Farm Wars: EU Grapples with Costs of Subsidizing Agriculture

By Susanne Amann, Jörg Schindler and Christoph Schult

European Agriculture Commissioner Dacian Ciolos wants to reform Europe's agricultural policy, but resistance from the farming lobby threatens to derail his plans. It will be to the detriment of citizens, who are expected to pay for a highly subsidized industry that is harmful to the environment.

From the top of the hill, farmer Martin Ramschulte has an unobstructed view of the past. "That one down there has given up," says Ramschulte, "and so has that one, and that one back there, too." Then he points to a brick house next to a pond. "And if this continues, it'll eventually spell the end of that place, too."

Ramschulte, 59, is pointing to his own house. "That's just the way it is," says the gaunt farmer.

It was three or four years ago that Ramschulte began pondering the fate of farming in his area. One neighbor had just ordered 1,500 hogs, another neighbor had ordered 2,000. Less than a kilometer away, factory-like buildings were erected to house about 200,000 chickens. The buildings are surrounded by swaths of open land the size of several soccer fields. "This isn't what I call farming anymore," the farmer says.

In 1978 Ramschulte became a hog farmer in the northwestern German town of Schöppingen, where the 100,000-strong hog population vastly outnumbered the mere 8,000 humans. At the time, he was considered a big player with his 25 hectares (62 acres) of land. By today's standards, his current 35 hectares and 950 hogs pale in comparison. The local farming organization advised him to expand and grow his business if he wanted to stay in farming.

He receives about €10,000 ($13,500) a year from Brussels, while some of his fellow farmers collect several times as much. He was told that he too could qualify for larger subsidies, but Ramschulte has his doubts. "Bigger and bigger, more and more -- it's just absurd."

He isn't an environmentalist. In fact, he's suspicious of environmentalists. Nevertheless, he did take notice when the last bit of pastureland was plowed for cultivation in Schöppingen. "In the long run, in the interest of the future and biodiversity, we have to do it the way this Europe man suggests."

Commissioner Wants Environmental Commitments

That "Europe man" is Dacian Ciolos, the European Union's commissioner for agriculture and rural development, and currently the man the powerful agricultural lobby loves to hate. For months, the amiable Romanian has been at the center of a political battle, one in which even German Chancellor Angela Merkel has become involved.

At issue is by far the largest chunk of money the EU has to hand out, and whether the decades-long motto of European agricultural policy -- "He who has, shall receive" -- is still justifiable in times of crisis. But most of all, the battle revolves around the question of how we intend to feed ourselves in the future, and at what price.

Ciolos has a solution, but one that's unacceptable from the standpoint of the German Farmers' Association and agriculture officials in Brussels and Berlin. He wants farmers to make more binding commitments in return for the billions in taxpayer money that shower down onto Europe's fields. He wants agriculture to no longer be focused primarily on growth, mass production and expanding exports, but rather on environmentally friendly farming and biodiversity. In other words, Ciolos is concerned about the survival of the bit players, both farmers and animals.

The fate of Ciolos's plans will be decided at the EU summit in Brussels at the end of this week. After that, European leaders will negotiate the budget for the years 2014 to 2020. An attempt to reach an agreement failed in November because of broad disagreements among individual member states. The Eastern Europeans wanted more money while the British felt that the cuts proposed by European Council President Herman Van Rompuy didn't go far enough.

It's clear that the smaller the EU budget, the less will remain of agricultural reform. Only if there is enough money is there a chance that the member states will agree to tougher environmental regulations -- and that is what the Germans, in particular, want to prevent at all costs.

The European Union plans to spend about €60 billion, or about 40 percent of the entire EU budget, on agriculture this year alone. It's a lot of money for an economic sector that generates less than 2 percent of the bloc's gross domestic product and employs less than 6 percent of its workforce.

Subsidies Benefit Big Farms Most

Landowners receive much of the money as direct payments. For years, the average payment in Germany has been more than €300 per hectare, even for land that is not actively being farmed. The main beneficiaries of this policy, according to the authors of the journal Der Kritischer Agrarbericht (Critical Agricultural Report), are "large-scale, streamlined farming operations, which receive annual payments of up to €120,000 per employee."

In Germany, 1.9 percent of businesses collect about 30 percent of payments, and they are not always farms. Ice hockey clubs, aristocratic families and companies like candy maker Haribo and sugar producers Südzucker and Nordzucker also benefit from EU agricultural subsidies. In 2009, defense contractor Rheinmetall also received a hefty sum of cash -- for planting trees in a former tank training area.

Farmers who run their farms differently from the mainstream are the ones left with nothing in the long term. It's a contradiction Agriculture Commissioner Ciolos knows all too well. In his native Romania, he has visited plenty of the massive farming operations created under former Communist dictator Nicolae Ceausescu. Even today there are still areas where the soil has been depleted, villages have been abandoned, fields have become overgrown and the groundwater has been contaminated.

It was partly his experiences in Romania that prompted Ciolos to unveil his reform proposal in October 2011, which is intended to force European farmers to satisfy a minimum of climate and environmental regulations. "Subsidies are not a birthright," the commissioner says. "Those who expect billions in taxpayer money should also have to do something in return."

His ideas are not really all that revolutionary. For instance, he wants to put an end to the unrestrained practice of plowing pastureland to convert it into arable fields -- a process that releases massive amounts of greenhouse gases. Ciolos wants to stop the trend toward monocultures in fields with more extensive crop rotation, which would eliminate the need for tons of high-energy chemical fertilizer. He also wants to see 7 percent of farmland turned into "environmental priority areas," off-limits to the use of chemicals and high-tech farming methods. The notion of "greening" is at the core of Ciolos's package of proposals.

Agriculture at Heart of European Union

Not surprisingly, opponents of the reforms in Brussels have been up in arms for months. No other area of policy in Europe is as centrally, and thus collectively regulated as agriculture.

The goals are outlined in Article 39 of the Lisbon Treaty, which uses the same wording that was used in the Treaty of Rome that established the European Economic Community in 1957. The objectives at the time were to "increase agricultural productivity," ensure that farmers could have a reasonable income and guarantee them a "suitable lifestyle." Europe, heavily damaged in the war, lacked adequate, safe and high-quality food, and rebuilding the industry secured the food supply and provided urgently needed jobs.

The main objective was to increase productivity, which made sense at the time, and the results have been impressive. In 1960, a cow in Germany produced an average of 3,400 liters (900 gallons) of milk a year; today it produces almost twice as much. Agricultural workers are nine times as productive today as they were 60 years ago.

The downside of this development was long ignored: environmental pollution, poor husbandry conditions, lack of animal welfare and poor sustainability. To keep them alive, chickens and hogs were fed antibiotics, which entered the groundwater and led to resistance. As global pesticide sales approach the €50-billion mark, the United Nations estimates that more than 3 million people suffer severe pesticide poisoning each year.

Ciolos's reform would be a first step at best. Nevertheless, owners of large farms, the agricultural industry, even politicians are mounting the barricades against the proposed changes. In their opinion, the commissioner's proposals would mean that after decades and several false starts, direct payments to Europe's farmers would be tied to painful environmental regulations for the first time.

"People always think it's more important that their food is produced in a safe, transparent and sustainable way," says Ciolos. A poll by the conservation organization WWF shows just how right he is. It concludes that about 80 percent of Europeans want the subsidy payments to be tied to sustainable agriculture and rural development. Some 90 percent say that it is important or very important that farmers, in return for the government subsidies, serve the public good.

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1. A Backward step
moerschen 02/05/2013
I'm amazed at this article, Germany has been steadily advancing toward a "Green" contry, and to suddenly decide that making farm lands green is not in the interest of the country is unbelieveable!! Not to mention that small farmers will soon be gone, and what would germany have done without them after the big war? if "bigger is better' take over the farms,seems to me that Germany is going the way of the U.S., in as much, as this is again enforcing laws for Big business, versus the poor farmer. If it goes for Big Business, then I pray for the health of Germans and their children. Because ALL Big business ever cares about is profit, and further growth, not the safety of the people who consume their products. So what happens? The quality of the farm goods decreases rapidly as the companies cut safety, in exchange for gain. That's been the story for years, and will remain as long as big business wins over small groups of people. The food supply of any country must be produced in the future by farmers that respect the users of their product, and adhere to the practice of producing the most healthful products. I have a small farm here in America, and my chicken eggs are extremely healthy, but those I bought before from large Super Markets, were not near up to the standards that I, as a producer set for my product. That's what Germany can expect if the big business wins!
2. Self interest at work
pmoseley 02/07/2013
The EU farm subsidies are the best example of where the EU was set up, and is still run, to serve the interests of Germany and, particularly, France. It is an example of why the EU needs drastic reform, why economic sense has to prevail and where the EU electorate has to have a voice.
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