Farm policy will still cause hunger after EU 'reform'

Are you ready for a travesty?

In less than one month’s time the European Commission will publish a new paper on the future of the Common Agricultural Policy (CAP). Like dutiful stenographers, most of us journalists will present this document as being part of a reform process, when in truth it is nothing of the sort. Rather than advocating a “reform”, the Commission will suggest a few tweaks to an unjust and unsustainable system, otherwise leaving it unchanged.

How do I know this? Thanks to the internet, a leaked draft of the paper can be read by anyone who wishes to. I have studied the document carefully and I desperately need a hug to cheer me up.

There is no recognition in its 12 miserable pages that the way much of the food in our supermarkets has been produced is depraved. Last week the environmental campaigner Tracy Worcester was in Brussels for a screening of her film Pig Business. It explains the disintegration of traditional farming in Poland better than a thousand articles in academic journals could. In 1999, the rapacious US meat company Smithfield snapped up Poland’s state-owned network of slaughterhouses. Ever since, the small farms that were once an integral part of Polish life have been going out of business as giant pig factories, where abuse of animals and toxic pollution are widespread, take over. Jerzy Buzek, then prime minister (now the European Parliament’s president), enabled the conquest by agreeing to close down hundreds of small abattoirs so that the guests of his nation would have no competitors. “Natural progression” is the repugnant term Smithfield uses to justify the suffering it has imposed on rural communities.

The Commission’s new paper might as well have been penned in Smithfield’s Virginia headquarters. The CAP, it says, must continue to promote “greater competitiveness”. Perhaps not even George Orwell himself could have dreamed up a concept so Orwellian. In the name of competition, small landowners will continue to be crushed by firms with whom they have no hope of competing, if everything goes according to the EU executive’s plan.

The paper does not accept any responsibility for how the CAP has led employment levels in many parts of the European countryside to plummet. Regardless of who occupies the Elysée, the French government has long been the single biggest impediment to CAP reform. Yet the proportion of the French workforce living off agriculture has shrunk from 30% in 1945 to around 3% today. The more recent entrants to the EU have seen a comparably calamitous drop; in Hungary the share of the population working on farms was halved between 1988 and 2008.

True, the Commission appears to doff its cap to the green movement by stating that it wishes to address environmental challenges. There is no indication, though, that it has seriously analysed the rich body of research on the ecological consequences of intensive food production.

Two years ago the United Nations’ Food and Agriculture Organisation published a study estimating that 18% of all greenhouse gas emissions come from livestock. Meat: A Benign Extravagance, a new book by Simon Fairlie, queries the FAO’s methodology and suggests that the correct figure is closer to 10%, yet there is no serious dispute among climatologists that the agri-business industry is a major contributor to global warming. Jokes about how flatulent cows are imperilling our future by releasing methane, a highly flammable gas, into the earth’s atmosphere might appeal to schoolboys. The surrounding issues are no laughing matter.

I searched the Commission’s paper in vain for some ideas about how European agriculture might become less focused on meat. I wasn’t expecting EU officials to extol the virtues of vegetarianism (a creed I have followed for the past 20 years), yet hoped that they might have looked beyond the steaks they can devour in their subsidised canteens and seen at least a fragment of the bigger picture. Why can’t they recommend, say, a legally-binding target that 20% of all European food be produced organically by 2020?

Nor do these officials appear to have any sense of guilt about how European agri-business perpetuates hardship and hunger in the wider world. Instead of letting poorer countries feed their own people, Europe’s beef barons and chicken kings expect them to grow soy for cattle and poultry on this continent. Not only has this reduced the domestic supply of food to vulnerable communities in Latin America, it has fuelled deforestation. About 500 hectares of Paraguayan forests have been lost to soy plantations per day in recent years; Germany, Italy and the Netherlands are among the main importers of this feedstuff.

Narrow definitions, meanwhile, have allowed EU officials to brag that they are making good on their commitment to remove those export-related subsidies inimical to farmers in poor countries. The truth is that the EU is continuing to dump on the poor. In Ghana numerous tomato processing firms have gone out of business because of the pressure from cheaper Italian tomato paste.

Each year the CAP gobbles up over €55 billion or 40% of the EU’s annual budget. The Commission’s paper says that its payments need to be made more understandable to the taxpayer. From the modicum of transparency that has been introduced to farm spending in the past decade, the effects of the CAP are no longer a mystery to ordinary people. It is the mediocre mandarins in charge of this policy who don’t want to understand reality.

·First published by New Europe (www.neurope.eu), 17-23 October 2010

Casino capitalism unthreatened by new EU rules

Imagine an amoral world, where parents encourage children to steal. On the way to school each morning, the richer kids would pilfer sandwiches or sweets from their poorer classmates. At playtime, the loot would be sold, the proceeds pocketed by the thieves.

Sounds crazy, doesn’t it? Well, it is no crazier than the financial system that Michel Barnier, the EU’s single market commissioner, is in charge of regulating. This Wednesday (September 15) the Frenchman will propose a new law on short-selling, that abstruse practice where a blackberry-hooked whizz-kid borrows shares and sells them based on the prediction that their value will drop, then buys them back once that fall has materialised, making a tidy profit.

The harmful effects of short-selling have long been apparent. Many Asian governments blamed the crisis that beset them in the 1990s on speculators who used the tactic to drive down the rates of local currencies far below their real economic values. A decade later, it was singled out as the major cause of the rapid fall in the prices of shares in Lehman Brothers and other massive banks. And more recently, it has been a contributory factor to Greece’s woes and the wider tremors in the euro-zone. Originally working in cahoots with the Athens government (before last year’s election), Goldman Sachs helped present a misleading picture of public accounts to make Greece attractive to lenders, then bet on the risk of the country defaulting. As Wall Street rogues reaped their winnings, Greece was forced to borrow at higher rates.

Earlier this year, Germany introduced a temporary ban on that even more extreme – and absurd – activity called naked short-selling, where a speculator gambles with shares he or she neither owns nor has borrowed. Barnier intimated that he was upset by the unilateral ban, yet expressed understanding for Berlin’s stance. His new proposal will offer national regulators greater leeway in restricting the practice but there is no prospect that it will be forbidden outright. And so a golden opportunity to heed the lessons of the financial crisis is being wasted.

Open Europe - the right-wing think tank that is a principal source on EU affairs for several British newspapers – regularly issues warnings about Barnier wanting to ruin the City of London. These warnings have now proven fanciful; the truth is that Barnier lacks sufficient guts to introduce stringent rules for the casino of European capitalism.

His cowardice is easily explained. While he may appear to be the antithesis of Charlie McCreevy, his predecessor as single market chief, both are essentially cut from the same ideological cloth. Barnier has not tested positive to the same allergy to regulation as McCreevy, yet is similarly willing to serve the interests of an unaccountable elite.

Gillian Tett, normally one of the most incisive commentators with The Financial Times, was wrong last month to say that the main lobby group for short-sellers, the International Swaps and Derivatives Association (ISDA), had become “distinctly toxic” in Brussels’ political circles. The truth is that it and other bands of speculators dominated the working group assembled by the European Commission to lay the groundwork for Barnier’s new proposals.

Evidently, the speculators held greater sway, too, during a sham “public consultation” that Barnier called on short-selling than the few more radical contributors to that exercise. John Chapman, a British diplomat-turned-journalist, has neatly summarised the flaws in Barnier’s thinking. By refusing to contemplate a ban on short-selling, Chapman’s submission to the exercise noted, the Commission is failing to land “a significant blow on the hedge fund industry, whose activities are the single most pernicious development of the past 30 years”.

Chapman traces the flourishing of hedge funds back to an initiative taken by Ronald Reagan in 1982. By modifying a US law then almost five decades old, Reagan ensured that funds for the use of millionaires did not have to be regulated. The greatest advantage of hedge funds may be their ability to short sell, says Chapman, who argues that the privileges granted to them by American and subsequently by Europe are largely unparalleled. “Millionaires are not allowed to be driven in super-charged limousines along public highways without limits or any constraints on knocking other cars out of the way,” he says.

In a related dossier, Barnier will also this week recommend new rules for the derivatives market. Estimated to be worth €427 trillion globally, the derivatives market is one that thrives on human misery. Derivatives were the main instruments of speculation on basic foodstuffs that caused prices of wheat and maize to jump by up to 90% in developing countries between 2007 and 2008, forcing the poor to eat less.

In January this year, Barnier described speculation on essential food in a world where one billion people suffer from hunger as “a scandal”. Yet his proposals on derivatives will not go far enough. The idea of insisting that as many derivatives as possible are traded through a regulated exchange has, for example, been ruled out. This omission is despite widespread recognition of how over-the-counter derivatives – those traded off-exchange – played “a key role in transforming a financial downturn into a global economic calamity,” according to Nobel laureate Joseph Stiglitz.

Loopholes of this nature are readily exploited by the market fundamentalists determined to maintain a free-for-all approach to global finance. For millions of others, they can mean the difference between sustenance and starvation.

•First published by New Europe, 12-18 September 2010 (www.neurope.eu)