has indicated a softer line on several topics but has held firm on the agricultural sector.

"The European Union budget can help farmers within existing instruments," said Danuta Hübner, secretary of the European Integration Committee at the Foreign Affairs Ministry. "We will try and apply for it."

But Günter Verheugen, the EU's commissioner for enlargement, noted that direct payments for candidate country farmers are not provided for in the EU's budget through 2006. He cast the agricultural question in terms of rural and social development during a panel discussion with Hübner last week.

Negotiations on veterinary and phytosanitary aspects of agriculture are scheduled for the last half of 2001, but talks on the CAP are not scheduled until the first half of 2002.

The EC-sponsored report reinforced the EU's unofficial position against farm payments to Poland. Immediate introduction of full direct income payments in candidate countries would consolidate the polarization between large holdings and semi-subsistence farming without ensuring the investment and restructuring necessary to improve farms' competitiveness, said a French Institute for Agronomy Research (INRA) report.

Candidate countries "are struggling to compete with the EU-15 and the restructuring process is far from over," the EC said in a press release summarizing a report. Following the transition from communism, candidate country agriculture has become increasingly polarized and low profitability of the sector has consolidated this process.

The report also acknowledges the strong social implications, and potential anti-EU sentiment, that could result from job losses and rural upheavals. "The pressures to restructure the agricultural sector in the single market will expose this hidden unemployment, particularly in semi-subsistence and former cooperative farms," the EC said.

The report emphasizes policies targeted at restructuring and the reduction of hidden employment as keys to agricultural recovery and recommends relatively long transition periods to carry out the economic and social adaptation of the sector.

"Such an approach would include strengthening aid for restructuring the commercial sector, the progressive introduction of direct aids to avoid major destabilization, a broad set of policies aimed at managing the rural exodus and a social safety net for semi-subsistence agriculture, the EC said.

The report adds that it will not be possible in the medium term to maintain two different sets of agricultural policies for new and old members.

In September, the European Parliament recommended that Poland accept a compromise that would phase in direct agricultural payments and gradually integrate the sector into the existing system. The Parliament pushed for Poland and the EC to reach a compromise on participation in the CAP. "The committee recognizes that Polish farmers were the only ones in communist central Europe who managed to keep privately owned agriculture, and this has led to structural difficulties such as farm fragmentation and over-employment," the Parliament said. "Polish authorities and the commission are urged to reach a compromise agreement on participation in the common agricultural policy … that would gradually integrate the sector into the community system."

An existing EC proposal for phasing in direct payments would gradually integrate Poland's farmers into the EU's elaborate system of subsidies and price supports.