EU Commissioner Dacian Ciolo? called for an elimination of agricultural export refunds in trade with African countries at the International Green Week in Berlin last Thursday (16 January). His announcement received mixed reactions in Germany, with political parties hopeful and NGOs advocating unconditional removal of such subsidies, EURACTIV Germany reports.
At the International Green Week (IGW) in Berlin last Thursday, EU Commissioner for Agriculture and Rural Development Dacian Ciolo? proposed putting a stop to export refunds on EU agricultural goods imported by African countries.
In a speech for the exhibition’s opening ceremony, Ciolo? announced: “I am ready to propose stopping, once and for all, the use of export refunds to those developing country destinations – even in times of crisis when this instrument can still be used.”
Since 1992, the EU’s agriculture policy has gradually been shifting from price support to directly providing aid to farmers (see background). This shift is intended to continue supporting farm incomes while lowering EU food prices and reducing the agricultural price gap with developing countries.
“This commitment will bring our agricultural policy fully into line with EU development policy,” the agriculture commissioner said at Thursday’s event.
IGW is the world’s biggestnutrition, agriculture and horticulture fair as well as the origin of Germany’s Global Forum for Food and Agriculture (GFFA). Producers come from all over the world for exhibitions on topics such as renewable resources, organic agriculture, Fair Trade, and rural development, of particular interest to developing countries.
This year, the 79th annual fair takes place from 17-26 January at the Berlin exhibition grounds (Messegelände). Along with Ciolo?, the EU Commissioner for Health Tonio Borg, was also participating.
“Since 1 January, EU legislation is also very clear,” Ciolo? said, “export refunds have ceased to exist as a means of systematically supporting a sector. … in the framework of preferential partnership agreements with African countries: I am prepared to go one step further.”
MEP Norbert Neuser from Germany’s Social Democratic Party (SPD) praised the decision saying, “Agriculture subsidies create distortions, particularly on the African market. Local producers cannot compete with subsidised products. As a result, regional economic efforts made by smallholders are destroyed.”
“The efforts being made to support African countries, in their development from aid recipients to becoming trading partners, can only succeed with coherent EU policy”, explained the SPD development expert, adding: “the announcement from the agriculture commissioner is a fair EU decision for economic development that will benefit Africans as well as EU citizens.”
Commission proposal not enough
But some relief organisations fear Commissioner Ciolo?’ proposal is not enough to curb distortions in the agriculture market adversely affecting developing countries.
“Here, a well-meaning move to eliminate export subsidies will force Africa into agreements that are even less suitable for fighting poverty and hunger”, said Francisco Mari, an advisor on agriculture trade for the German relief organisationBrot für die Welt (Bread for the World).
“Products from European intensive agriculture and large-scale animal farming do not need subsidies to be sold off cheaply to Africa. In the well-known case of poultry exports, for example, there were never any export subsidies and they still ruined the poultry producers in Africa”, said Mari.
The development and environmental organisation Germanwatch, criticised Ciolo?’ decision to link plans for eliminating export refunds to ongoing negotiations onEconomic Partnership Agreements with African countries.
Tobias Reichert, an expert for world food supplies at Germanwatch, said this substantially limits the scope of the ban.
“In this case,” Reichert said, “ending subsidies on exports would not be a development policy initiative but rather a trade policy offer that the African countries would have to pay for by opening up their agriculture markets”.
“Instead, export subsidies should be removed unconditionally for all countries,” Reichert said.
Too late for developing countries?
Bundestag MP and development policy spokesman for the Green Party Uwe Kekeritz, said Ciolo?’ call to end remaining export subsidies for agriculture production are long overdue.
“For decades now, European export subsidies have had negative effects on local markets in developing countries and, along with other agriculture subsidies, have worsened or even destroyed the livelihood of many smallholders. Entire countries have developed an existential dependence and become permanently reliant on food imports,” the Green politician pointed out.
Stopping export refunds is the right action but is only a first step, Kekeritz said, indicating that they have lost relevance in recent years.
“For real political coherence in the interest of sustainable development, all support programmes in European agriculture policy must be put to the test. All trade distorting payments, that lead to EU agricultural dumping in development countries, must be eliminated,” development spokesman Kekeritz said, adding: “EU agriculture policy should not continue to hinder food sovereignty in the poorest countries.”
Launched in 1962, the Common Agricultural Policy, or CAP, is a system of EU agricultural subsidies and programmes comprising the biggest single budget outlay for the EU – some 38% of the overall budget compared to nearly 70% in the 1970s.
Under the agreement on the EU’s €960-billion budget for 2014-2020, spending for agriculture and rural development will be around €380 billion, with some €280 billion set aside for direct payments to farmers and around €80 billion for rural development. The rest goes mainly for export support.
Over the years, the CAP has gradually become more market-oriented, gradually reducing export refunds as a portion of the budget. In 1992 market management (primarily comprised of export refunds and intervention purchases) represented over 90% of total CAP expenditure. By the end of 2013 the percentage had dropped to just 5%.
Germany has been one of the biggest advocates of eliminating agricultural export refunds in the EU's agriculture policy. Those against the subsidies say they are unfair to producers in developing countries and should only be used as a last resort in crisis situations, a position which Germany strongly defended during CAP reform negotiations in 2013.
- Press Release: Commissioner Dacian Ciolo?' speech at the opening ceremony of International Green Week (16 Jan. 2014)
- EURACTIV Germany: EU-Agrarkommissar: Stopp aller Subventionen für Agrarexporte nach Afrika