EU warned of new food mountains to the east

KATHERINE BUTLER

Brussels

The European Union is considering sweeping new changes to its farm policy to prepare the EU for expansion to include former Communist states in Central and Eastern Europe.

New cuts in the support given to Europe's 9 million farmers are outlined in a draft of a long-awaited white paper on enlargement strategy, prepared by the EU Agriculture Commissioner, Franz Fischler.

The proposals are certain to provoke hostility from the big farming lobbies, particularly in France and Germany.

The draft says that to expand eastward without scaling down the pounds 30bn- a-year Common Agriculture Policy will cause an explosion in spending and a return to the notorious grain and beef mountains and milk lakes of the early Eighties. Earlier reforms of the CAP have removed these surpluses and brought EU farm prices in line with, or in some cases below, world market levels. The fear is that eastward expansion could renew the cycle of over- production. Agriculture is important to the economies of Eastern Europe, where a quarter of the workforce is employed on the land. If the status quo is retained, the annual cost to taxpayers would rise by pounds 8bn-12bn, draft plans say.

The proposals will go before EU heads of government when they meet in Madrid next month. They suggest that the 10 former Communist states hoping for membership by the turn of the century should be made to wait several years after joining before being allowed to take advantage of the CAP's generous support.

During the transition period they would get extensive aid to revamp their decrepit farms as well as a gradual opening-up of EU agricultural markets to their exports. The paper steers clear of specifying how long the delay would last.

Regardless of enlargement, Mr Fischler says deeper CAP reform is inevitable because of internal budgetary pressures and world trade liberalisation. The warning is intended to head off a row between fierce critics of the farm policy, such as Britain, and its stalwart supporters, including France and Ireland, which could block the entire enlargement process.

Price cuts, he says, could continue to be compensated for by direct payments to farmers introduced in the 1992 round of reforms, but would be limited to "where necessary".

The CAP, which is a bureaucratic nightmare to run because of its complexity and red tape, would also be simplified.

The paper also suggests replacing the annual springtime price-fixing haggle with a US-style five-year support programme. Brussels would devolve control over running the policy to national governments, including responsibility for some direct income supports.