Thursday, October 27, 2005


The Common Agricultural Policy of the European Union is a scandalous monstrosity:
How could anybody regard €40 billion ($39 billion) a year of direct subsidy (plus twice as much again in higher prices demanded of European consumers) as too much to pay for producing food nobody wants, keeping third-world farmers poor and wrecking Europe's rural environment?
But surely we don't want to give way to barbaric capitalism and let all those cute little farms close down in the face of unbridled competition from the developing world, horror of horrors?! It turns out, as the Wall Street Journal reported yesterday, that this concern is total bollocks:
But there is clear progress in one little-noticed area: transparency. Last Thursday -- after much pushing and prodding and not without a fight -- Belgium became the latest EU member state to reveal who gets what from the CAP. Surprise, surprise: The main beneficiaries are large agribusinesses that shouldn't need taxpayer-funded handouts, not those small farmers "struggling to survive" so often cited by subsidy defenders.
Here are some enlightening facts about the €546 million that Belgium divided among 399 recipients last year:
• The largest recipient, Raffinerie Tirlemontoise, a sugar refiner based in Brussels, received €91.9 million -- more than the bottom 378 recipients combined. The RT Group, as the company is also known, is part of the Südzucker AG Group -- which, according to its Web site, is "the biggest sugar group in the European Union."
The Belgian government explained that much of its CAP allotment doesn't end up in Belgium, but is channeled to firms in other EU countries as an export refund. It is distributed through Belgian companies because they do the actual exporting. Even if RT doesn't add the subsidy directly to its bottom line, the subsidy allows the EU to be a net exporter of sugar whereas in a truly free market it would surely be an importer.
• Ninety percent of Belgium's subsidies went to just 29 firms. That includes such mom-and-pop operations as Campina, the European dairy cooperative, which received more than €24.5 million. Just missing the cut for the top 29 were Tate & Lyle (more than €6 million, in addition to the £127 million it received in Britain), BASF (€1.2 million) and Nestlé (just over €1 million).
So let me get this straight: not only are we paying enormous amounts of money in order to double (sic) the cost of our food, but we are doing so to subsidize multinational companies which could easily do without the extra money. How dumb is that?! Oh wait, not dumb enough apparently:
Jacques Chirac, French president, on Thursday warned he would block a world trade deal rather than make deep cuts to the European Union's farm subsidy regime, as EU leaders tried to present a united front at an economic summit.
At any rate considering these follies it is no wonder we have such high tax rates (which as George Adair shows, slow down economic growth). Scrap the CAP and give us the flat tax! And get rid of Chirac, while you're at it.

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