The EU boost for dairy farmers that isn't

A recent news item, and its reporting, caught my eye. BBC News Reported that;

EU boosts aid for dairy farmers

Dairy farmers in the European Union are to receive 280m euros (£255m) in aid, says the EU's farm commissioner.

The decision follows weeks of protests by thousands of farmers over the low price of milk, including the spraying of milk onto fields.

This is an important news story. Sadly, the BBC failed to offer substantial discussion of the context or implications of agricultural subsidies.

Here are a few things that they failed to adequately address:

1) Agricultural subsidies harm developing nations

Subsidies have a double impact on poor farmers in poor countries: farmers are undercut and swamped by the flood of cheap subsidised imports. Local exporters get rock bottom prices when they try to sell their crops onto depressed world markets

2) The largest payouts go to multinationals, not farmers.

While most people still believe that Europe's agricultural subsidies have been used to protect farmers, particularly small farmers, it is now emerging that among the main beneficiaries are large multinationals.

The CAP [Common Agricultural Policy] accounted for nearly half of the total EU budget in 2004, costing taxpayers €43.6bn. While the largest part of the CAP budget was indeed made up of direct aid to farmers (€30bn), most of that went to the largest farmers, and nearly €14bn went on other CAP schemes such as export refunds to large companies, storage payments and BSE payments to large-scale renderers and abattoirs. The UK received €4bn in agricultural payments in 2004. [...]

The largest UK recipients of money include companies such as Tate & Lyle, Nestle, Cadbury, Kraft and a host of manufacturers of bulk animal fats, sugars and refined starches. Further FoI [Freedom of Information] requests reveal a similar pattern of the largest individual payments going to multinationals in other European countries. [...]

The largest recipient of payments in the UK for 2003-4 was Tate & Lyle and its subsidiaries, which took more than £227m over two years from the CAP. Meadow Foods, a leading manufacturer of bulk fats and proteins for ice cream, spreads, sports drinks, processed meats and confectionery, received nearly £26m in the year 2003-4. Other large dairy manufacturers supplying the processed food industry dominate the list of top recipients of money paid by the Rural Payments Agency (RPA) which administers CAP payments in this country.

Our detailed analysis of the full list of RPA payments has also unearthed a number of anomalies. They include:

• Gate Gourmet, the airline catering company whose industrial dispute brought British Airways to a halt this summer, received more than £500,000 from the CAP last year for flying tiny, individual helpings of milk and sugar into international airspace, thereby qualifying for an export subsidy.

• Premier Foods, the company at the heart of the Sudan 1 contamination crisis, received over £60,000, believed to be in export subsidies.

• Eton college received £2,652 last year but admitted to us that what it was for was "a bit of a mystery". Although it tried, it was unable to obtain information for us from the RPA to explain the payment.

• Drug companies, including GlaxoSmithKline, Boots, Reckitt, and ACS Dobfar, received substantial payments for using sugar in the manufacture of pharmaceuticals.

3) The European Milk Board do not want subsidies

This brings us back to the BBC's report, which made broad statements such as;

Most of the EU's member states - including France and Germany - had been pressing for aid after the global economic downturn reduced demand.

And

EU Farm Commissioner Mariann Fischer Boel said she was forced to "empty her pockets" to meet the demands of 21 of 27 member states seeking an emergency fund for dairy farmers.

The report closed with remarks

These EU market interventions help support dairy prices.

That's not what the European Milk Board think, their preferred solution is to "limit milk production" and to "set up a monitoring mechanism, in which milk producers, consumers, dairies and politicians take joint responsibility and analyse the market, with the aim of bringing milk production in line with demand." As for the protests,

The motto of the rally is "No subsidies in the milk sector, only flexible production regulation"

In regards to the subsidies themselves, the president of the European Milk Board, Romuald Schaber, said,

It makes no sense when ministers talk about money, which then flows into the milk sector in the form of subsidies with little impact. Flexible production controls represent no extra burden to the taxpayer and can be an effective way of creating milk prices which are fair both to producers and consumers.

I'm sure that by now you get the point, so I won't dwell on the environmental impact, welfare concerns or GM issues associated with milk production. (Or, that the people making the decision, the European Commission, are unelected.) When the best response to falling milk prices would be to reduce production quotas, yet the EU offer money with no details of reform, mainstream news media organisations report the story as though the EU had given farmers what they want.