Subsidy way of life difficult for farmers to shake

By PHILIPPA STEVENSON

French farmer Bernard Beauchesne is as committed to efficiently and profitably producing quality dairy products as any of his New Zealand counterparts.

But no matter how hard he works on fine tuning the genetics of his 75 holstein friesian dairy cows, or obtaining the best feed, most of his income is Government subsidy.

Beauchesne, his two brothers and sister work hard on 320ha of farmland in blocks spread around the fertile Loire Valley, best known for its picturesque chateaus, about 300km southwest of Paris.

They have taken over from their parents, who still live on the farm, milking cows sired by American and Canadian bulls and fed on highly nutritious feed from Spain, fattening steers, growing wheat, barley, oats, sunflowers, maize and alfalfa and, latterly, milking 900 goats.

Their 1500 goats, including kids, are Marie-Anne Beauchesne's job. But she was not home the day the Business Herald visited and older brother Bernard, who speaks English after a year-long farm study trip to the United States, was the proud guide to the family farm.

It is an odd mixture of high-tech and hardship. Beauchesne's parents live in a humble farmhouse while he occupies a caravan strategically placed outside the goat barn to prevent thefts of the animals. A new house has been built on the farm for younger brother Thierry, and middle brother Andre lives in a nearby village.

The six-aside herringbone dairy shed is nothing to write home about, nor is the 48-bale rotary goat milking platform. Both have external surfaces dirty with cow and goat muck, but Beauchesne says internally the equipment is cleaned after each milking and bacteria reports on the cows' and goats' milk give good results.

There are no New Zealand-style, twice-daily washdowns of the sheds because water is scarce on this farm, which has to buy it in by the cubic metre.

There are new-looking tractors equipped for purposes from mucking out barns, stacking huge hay bales, planting and harvesting crops. A huge three-sided barn-cum-implement shed is a couple of years old.

Beauchesne has never known life without the 40-year-old European Union's €44 billion ($90 billion) Common Agriculture Policy (Cap) subsidies. He would like to have more than his 600,000-litre-a-year milk quota, but has been turned down a number of times for the quota released by the closure of smaller farms.

The family are building up their goat herd over the public protest of those nearby with small flocks. They plan to milk 1500 goats because Beauchesne believes there will soon be a quota on goat milk and he wants the operation to be as big as possible by then.

There is a move among some of the 15 members of the EU, and officials at the European Commission, to reform the Cap.

The debate has polarised behind Germany, whose net contributions to the EU budget are six times higher than France's, and France, whose farmers are the major beneficiaries of the Cap, which takes almost half the EU's €95 billion ($194 billion) budget.

The French believe their already dwindling farmer numbers would be devastated by changes, but Germany, with the decade-long experience of the costs and difficulties of uniting East and West Germany, has a weather eye on the Cap bill if and when the EU includes 10 new countries with inefficient farm sectors from 2004.

Germany argues that paying farmers directly does nothing for their efficiency and market responsiveness, and that support would be better spent on structural reform. A counter argument suggests, though, that Germany has a lot to gain from enlargement because of the greater prosperity that would almost certainly result from the extra customers delivered by Cyprus and Malta and eight eastern European states. Thus the immediate pain of a heftier Cap could turn into long-term gain for the European powerhouse.

Meanwhile, the French are adamant discussions about the Cap should not be linked to EU enlargement. They would like to proceed only with the so-called mid-term review of Agenda 2000 - the 2002-2003 halfway point mapped out in the 1999 agreement by the European Council in Berlin, which set a seven-year framework for the Cap until 2006.

In a paper issued after a meeting of EU agriculture ministers in Luxembourg on June 27, the French Government view was that "the conclusion of negotiations on European Union enlargement must not be subordinated to revision of the Cap."

Beauchesne, like many French farmers, believes subsidies are a necessity. The only changes he wants are for them to revert to being paid on product price as they were in the 1980s. That system produced huge food mountains, which when dumped on world markets depressed prices globally. Payments were then switched to a per-hectare basis, and into some rural development.

He does not believe the old system produced too much food, or would again.

"There are people who are hungry in the world," he said. His explanation for the food mountains is that "that is politics".

He added that "US farmers get subsidies" - the argument that clinches it for those in favour of the support system that liberalisation advocates argue distorts trade and condemns the Third World to poverty.

Beauchesne's frustration at the complex rules that force him to farm for subsidies, not markets, seems at odds with his desire for the system to continue.

But the contradiction is common at all levels of French society, where the suggestion that New Zealand farmers operate without subsidies is often met with open disbelief.

Lawyer Marie-Cecile Gamez, of the French young farmers organisation Jeunes Agriculteurs, specialises in the complex nature of land ownership and succession in France which means most farmers rent their land but have almost unbreakable rights of tenure and the ability to pass these to the next generation.

She acknowledged there were so many constraints on farming and farmers that they were not profitable.

"But," she said proudly, "we make high-quality products as a result of the controls."

In Paris, Eric Maerten, deputy chief editor of the major farm magazine La France Agricole, could imagine no end to subsidies.

"Why should we [do away with them] when America does not?" he said.

He was unaware of reports, including one by the Paris-based Organisation for Economic Co-operation and Development, that food prices are 44 per cent higher in the EU than they would be without the subsidy and market intervention programme. That may not be surprising when a poll of 16,000 people last year found that half the respondents did not know the Cap existed at all.

But when asked to describe the state of French farming, Maerten told a sad tale of economic and psychological hardship.

Young farmers were not interested in the job and 40-year-old farmers were simply stopping farming out of frustration, he said.

The June 21 issue of his magazine carried a series of stories on French farmers' new agricultural enterprises in Spain, Argentina and Canada. It also reported on June's United Nations Food and Agriculture Organisation world summit in Rome, but failed to mention that farm subsidies in the Western world were named the chief culprit in global hunger.

The story was more likely to have reinforced the view, as expressed by farmer Beauchesne, that there was simply not enough food in the world to go around.

It is in this climate that last week European Commission officials launched proposals for a radical makeover of the Cap.

EU Agriculture Commissioner Franz Fischler proposed a system under which European farmers would get a single direct payment of a maximum €300,000 ($614,000) a year. It would be based on past income and would be cut over time.

He called for a "greener" approach to farming, responding to public demands for safer, better food products after a string of food safety crises, including mad cow disease, foot and mouth disease and dioxin contamination fears.

"In future, farmers will not be paid for overproduction, but for responding to what people want - safe food, quality production, animal welfare and a healthy environment," he said.

The overhaul would still guarantee farmers a "stable income" but free them from "the straitjacket of having to gear their production towardS subsidies".

Brian Lynch, chairman of the New Zealand Trade Liberalisation Network, described it as a breakthrough, particularly a commission statement that read: "A common agricultural policy that encourages surpluses, which then have to be disposed of ... is no longer acceptable or sustainable."

But Lynch has no illusions that the Cap will be doffed quickly. In Europe last month he was told the pace of reform would be like "moving molasses up hill."