Photo Gallery: A Smaller Share of the Crop

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Farm Wars EU Grapples with Costs of Subsidizing Agriculture

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.

Public Support for Farm Subsidies Eroding

Voters' opinions of farm subsidies were borne out in the recent elections in the agricultural state of Lower Saxony in northern Germany: Residents tired of the stench of liquid manure and large factory farms summarily voted the pro-farmer Christian Democratic Union (CDU) out of office.

The trend is also reflected in the academic and political worlds. In a declaration published in November 2009, agricultural economists from all over Europe called for agricultural policy to be more strongly oriented toward goals like climate protection and water management. In December 2011, Germany's upper legislative chamber, the Bundesrat, which represents the 16 German states, demanded that the direct payments be "more strongly legitimized by social contributions." The German conference of agriculture ministers also endorsed the fundamentals of the Ciolos proposals.

"It is in the interest of farmers not to further distance themselves from society," says Ciolos, who senses that a phalanx of special interests in agriculture and politics could defeat his reform. At the head of this phalanx is Joachim Rukwied, president of the German Farmers' Association, who has refused to tolerate criticism of his profession and did not respond to SPIEGEL requests for an interview.

Meanwhile in Brussels, people like Albert Dess have been doggedly fighting the proposed revamping of agricultural policy for months. Dess, a veteran member of Germany's conservative Christian Social Union (CSU), is now a member of the European Parliament and rapporteur on the future of the Common Agricultural Policy (CAP). He sets policy for the parliament and, as a rapporteur, negotiates laws with the European Council and the European Commission. Dess was the clear winner in the first round of negotiations in the agricultural committee the week before last.

The majority of members, most of whom are farmers themselves, are watering down Ciolos's plans. If the committee prevails, all that will change is that farmers will have the option of satisfying the environmental requirements in the future -- or not. Nothing will have been accomplished.

Dess, a self-confident farmer from the Upper Palatinate region of Bavaria, says he has absolutely nothing against protecting the environment. In fact, he adds, he feels connected to nature -- as he did when he once stepped down from his tractor "to carry a fawn out of the field." But the things Ciolos wants? Poorly conceived and bureaucratic!

Germany Stands With Farm Lobby

Dess's opponents in Brussels refer to the 65-year-old Bavarian's work as "Dess-information" (disinformation). In fact, Dess is one of the biggest boycotters of the reform and has introduced a potentially record-breaking 8,000 amendments into the parliament. He reportedly even pushed for having the amendments translated into all 22 EU languages. "A lot of work," says Dess, who seems to relish his words.

The CSU politician knows that he enjoys the support of Chancellor Merkel and Agriculture Minister Ilse Aigner (also of the CSU), whose rhetoric has been inconsistent with her actions.

Aigner likes to point out how often she is at odds with farmers. "We support much of what Ciolos proposes," the minister insists. In reality, however, she is doing a number of things to satisfy the wishes of the farmers' lobby. Like the lobby, she misses no opportunity to disparage the reform as a bureaucratic monstrosity. And again echoing the lobby, she characterizes Ciolos's proposal to use 7 percent of arable land in environmentally sound ways as "putting fields out of commission."

Last April, Aigner's ministry unveiled a proposal intended to make "greening" completely voluntary. Her two state secretaries supposedly ensured that a very similar draft was introduced into the European Council, the powerful EU body representing leaders and ministers from the 27 member states, apparently with success. "In addition, there is considerable overlap between the ideas put forth by the European Farmers' Association in November and what is now in the proposals," says WWF official Matthias Meissner.

Berlin already put a stop to a central building block of the reform last year. Ciolos wanted to eliminate direct payments to the largest operations, which can run their farms on their own steam. Aigner claimed that if that happened, the companies would simply divide themselves into smaller entities to qualify for the subsidies again.

"Ironically Germany, which is the largest net payer and usually wants the European Commission to pay special attention to how public money is being spent, is now saying no to the capping of direct payments to large farms," Ciolos says with astonishment.

"Neither Ms. Aigner nor her party allies want a serious reform, because it would harm their own clientele," says Martin Häusling, a Green Party member of the European Parliament. "That's why they are doing everything to continue to support export-oriented agriculture, in which quantity and size are all that matters. What they fail to recognize is that the billions of euros in direct payments have long been unacceptable to the public."

Without Reform, Subsidies Could End Completely

The showdown over agricultural policy will be on the agenda in Brussels in the coming weeks, and not for the first time. But in contrast to past showdowns, this time it will not be dominated solely by the Commission and the leaders of the EU member states. The European Parliament will also be given a say in how the billions in subsidies to farmers are structured. The contest is still seen as undecided, although one thing is clear: If the farming lobby does manage to block the Ciolos reform, a much more unpleasant debate could follow, namely whether the billions in subsidies in the current form are justifiable at all.

"There are actually only two socially acceptable justifications for payments to farmers," says agricultural expert Lutz Ribbe of the European Nature Heritage Fund. One argument, he explains, is that the money can supplement the meager income of farmers, thereby preventing the farming lifestyle in Europe from going extinct. The other is that the farmers can provide vital aid to the environment in return for support from the taxpayer.

But poor income is hardly an issue anymore for farmers. Global market prices have almost doubled since 2005. According to calculations by the government-run Thünen Institute of Rural Studies, larger farms recently made an average annual profit of about €160,000, of which about 40 percent was financed with taxpayer money. Farmers are also increasingly profiting from the boom in alternative energy, as they rake in millions with biogas plants and wind turbines that they operate on the side.

This leaves the environmental services Ciolos is calling for. If they don't materialize, says agricultural expert Ribbe, "there will no longer be any justification for direct payments, and they'll have to be eliminated!" Environmental groups like Friends of the Earth Germany, as well as the Greens, tend to agree. Bärbel Höhn, deputy chair of the Green Party's parliamentary group, says: "It must be clear to farmers that social acceptance for direct payments hinges on 'greening.'"

This explains why EU Commissioner Ciolos has absolutely no intention of giving up the fight. He visited Germany several times last year and spoke to farmers there, he says. "They repeatedly criticized items that aren't even included in the reform." Ciolos says that he was surprised by this "almost ideological opposition to things people haven't even understood."

Ciolos is quite disconcerted by the chancellor's aim to bring up the issue at the EU summit on Thursday and Friday this week. If Merkel actually manages to cut in half the already minimal environmental offset areas on farmland, says Ciolos, it will mean that Germany is doing nothing at all. "We can talk about details, but there are certain red lines, as far as I'm concerned," says Ciolos. "I will not accept a bogus reform."

The commissioner is adamant in defending his views, but other commissioners before him have expressed similar opinions. They are gone now, but defenders of the status quo are still around.

Translated from the German by Christopher Sultan