MercoPress. South Atlantic News Agency

Mercosur cautious about CAP reforms.

Mercosur countries reacted cautiously to the latest Common Agriculture Policy, CAP, agreement reached by the European Union after three weeks of hard bargaining. The gigantic sum of 43 billion Euros annually ploughed into EU farms will be substantially reduced and apparently reoriented as of 2005, towards a more environment friendly and quality agriculture.

Mr. Didier Opertti, Foreign Affairs Minister of Uruguay that holds the Mercosur chair for the next six months, described the Brussels announcement as positive but "we also are aware of the strong political interests in the EU and will be looking forward to Brussels willingness in making this new CAP reality".

The approximately 50 billion US dollars, half the EU budget, invested in farm subsidies by the EU are world wide criticized for distorting global trade and hurting more efficient producing areas such as Mercosur.

Franz Fischler, European Agriculture Commissar said that the very ample agreement reached (only Portugal kept its original objections) marked the start of a new era and is in line with the EU long term policy to change from intensive to extensive farming, fundamentally reorienting EU agriculture.

"It will be sending a very clear message to the rest of the world", emphasized Mr. Fischler after reaching a compromise solution with three of the members who most opposed his original proposition, France, Spain and Ireland.

Under the deal most subsidies that rewarded farmers for volume of production will be abolished and replaced by other mechanisms.

Farmers will receive a single payment, ending the grading of money with the amount of food produced.

Prices at which EU intervenes to support farmers are to be cut in key sectors including milk and butter.

Direct payment to big farms will be cut to finance the new rural development policy, promoting the environment and animal welfare.

Individual countries will be able to keep to the old system if there is a risk that the land could be abandoned with the new system. However countries who want to press with more radical reform (Germany, Britain) are allowed to do so.

French Agriculture Minister Hervé Gaymard said the agreement satisfies France "taking into account the diversity of interests and the toughness of some of the original proposals". France and Spain that managed cereal support prices to remain unchanged are the countries that most benefit from subsidies with Paris receiving 9,2 billion Euros annually.

German Agriculture Minister Renate Künast considered the reforms a "great success" since it helps create the conditions "for a sustainable farming policy environmentally friendly and with great care for animals".

"CAP reform will also transfer money to the rural economy and strengthens EU bargaining position for the coming WTO Cancún round", added Ms. Künast.

British Agriculture Minister Margaret Beckett pointed out it was an "excellent agreement" and a courageous stride forward with the world trade talks in Mexico in mind.

However charities that support poor countries such as Oxfam and ActionAid said the agreement will not prevent rich countries from dumping produce such as sugar and dairy on developing countries.

European farmers were not entirely satisfied either and analysts believe that in the short term the new deal will not save taxpayers money.

"Typical EU compromise: gives and takes a little from everybody but creates terrible difficulties for those who have to implement it", indicated Gerd Sonnleitner German farmers' union president.