cut the c(r)ap…

The average EU cow receives a higher daily subsidy than more than half of the world’s population.

A fact that can’t go unnoticed by the average human being on this planet. The fact that billions of people are suffering from poverty and struggling to survive day after day after day is worrysome enough. Trying to help them out of this inhumane situation is one of mankind’s biggest endeavor. And while you’d expect a continent that prides itself with humanistic traditions to be the very forerunner in this effort, I can’t help but shake my head in disbelief every now and then when I think about European policies. Let’s start with the sample mentioned above, shall we?

The Oxfam calculations obviously go back to net EU spendings on subsidies to the dairy industry per annum. Added up, this amounts to a good €16 billion a year. Money used to… to do what, exactly? Polemically speaking, it’s used to keep European dairy farmers busy while paying for their “fair standard of living”, as the original CAP framework stated. Economically speaking, it is used to finance exports of overproduction to non-EU markets and for domestic “sales schemes”, which is nothing else but a market distortion by artificially lowering prices for dairy products, hence creating demand. The former, also known as “export refunds”, are payments to the European dairy industry intended to cover the difference in costs of products sold at the world market because domestic demand was exhausted. Whether in the form of deficiency payments or, as intended by the Fischler reforms, of direct income support payments, in the end the whole concept stays a huge waste of money that is economically unreasonable, and it’s far from restricted to the dairy industry. What worries me even more than the waste of taxpayer’s money is, however, the negative externalities included in this scheme:

  • A) Negative environmental externalities

The obvious triggering of overproduction, in almost all agricultural sectors, overstrains the capacaties of nature and supports big style industrial agriculture. The unnecessary damages done to the environment are manifold and easy to imagine: emissions, fertilizers, deforestation…

  • B) Negative development-related externalities

Not only are the terms of trade with the rest of the world distorted, but EU export subsidies (and import restrictions) also heavily influence world prizes of agricultural products – up the point where it is pushed below the costs of production of small farmers in LDCs that have no chance to compete with the high-standard EU products that are being dumped on their markets. Their existence is in danger, and I’m not just talking about the existence of their farms and jobs, but their lives… Putting this in direct relation to the first line of this entry, you really wonder where this world is coming to.

While the CAP as Europe’s biggest problem child is certainly a big black stain on the white vest of the Old Continent, it’s by far not the only one. And even if Europe tries to help out, does it really do any good? In the framework of the ACP and GSP programs, all dealing with PTAs with developping countries and LDCs, and manifested in the Cotonou agreement, lots of money is flowing into development aid and support. In addition, favorable trading conditions are generously offered to those countries, seemingly eliminating artificial barriers to trade and hence, laying the foundation for economic growth. Realistically speaking, however, the finest PTA isn’t good enough if signed with a European Union that offers even better PTAs to other (groups of) countries. In addition, the highest amount of development aid doesn’t seem to do too much good if it’s finally used inefficiently, be it to pay corrupt politicians or to finance militias and armies, just because conditionality in giving out aid is a no-go these days and creative alternatives to traditional aid are frowned upon. Not to mention all that money that doesn’t even reach the development programs.

As usual, I watch the sun go down behind the Vrijthof churches with that feeling of dissatisfaction in the back of my head… the feeling that there’s so much more that can be done.

Hoffnung means hope…


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Filed under Development, Politics

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