An investigative report published in the Sunday edition of the New York Times (3 November) highlighted once again the distorting effects of farm aid provided under the EU Common Agricultural Policy (CAP), which are however intrinsic to its delivery model.
Common agricultural subsidies are being systematically exploited across countries in Central and Eastern Europe by those in power, leading to the creation of a system which amounts to “modern feudalism”, according to the recent investigation by the NYT.
The investigation, conducted in nine EU countries, concentrates on the example of Hungary in particular, where the Times investigation found that European subsidies are being used by Hungarian prime minister Viktor Orban as a “patronage system” that “enriches his friends and family, protects his political interests and punishes his rivals”.
The European Commission fought back against these allegations, saying they “can and will take” all necessary measures to protect the EU budget “including, where the conditions are met, making use of suspension of payments under the CAP and apply financial corrections against the member states concerned”.
But besides empty threats of freezing funds, the EU executive defended itself by passing the buck to the member states. He recalled that although they share the competence on the use of CAP spending, countries are primarily responsible for the sound and legal management of funds.
“When it comes to land ownership, it is first and foremost for relevant authorities from member states to act and to put the necessary system in place to prevent and avoid frauds,” a Commission spokesperson said on Monday (4 November).
However, the Commission did not seem to trust member states with the issue of protecting the EU budget.
“We have proposed a European public prosecutor, who will be up and running very shortly, precisely for the reason that national public prosecutors do not always put the EU budget as a number one priority when following up on cases,” the spokesperson said.
A matter of definition
Apart from the political conflict of interests highlighted by the NYT, these distortive effects are caused mainly by the basic payments system, which grants farmers payments only on the basis of the number of hectares they own.
And the new Commission proposal for the post-2020 seems to remain stuck in this traditional system of aid per hectare, where who earns more is actually who owns more, according to MEP Herbert Dorfmann, group coordinator of centre-right European People’s Party (EPP) at the Parliament’s Agriculture Committee (AGRI).
The European Parliament, in particular, has tried to overcome this by proposing a definition for active or genuine farmers in charge of accessing funding, but this has proved a controversial issue even within MEPs.
“I don’t have the answer to this problem, but I think that EU taxpayers would like to award who actually farm the land and create jobs in rural areas, not who has an income on it,” Dorfmann told EURACTIV.
He also stressed the need to launch a reflection on how to modernise the first pillar, which deals with direct payments, in the ongoing discussions about the next CAP.
Dorfmann also pointed out that this is part of a much wider phenomenon of land-grabbing, which also involves other areas like Romania and former East Germany. “Where the land is cheap, of course, CAP aids ensure an income,” he added.
EURACTIV contacted the European Landowners Organisation (ELO), who said they are aware of the impact of the CAP on land prices.
“But one may keep in mind that after the transformation of the communist system, land was often abandoned as seen unattractive to invest to produce food,” said Emmanuelle Mikosz, adviser for Central Europe at ELO.
ELO also suggested that, if EU funds are allegedly misused or wrongly attributed, it shouldn’t be only a matter for national prosecutors, but should also be checked by the services of the European Commission as possible infringement that, if confirmed as such, should be taken to the EU court.
According to them, the new delivery model proposed by the Commission in June 2018 contains some elements related to the control, reporting and evaluation of CAP strategic plan that member states will be required to submit in order to receive funding. This is designed to make the effects of the new CAP more transparent.
“As agriculture is facing real structural problems related to the big change in economies of scale in arable agriculture, there is a need for transparent restructuring which would be, in any case, challenging for countries of the former Communist bloc, as they don’t have a transparent, normalised land market,” said Mikosz.
The main principle behind the Commission’s CAP proposal is that giving more power to member states could result in a more efficient way to spend money.
However, some argued that the CAP must remain ‘common’, avoiding the risk of re-nationalisation.
“Naturally, we would prefer a common EU approach to this, in line with our general CAP position in maintaining the strong C in the Common Agricultural Policy,” said Pekka Pesonen, secretary-general of EU farmers lobby Copa-Cogeca.
But the reality is that there are some differences amongst member states when it comes to making support recipient information public, he added.
The NYT investigative reporting is another good reason to stop the renationalisation of the CAP, socialist coordinator at the AGRI committee Paolo De Castro told EURACTIV.
“We need more checks, but giving a wider place to the EU, as the European Parliament has always proposed.”
He criticised the process of granting too much autonomy to member states, which is at the heart of the misbehaviour revealed by the journalists.
De Castro also highlighted again what the next Agriculture Commissioner, Poland’s Janusz Wojciechowski, said during his first hearing, that “Hogan’s proposal is not the Bible.”
“We don’t want to reopen everything but just a few articles, which include the one dealing with renationalisation,” he said.
[Natasha Foote and Sarantis Michalopoulos contributed reporting]
[Editing by Zoran Radosavljevic and Natasha Foote]