‘Follow the money’Jack Thurston

Co-founder, farmsubsidy.org

The CAP and the Budget Review Prague, 11 December 2008

If Europeans knew how the EU spends €55 billion a year

on farm subsidies...

What would they think?

Our method

Freedom of information

+Investigative reporting

Vigorous debate

+Better policy

=

May 2006 May 2007 August 2008

Value of payments €33 billion €55 billion €66 billion

Number of payments n/a 8.2 million 12.1 million

Number of recipients 0.9 million 2.6 million 6.5 million

Countries 8 18 21

Data obtained - timeline

Total amount €

Number of payments

Number of recipients

615 million 47 264 23 337

CAP payments Czech Republic, 2007

In the Czech Republic

the biggest 10 per cent of

farms get 76 per cent of

the money (2007)

BelgiumCzech Republic

DenmarkGermany

SpainGreeceFranceIreland

ItalyHungary

NetherlandsAustriaPoland

PortugalSloveniaSlovakiaFinland

SwedenUK

0 20 40 60 80 100

Top 10% of recipientsNext 10% of recipients

Percentage of all direct payments (2006)

Recipient name Amount Kor. Amount €

AGRO - MERÍN, A.S. 88 867 708 3 127 315

VOJENSKÉ LESY A STATKY CR, S.P. 59 091 118 2 079 456

ZEMEDELSKÉ DRUŽSTVO DOLNÍ ÚJEZD

44 129 1761 552 935

ZD MORINA 39 833 202 1 401 757

ZD KRÁSNÁ HORA NAD VLTAVOU A.S.

38 179 494 1 343 562

ROSTENICE, A.S. 37 664 868 1 325 453

ZEMEDELSKO-OBCHODNÍ DRUŽSTVO ŽICHLÍNEK

35 845 093 1 261 413

ÚNEŠOVSKÝ STATEK, A.S. 35 672 403 1 255 336

HORYMAS, SPOL. S R.O. 34 831 633 1 225 749

AGRODRUŽSTVO JEVIŠOVICE 32 393 009 1 139 932

Top 10 recipients SAPS, 2007

Business & Media |21.05.066 |||| BUSINESS

Who’s creaming off EU subsidies?

CASH COWS

WHAT IT COSTS THE TAXPAYER TO DESTABILISE DAIRY MARKETSBritish export subsidies, bydestination country, 2004 and 2005

Export subsidy granted, by company, 2004 and 2005

SOURCE: FARMSUBSIDY.COMPHOTOGRAPH: ALAMYGRAPHIC: CATH LEVETT

NIGERIA£11,782,308

IVOIVORY COASTCOAST£5,722,515722,515

DHAILANDTHAILA06,805£6,706,80£6

OMANOMA,660,973£4,660,97

SAUDIARABIA

£2,147,003

SUDAN£3,906,970

ESIAINDONESIAIND8£2,947,118£2,94

INDIA£1,244,914

BANGLADESH£3,479,499

NESIPPINEPHILIPPH,901,708,9£1,7

NAPANJA27344,2£1,24£

ALGERIA£9,413,948

EGYPYPT£3,03,031,340340

JAJAMAICAAICA£2£2,296,9296,9877

MEXICO£7,714,200

VENEZUELA£2,274,752

UAE£6,016,605

*includes subsidiaries

£1 to £4m

KEY

£4 to £7m £7m+£0m 5 10 15 20

£22,149,818

£21,957,002

£19,391,504

£7,442,672

£6,421,069

£6,016,872

£4,863,754

£4,009,257

£3,335,750

£3,084,188

FayrefieldFoods*

Philpot DairyProducts

DaleFarm*

NestleUK

TMC Dairies(NI)

HoogwegtInternational

Lakeland Dairies(NI)

Eilers & WheelerSales

MeadowFoods

F UhrenholtDairy

British-based exporters, includingNestle and Dairy Crest, haveclaimed £126m of taxpayers’money over the past two years for

sending surplus butter and milk powder topoor countries such as Nigeria andBangladesh, according to a new reportobtained exclusively by The Observer.

Export support for British dairy prod-ucts is only a tiny part of the complex!43bn web of farm subsidies thatstretches across the European Union.But by anatomising this one subsidy indetail, the figures provide a startling pic-ture of how the Common AgriculturalPolicy (Cap) works to prop up priceswithin Europe, with reverberations farbeyond the farms of the home countiesand Northern Ireland.

The data, obtained by Jack Thurstonof campaign group farmsubsidy.org,using Freedom of Information requeststo the government’s Rural PaymentsAgency, shows that most of the recipi-ents of the cash are large agribusinesses.

The biggest winner, Fayrefield Foods,was able to bank more than £22m overtwo years, 2004 to 2005. Philpot DairyProducts, the export arm of Dairy Crest,which owns well-known brands such asCountry Life and Clover, also claimed atotal of almost £22m. These levels of sub-sidy are enormous relative to the size ofthe companies: the £10m claimed byFayrefield Foods in 2004 was worthalmost 10 per cent of its turnover, forexample, and dwarfed its profits, whichwere less than £1m. Nestle, whose exportof skimmed-milk powder to developingcountries has long been controversial,received more than £7m.

The total cost of the dairy subsidyregime across the EU is more than !1bn.Dairy farmers receive some subsidiesdirectly, but much of the money goes toprocessors and exporters – who are paidby EU taxpayers – to underpin prices.

To maintain these artificially highprices, cheap dairy products from moreefficient producers, such as NewZealand, are kept expensive usingimport taxes. At the same time, theprocessors are given financial help tooffload their surpluses.

Until the 1980s, the EU simply boughtany extra production and piled it up inwarehouses, forming what became

known as the EU ‘butter mountain’(‘wine lakes’ were another manifestationof the same problem). But after a barrageof criticism of this very visible waste,Brussels switched its attention – and itscash – towards exporting the products.

Since the EU price is so much higherthan the world average, farmers aregiven a refund for each kilogram of but-ter or skimmed-milk powder theyexport, so that they can sell at somethingcloser to the market price and avoidmaking a huge loss on the transaction.This year the subsidies are !109 (£73) forevery 100kg of butter exported.

Trade campaigners argue that thescale of the exports – £47m was spent on

refunds in the UK alone last year –means rather than smoothing out fluctu-ations in dairy production, the exportsubsidies have created an entire industryout of dumping cut-price products inpoor countries, often damaging the localagricultural industry, and driving otherpotential producers out of the market.

Many of the countries revealed as

major destinations for exports are sur-prising. British firms were handed£11.8m over the two-year period forsending milk products to Nigeria, forexample, and almost £6m for sendingproducts to Côte d’Ivoire.

A recent report by Cafod found thatimports of cheap, EU-subsidised milkpowder had devastated the Jamaicandairy market, for example, causingdomestic production to plunge, anddamaging the livelihoods of small-scale,local producers.

For the consumers of the butter andmilk powder, the cut-price products canbe a bonus: that’s one argument oftenused to defend the subsidies. But in anyother industry, the idea of the Europeantaxpayer paying producers to sell goodsabroad at lower prices than in Europe’sshops would seem odd to say the least.

Campaigners complain that shiftingthe butter mountain into developingcountries stifles agricultural trade, bycrowding out domestic farmers whocan’t compete with the might of the EU.

‘In many of these countries, buying a

Exports of cheap European dairy products are crushing the livelihoods of developing world farmers, writes Heather Stewarton behalf of the EU, said Britain wouldlike to see them abolished.

‘We would prefer that export refundsdisappeared as soon as possible; but aslong as they are there, British farmers areentitled to claim them just like all EUfarmers,’ he said. He added that the gapbetween the fixed EU price and theworld price had narrowed in recentyears, and argued that the amount spenton export refunds had been ‘witheringaway’.

Britain’s small-scale dairy farmers,many of whom have been driven out ofbusiness recently, see little of the benefitsfrom the subsidies. They sell their milkto processors and supermarkets, which

often have a strong position in the mar-ket place, driving down farmers’ mar-gins. A recent report by aid group Cafodfound that farmers were paid less thanthe cost of production for their milk.Even the EU admits that the export sub-sidies are unfair, and agreed to phasethem out – though not for seven years.

But in the ongoing WTO talks, Man-delson is battling, on the EU’s behalf, tocling on to most of the lavish Cap sys-tem. Uncovering the details of the dairyexport regime, just one small corner ofthe Cap, confirms that any system aimedat fixing the market creates strangeanomalies, and knock-on effects else-where.

The new figures also powerfully con-firm campaigners’ claims that the smallfarmers who are meant to be protecteddon’t see much of the cash: and in a glob-alised marketplace, a scheme dreamedup in Brussels has ramifications thou-sands of miles away, including in some ofthe world’s poorest countries.

‘Milking The System’ is available at farmsubsidy.org

Peter Mandelsonagreed to Europegiving up exportsubsidies by2013. Critics saythis is no help tofarmers drivenout of business.

cow is one of the most reliable ways oflifting yourself out of poverty,’ saysThurston, who is trying to compile aEurope-wide directory of how Capsubsidies are spent.

Sheila Page of the Overseas Develop-ment Institute says small-scale farmersin Bangladesh or Indonesia would prob-ably not be the beneficiaries if the subsi-dies were removed; but more efficientexporters, such as Argentina and Aus-tralia, could win such markets in fair(unsubsidised) competition.

‘If they weren’t getting it from the EU,they would be getting it from some-where else – Argentina, South Africa,Australia,’ she says.

Peter Mandelson, who negotiates onbehalf of Europe in the current ‘DohaRound’ of World Trade Organisationtalks, agreed in December that Europewould give up its export subsidies by2013. However, it it is not clear how thephase-out will happen.

Page says that’s little help for farmersin poor countries who have been drivenout of business by the existence of thesubsidy regime. ‘They’re being damagednow, and the fact that the subsidies won’texist after 2013 won’t be much comfort.’

Britain argued strongly for an earlierdeadline for the abolition of export sub-sidies, but Mandelson made it clear thathe saw the 2010 deadline advocated bysome campaigners as ‘unrealistic’.

A spokesman for the Department forthe Environment, Food and RuralAffairs, which administers the payments

F armers are given arefund for each kilo ofbutter or skimmed-milkpowder they export| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

European taxpayers arepaying producers to sellgoods abroad at lowerprices than in Europe| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Land of milk and moneyEACH TIME you rip open aminiature plastic packof butter to spread onyour in-flight roll, half-wayacross the Atlantic, thecaterer is clocking uphow much it can claimfrom the European Union for‘exporting’ a dairy product.

The giant milk processors and tradersare not the only firms able to dip into tax-payers’ cash each time milk or butter leavesthe EU. Gate Gourmet and Lufthansa Sky

Chefs, the major providers of in-flight catering, are among thestrangest claimants of exportsubsidies for dairy products.Each of them has received

more than £100,000 over thelast two years.The EU also paid out

£14,026 in export refunds toNeal’s Yard, the upmarket cheesecompany with swanky outlets inLondon, which also sends itsproducts overseas, including tothe US.

Another £1.75m was claimed inBritain by companies carrying milk prod-ucts out to ‘ships’ stores, oil and gas rigs’,while £1m was paid out for ‘victualling’ on

vessels belonging to non-EUmember states,

which apparentlyalso qualifies asexport. And£4,092 of taxpay-ers’ money wenton sending milk products to

Antarctica.

Renault chutesur un marchéfrançais en baisse

DROIT D’OPPOSITION DE LA CGT ET SUD

Accord controversé pourla future Banque Postale

L a Poste continue d’affronterles obstacles pour créer sa

filiale bancaire. Un accord-cadre a été signé fin septembrepour accompagner le person-nel qui basculera vers la BanquePostale. Ce texte a fait l’objetd’un droit d’opposition deSUD et de la CGT, organisa-

tions majoritaires. Faute d’ac-cord, les mille cadres devant re-joindre la banque manquaientde garanties. Aussi La Poste a-t-elle troqué son accord-cadrepour un accord réduit au péri-mètre de sa filiale Efiposte.SUD entend porter l’affaire de-vant les tribunaux. P. 24

32.000 SUPPRESSIONS D’EMPLOIS D’ICI À 2008

Purge sociale chez Deutsche TelekomDeutsche Telekom, premier

opérateur européen de télé-phonie, a annoncé hier qu’il al-lait se séparer de 32.000 salariésen Allemagne durant trois ans.Ceprogramme devrait lui coûter3,3 milliards d’euros. Le pluslourd fardeau revient à la filiale detéléphonie fixe,T-Com,qui devrase séparer de 20.000 personnes

sur 111.000 à temps plein qui, àla fin 2004,représentaient près dela moitié de l’ensemble du per-sonnel. La Bourse a salué cetteannonce. Le syndicat des ser-vices Ver.di a l’intention de résis-ter à ce plan. Un moratoire signéavec les syndicats interdisait àl’opérateur de supprimer des em-plois jusqu’en 2005. Mais son

patron, Kai-Uwe Ricke, n’a ja-mais exclu que des mesures de ra-tionalisation soient lancées aprèscette date. La téléphonie est enplein bouleversement.L’espagnolTelefonica vient ainsi de lancerune offre amicale sur le britan-nique O2. Hier, l’irlandais Eir-com annonçait avoir été approchéen vue d’un rachat. P. 21

! ÉCONOMIEEMPLOI. Le Cerc veutréformer l’indemnisationdu chômage. P. 4

! ENTREPRISESCLUB MED. Retour àl’équilibre en 2005. P. 18

RENSEIGNEMENTS. FranceTélécom compte resterleader du marché. P. 22

! FINANCERÉASSURANCE. Swiss Reaffaibli par les cyclones.

P. 24

! MARCHÉSEURONEXT. Activitéhistorique en octobre. P. 27

! « La Tribune » publie l’étuded’un groupe de recherchequi lève une partie du voilesur ce que touchent 24 grosbénéficiaires de la politiqueagricole commune européenne.

! Mais la France refusetoujours de révéler leur nomen s’abritant derrièrela protection des donnéesprivées.

! Pourtant, sous la pressiondes ONG et avec la bénédictionde Bruxelles, plusieurs payseuropéens ont livré des listesnominatives.

Agriculture : à qui profitela PAC en France

P. 2 ET 3 ET ÉDITORIAL P. 43

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A lg érie : 85 DZD . A llemagne : 1,55 !. Andorre : 1,40 !. Ant illes-Réun ion-G uyane : 2 !. Be lg ique : 1,25 !. C anada : 2,75 D C . Espagne : 1,50 !. Grand e-Bretagne : 1,10 LS. Grèce : 1,65 !. Ita lie : 1,55 !. Lux : 1,25 !. Maroc : 14 D H . Portuga l cont . : 1,60 !. Su isse : 2,60 FS. Tun isie : 1.800 MT. Zone C FA : 1.150 F C FA . ISSN 0989-1922.

LaTribuneJeudi 3 novembre 2005 - 1,20 !* LE QUOTIDIEN ÉCONOMIQUE ET FINANCIER www.latribune.fr

L es immatriculations de l’ex-Régie ont baissé de 11,7 % en

octobre. La plupart des modèlesplongent. Le gâteau automobilefrançais s’est replié de 5,8 %.

P. 14

L’ANALYSE DU JOURPhantasme et réalitédu péril chinois. P. 32

E s p è c e e n v oie d ’ a p p a ritio n e n b o u r s e

p a g e 9

No 24.465 - 3.279

"

EU Budget Transparency (at last!)

30 Sept 2008: Pillar 2 + non-CAP

30 April 2009: Pillar 1

Farmsubsidy.org 2.0

(March 2009)More interactivity

More mapping

More analysis

Faster and more powerful searching

Some analysis:

Two insights

Insight 1

A flat rate for

direct payments

would mostly benefit

new member states

Elláda

Malta

Nederland

Belgique/België

kypros/Kibris

Danmark

Deutschland

Ireland

Luxembourg

France

Italia

Slovenija

Sverige

Česká republika

Suomi/Finland

United Kingdom

Österreich

Magyarország

Slovensko

España

Polska

Portugal

Bulgaria

Lietuva

Eesti

Romania

Latvija

0 100 200 300 400 500 600

Direct payments, € per hectare, 2013

Elláda

Malta

Nederland

Belgique/België

kypros/Kibris

Danmark

Deutschland

Ireland

Luxembourg

France

Italia

Slovenija

Sverige

Česká republika

Suomi/Finland

United Kingdom

Österreich

Magyarország

Slovensko

España

Polska

Portugal

Bulgaria

Lietuva

Eesti

Romania

Latvija

0 100 200 300 400 500 600

Direct payments, € per hectare, 2013

A flat payment at

at €229 per hectare

Elláda

Malta

Nederland

Belgique/België

kypros/Kibris

Danmark

Deutschland

Ireland

Luxembourg

France

Italia

Slovenija

Sverige

Česká republika

Suomi/Finland

United Kingdom 7

14

14

22

32

39

54

58

82

110

128

133

209

211

359

366

Subsidy cut per hectare / €

Latvija

Romania

Eesti

Lietuva

Bulgaria

Portugal

Polska

España

Slovensko

Magyarország

Österreich

0 100 200 300 400

1

10

34

45

49

69

78

99

108

110

149

Subsidy gain per hectare / €

€ 229 - flat rate

Insight 1.1

A flat rate for direct

payments would mostly

benefit new member

states but presents

political challenges

Insight 2

New member states get a

better deal from rural

development than from

direct payments

0

100

200

300

400

500

600

0 100 200 300

Dir

ect

Pay

me

nts

/ €

pe

r h

a

Rural Development / € per ha

2013

0

100

200

300

400

500

600

0 100 200 300

Dir

ect

Pay

me

nts

/ €

pe

r h

a

Rural Development / € per ha

Czech Republic

O

2013

EU-15

EU-12

0

100

200

300

400

500

600

0 100 200 300

Dir

ect

Pay

me

nts

/ €

pe

r h

a

Rural Development / € per ha

Czech Rep

O €229

€72 2013

EU-12

EU-15

Three core questions

Entitlementsv.

Targeting

Incentive paymentsv.

Regulation & law

Common policyv.

National/regionaldiversity

CAP is...

“little more than an instrument for Ministers of Agriculture to get for

their farmers in Brussels and in the name of Europe what they would not get at their national Cabinet

tables.”

Lord Dahrendorf, former European Commissioner.

Thank you for your attention

jack@farmsubsidy.org