Czech Republic might lose €400 million on new Agriculture policy

The new reform of Common agriculture policy which aims to prevent rich landowners from taking millions of EU subsidies could be destructive for the Czech Republic where used to be cooperative farming.

by Magdalena Medkova

While small farms in poor regions across Europe struggle for their survival, the EU legislation let big agriculture businesses and rich landowners take millions on the Common agriculture policy to run their fields and grasslands.

According to the,  a nongovermental project for transparency of EU subsidies,  around  80% of European farm aid (€55 billions a year) goes to just one quarter of European farmers, to those with the  largest holdings.

This Febuary the Commission said this was no-longer justifiable in the view of European taxpayers, who contribute €100 a year on farming aid, and proposed a new reform which would limit the financial support per large individual farm to €300,000 a year.

“We believe that the capping of subsidies is an important step of how to allocate the money in more fair way,“ says Dacian Cialos, the Commisioner on Agriculture and Rural development.

The  new reform, which is planned to enter into force in 2014, now has to be approved by the European Parliament and the Council. However, what seems to be fair for some is unfair for others and with 27 member states across Europe  there will always be someone left unsatisfied. 

The term of capping
– The basic payment scheme received per farm will be limited to €300,000 per year
– Payments higher than €150,000 will be subject to progressive reductions
– The main aim is to restrict the amount of subsidies for large holdings
– Nowadays the basic payment is redestributed according to the amount of hectares
– The amount of money has not been limited so far.

 Martin Pycha, a member of nongovermental Agriculture association in the Czech republic,  says that this proposal  is a dismissal failure.

 „The commission  doesn‘t take on account that capping will destroy the production of those countries which are based on big agri-associations,“ he says.

According to the study made  by the EU, while member states such as Belgium, Ireland, Luxembourg, Austria, Finland, Slovenia, France won’t be touched by the capping,  the agriculture production of Slovakia, East Germany, Hungary, Bulgaria, Romania and the Czech Republic will be affected, due to the large farm structures.

As Martin Pycha says, for the Czech Republic the ceiling could be a problem in particular since the agriculture system is from the old comunism regime, where  there used to be cooperative farming.


Collectivism in the Czech Republic

  • –       In 1946 the comunistic regime introduced collectivism of agriculture
  • –       In the period of 1950 – 1985 colective farms increased by six times
  • –       Total area owned by collective and state farms counted about 64,000 km²
  • –       While the private farmers hold only 4,040 km²
  • –       after the Velvet revolution in 1989 the farms split into big associations


Nowadays about 34% of Czech capholders are above the CAP ceiling, according to the European statistics. Which would mean that the Czech agriculture sector  might lose from 250  to 400 millions euros a year due to the new system of capping.

„It is just another form of discrimination , what we hear now is that member states with large agriculture associations which have extended their production and gave jobs to hundreds of people are now going to be punished,“ says Martin Pycha.

From his point of view not only will the capping of subsidies have a negative impact on production but also on the employement in the agriculture business.

The commissioner of agriculture and rural development, Dacian Cialos doesn’t agree with that argument and says that the commission plans to make „ additional loans for employment so the inclusion of cap criteria should make sure that some of the large farms with high rate of employment will be exempted from the capping requirement.“  

However, Alan Swinback, a professor of Agricultural Economics from University of Reading,  points out that in terms of equality the ceiling of direct payment won’t solve the problem.

 „We will be victims of the big agriculture businesses, spliting into small farms in order to gain more on their subsidies,“ says Alan Swinback.


A big task for Parliament

Last week, on Monday, Martin Pycha came to Strasbourg to lobby against the new proposal in the European Parliament.

„We have already known that the Czech MEP’s are not in favour with the term of capping, so our priority for next six months is to keep trying to persuade the others,“ he says.

The European Parliament has had limited influence over agricultural policy for a long time . The European farm ministers took decisions based on a Commission proposal and the Parliament simply gave its opinion – but with the Lisbon Treaty the Parliament has the same power as the Council.

Before any proposal become a law the two organizations have to reach a common agreament.

James Nicholson, a member of European Conservative and Reformists Group and Committee on Agriculture and Rural Development, thinks that the main task for the Parliament will be  how to meet the expactations of both sides.

„I think that most of us understand the big farmers but on the other hand we also understand the taxpayers who might not be willing to support rich landowners any longer,“ he says.

Last year, in December, the NGO‘s published a list of ‚milionairs‘, including govermental organizations, non-agriculture businesess or rich aristocrats such as Prince Charles and Queen of England. This has raised another discussion about the subsidies redestribution.

Christel Schaldemose, a member of Group of the Progressive Alliance of Socialists and Democrats in EP, see the public image of CAP as a high priority.

There are people in Europe who are struggling on their farms every day and the European Union doesn’t do anything but supporting millionairs,“she says and ads that the parliament has to find a solution which won‘t produce any more negative consenquences.

However, as she says: „The biggest shoulders should carry the biggest burdens and it is to say that if you have already hit someone than you should hit the others.“


[box] The Common Agriculture policy (CAP)
– Is a program and system of EU subsidy redestribution among farmers
– Curently represents 34% of the EU budget
– Costs100 € every EU Citizen a year[/box]


The national interest

The capping at €300,000 has been firstly proposed in 2002 by Franz Fischler, however rejected by members and postponed, partly because of opposition from the UK.

„I wouldn’t be suprised if the capping is the last think to be agreed on,“says James Nicholson, a member of Committee on Agriculture and Rural Development.

According to James Nicholson, a reform of Common agriculture policy is a problematic issue since farmers have always been taken as a potentional voters of national goverments.

I don’t think  we can expect the decision to be reached until the election in France and Germany is held (2013),“ he says.

And ads that whatever the final decision will be „with 27 member states there will be always some countries who are getting more than the others.“

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