One of the most overlooked issues of the European question is the impact of the EU’s Common Agricultural Policy (CAP) on food prices and farming – not only in the UK and Europe, but also throughout the developing world. Despite agriculture only accounting for 1.6% of the EU’s GDP, spending on the CAP takes up 40% of the EU’s annual budget, and is, as a result, highly significant to the Brexit debate. If that money is being used unwisely, it means nearly half of our contributions are being badly mismanaged.
Arguably agricultural subsidies are essential in an increasingly urbanised Europe for a number of reasons. Many farmers earn less than average incomes, yet it is still necessary for society to maintain agriculture – as relying too heavily on food imports could be disastrous in future emergency situations. As this is the case it would seem necessary for Britain to continue paying subsidies to its farmers to some degree, even if we left the EU. Additionally, by instilling the virtues of independence, dignity and self-worth, agriculture has inherent value and its decline should be averted.
Thomas Jefferson, the father of liberty amongst other prominent early free-market thinkers cited farmers as the bedrock of any successful society: ‘Cultivators of the earth are the most valuable citizens. They are the most vigorous, the most independent, the most virtuous, and they are tied to their country and wedded to its liberty and interests’.
Nonetheless, the CAP is incredibly harmful to small, self-sufficient farmers. Farmers are given a set amount of subsidies based on land quantity and economies of scale are discounted. Farmers with huge tracts of land are rewarded disproportionately and 80% of subsidies go to the largest 25% of holdings. The Duke of Westminster has a net worth of £7 billion and claims more than £500,000 in farm subsidies each year. He has 1,300 dairy cows and thousands of acres of cereals, and consequently receives high amounts of funding – not that you would think he needed them! This seriously disadvantages small farmers by decreasing competition and efficiency – as the richest farmers know they are unlikely to be displaced by smaller rivals.
Furthermore, the information revealing where country’s agricultural subsidies have been spent has been kept secret for decades. Only following the Freedom of Information Act 2000 did it become public knowledge where CAP funding was going. Therefore no scrutiny into where CAP money was distributed was available, a point of huge significance especially as CAP spending took up 70% of the EU budget as recently as 1985. This lack of transparency led to a situation where Dutch Minister for Agriculture, Cees Veerman, was able to claim agricultural subsidies of over £100,000 a year while being part of the decision-making process that decided the levels of money he and his competitors received. The EU’s lack of transparency is criticised in many of its institutions – from banking to the European Parliament – and the concealed use of CAP funding is just another blatant example of, at best, ineffectiveness and at worst, corruption, on its behalf.
The most pressing issue regarding CAP has to be its impact on food prices. The CAP ignores all rules of supply and demand and directly causes the price of food to be inflated by 17%, affecting the poor the most. Instead of allowing overproduction to flow into the market and let prices be lowered through the basic laws of supply and demand, the EU buys the excess production or provides subsidies for its export. This leads to so called, ‘wine lakes and butter mountains’ of wasted food and means surpluses are exported to developing countries at a lower price, harming some of the world’s poorest farmers – driving them out of business and raising prices for imports of food not produced in Europe. By not allowing the normal rules of supply and demand to apply in the agricultural sector, the EU is responsible for excessive food prices at home and poverty abroad.
A system such as CAP that requires continent-wide bureaucracy as well as conformity from producers rarely succeeds. It is no exception to the record of failure regarding EU-wide projects like the Euro and the Common Fisheries Policy. The policy has resulted in the erosion of smaller farms – undermining those who were previously self-reliant and self-sufficient – while replacing them with fewer numbers of large land-owners. The scheme managing to cause this inequality is also costing every EU citizen annually €100.
An agricultural policy under our own control would be much more accountable to voters, and the electorate could choose to change the system through our elected representatives when we see fit. If Britain were to leave the EU, then like Norway and Switzerland we would be in control of our own agricultural affairs. We are – and always have been – net contributors to CAP, and by stripping it away we could have more accessibility for UK farmers and lower costs for taxpayers. By removing much of an expensive bureaucracy and making payments tailored specifically to the needs of our farmers, small farmers can be protected, costs to the UK taxpayer reduced, and ultimately food prices can be lowered – helping the majority in society.