Alistair Darling will fire the opening salvo today in what threatens to become an important battle with France and Germany about the future of Europe’s Common Agricultural Policy which, he claims, is exacerbating the world food crisis.
The chancellor will urge fellow European Union finance ministers to support the dismantling of the CAP, saying it is costing EU consumers billions of pounds a year in higher food bills, while hurting farmers in the developing world.
In a strongly worded letter, Mr Darling calls current EU farm policies “unacceptable”. He urges an end to direct support for European farmers and all measures that keep farm prices above world market levels.
The chancellor also repeats Britain’s insistence Europe must review its target to increase the use of biofuels to 10 per cent of fuel use. He believes this could be forcing up food prices in developing nations.
Although Britain is a long-standing critic of the CAP, Mr Darling’s letter and call for free trade in farm products comes at a time when France – which takes over the EU presidency in July – and Germany are defending forms of protectionism as a response to soaring food prices.
Michel Barnier, French agriculture minister, has called for the EU to erect new tariffs at its borders in an attempt to encourage European self-sufficiency in food. Meanwhile, Germany has urged Europe to demand higher environmental and health standards from countries such as India, China and the US that seek to export to Europe.
Rising food prices will be discussed informally at a finance ministers’ meeting in Brussels this week and formally at the economic and financial affairs council in June.
The future of the European farm budget, which still consumes more than a third of all EU spending, may become the most contentious issue to face the union in the next few years.
With Gordon Brown’s government under fire at home, and public anxiety about rising food prices intensifying, Mr Darling’s decision to pick a fight with important European partners now may be influenced by domestic politics. Many of his prescriptions for the CAP are shared by the European Commission, which is phasing out the last export subsidies and which wants to shift more direct support for European farmers to rural development.
But Mr Darling wants to go much further, scrapping EU external tariffs, which inflate prices for commodities such as beef and dairy products, and ending all direct payments to farmers. “It is unacceptable that, at a time of significant food price inflation, the EU continues to apply very high import tariffs to many agricultural commodities,” he writes.
The chancellor says “efficient international markets” – not protectionism – are the best way to maintain global and European food security, and that a successful conclusion of the Doha round of world trade talks is vital.
He also calls for action to raise “farmer knowledge” of mechanisms such as agricultural futures and options to manage risk, and for more investment at a European and national level into agricultural research.
He will press the case for CAP reform in Brussels this week in what will be a rare appearance by the chancellor at the Ecofin council.
