Possible EU subsidy cuts could benefit SA agriculture

The South African agricultural sector would benefit if subsidies to EU farmers are cut significantly, according to Dr John Purchase, CEO of Agbiz.

Possible EU subsidy cuts could benefit SA agriculture
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This follows reports from the EU indicating that once Britain exits the EU, not only will the country’s £2,5 billion (R41,6 billion) annual contribution to EU farmer subsidies be lost, but the EU would have to cut the Common Agricultural Policy (CAP) subsidies to remaining farmers.

Purchase told Farmer’s Weekly that the CAP direct payments which EU farmers received were in effect a subsidy programme that encouraged them to become more competitive.

“Essentially these subsidies distort what is supposed to be an open, competitive global agro-food market system, and disadvantage or prejudice countries such as South Africa, that receive only limited support from government, and certainly no direct payments,” Purchase said.

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Brexit could come into effect as early as mid-2019 if exit negotiations between Britain and the EU run smoothly.

The EU was reportedly already holding public consultations on what it described as “modernising and simplifying” the CAP.

The Copa-Cogeca EU farmers and agri cooperatives union welcomed these public consultations.

“We believe that the CAP which has so far worked quite well is very good value for money. It costs less than 1% of total EU public spending, and in return provides sustainable food supplies for 500 million consumers, at the same time as ensuring growth and jobs in rural areas, biodiversity and countless environmental benefits,” said Copa-Cogeca’s secretary-general, Pekka Pesonen.

The UK publication, Farmer’s Guardian, reported that the British National Farmers’ Union had learned that CAP direct payments to EU farmers were already under pressure.

Purchase said that while SA agriculture would welcome the news of potential subsidy cuts, Agbiz would first want to see the real extent of these cuts “before getting too excited”.

“In our opinion, there is still a long way to go before we see significant cuts, and then the EU may further ramp up non-tariff barrier measures to protect the agriculture and agribusinesses sectors if direct payments are cut. We are already witnessing an increase in such protectionist measures through arbitrary or debatable implementation of sanitary and phytosanitary standards measures [by the EU], for example,” he said.