(Nov. 5) The expansion of the European Union in 2004 will result in a sudden rise in overall EU agricultural subsidies, but farmers in prospective member states don’t think they will be getting enough.

An Associated Press story on Oct. 30 reported 2,000 farmers marched in Prague, Czech Republic, on the same day to protest what they consider insufficient subsidies negotiated by their government.

Under a deal that the Czech Republic and nine other countries negotiated to enter the European Union, farmers in the new member states will receive subsidies equal to about 25% of what’s paid to farmers in current member states. The level of the subsidies will be incrementally raised by 5% per year after the countries’ entrance into the EU until they are equal.
Meanwhile, one U.S. trade analyst in Brussels, who declined to be identified, said the EU’s agricultural policy is under review. A concept paper put out by the European Union earlier this year had suggested the possibility of fundamental changes to European Common Agricultural Policy in 2003, but a compromise between France and Germany put off any changes until 2006.

The changes suggested in the policy were the decoupling of payments to production and the shifting of funds from market support to rural development.
Meanwhile, agricultural subsidies in the European Union may be capped in 2006, the analyst said, with only marginal increases allowed after that.

“The idea is that everybody will get fewer payments,” the analyst said.
In general, the analyst said, public sentiment in Europe, particularly northern Europe, is running against production agriculture because of problems with foot-and-mouth disease and mad cow disease in the livestock industry. That means there is political momentum toward shifting funds spent on agricultural from direct subsidies to rural development.

Horticultural products in the European Union are primarily supported by high tariffs, which keep out price competition from imports.