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28/09/2016

EU funds feed Bulgaria’s grain millionaires

Agriculture & Food

EU funds feed Bulgaria’s grain millionaires

Grain harvest in Bulgaria.

[Union of Bulgarian cattle breeders]

The farms of the two old classmates sit side by side in the central Bulgarian countryside. On one, a fleet of tractors ploughs through endless golden fields of wheat. On the other, a woman picks raspberries in the searing sun.

While national grain association chief Svetoslav Rusalov, 43, enjoys a high annual turnover thanks to his crops, neighbour Nadya Petkova struggles to make even a tiny profit from her small organic farm near the village of Trud.

“It’s all hand labour. Every grass stalk must be weeded by hand,” Petkova, a former construction engineer and single mother of two, told AFP.

“I dream of buying a tractor.”

On market day, her elderly parents lend a helping hand.

“I’ve been on the verge of giving up many times. But this is my vocation,” the 43-year-old said.

The farms’ differences in scale and wealth reflect the controversial way in which Bulgaria has chosen to hand out highly-prized subsidies under the European Union’s Common Agricultural Policy (CAP).

The CAP offers a series of funding instruments to member states, including per-hectare payments to farmers.

Until this year, Bulgaria – which joined the bloc in 2007 – was one of the only countries to distribute these direct subsidies without putting limits on the amount given to one person.

As a result, “mega-farms” with easy-to-grow commodity crops for export began popping up in the EU’s poorest nation over the past decade.

Today they dominate the landscape, with a typical size of around 2,430 hectares (6,000 acres or roughly half the size of Manhattan) – nearly 10 times the European average of 250 hectares, according to the Bulgarian Economic Research Institute (ERI).

‘Big, big money’

Critics say this has distorted the ex-communist country’s agriculture model by rewarding those who control the biggest lands and pushing out traditional products, which are harder and more expensive to cultivate.

“We used to be famous for our white brine cheese that we exported. Now we export wheat and import milk and meat. Bulgarian vegetables have also disappeared from the market,” said the ERI’s agricultural expert, Ognyan Boyukliev.

In a recently published report, Boyukliev argues that the CAP has concentrated farmland and subsidies in the hands of a few millionaires.

Research shows some 100 agricultural holdings receive as much as 75 percent of the EU aid, which amounts to around €380 million for 2016 so far.

“If I work 30,000 hectares, multiply this by 150 euros and you get an idea of how huge a sum this is for a farmer in a country like Bulgaria. It’s big, big money,” Boyukliev told AFP.

Some observers accuse the government of creating incentives for policymakers and farming organisations to exploit the system.

“It has twisted the market and turned the subsidies into an income source for farmers who buy new homes and cars,” agricultural analyst Nikolay Valkanov told AFP.

Earlier this year, Bulgaria introduced an annual cap of €300,000 in aid per applicant.

But experts argue this has merely prompted big land owners to register separate farms under the names of employees and thus still reap funding for each hectare.

‘Vicious circle’

Grain producers reject the criticism. Instead, they argue that their efforts have revitalised massive swathes of land left abandoned after the fall of communism

In the 1990s, the government decided to return all the farming plots expropriated by the communist regime.

But the restitution proved a headache because of protracted ownership disputes and urban migration.

In the midst of the chaos, a handful of savvy entrepreneurs like Rusalov realised that Bulgaria’s EU membership plans would pave the way to subsidies and began to snap up land cheaply.

“It should not be considered a problem that the majority of the funds go to a small group. The fact that there are farmers who consolidated the lands and made money out of it – I see nothing wrong with that,” Rusalov told AFP.

“It is normal that people are rewarded for their labour and the risk they took.”

The EU Commission, the bloc’s executive body, also defended the subsidies.

The spread of large-scale farms “is a long-term trend which is not unique to the EU, so it should not be labelled as the result of the CAP”, Commission sources told AFP.

It’s been a whopper year for grain producers who have harvested 5.6 million tonnes of wheat this summer, the highest since 1980.

Nearly 70% will be exported, mostly as forage for other EU countries.

The government recently promised more help for organic farmers like Petkova.

“Small farmers are the country’s backbone but they aren’t a state priority,” she said. “If I had state backing, I would invest in modern machinery instead of sinking into this vicious circle without growth.”