Agriculture and consumers

What exactly is being negotiated on agriculture? And why should it be of interest to consumers?

There are two major issues at the centre of negotiations on agriculture. One relates to the gradual removal of levies on imported products. The second relates to products that we currently buy at prices that are cheaper than EU prices.

Both these points have a direct impact on farmers and all those involved with the agricultural sector. But they are also of direct interest to consumers too. Here is why.

With respect to goods that are currently protected by import levies, it is clear that membership will require the removal of levies on EU imports. This will bring about lower prices for consumers on food and agricultural products. And it will become visible from July this year when the prices of pork, poultry and eggs will be the first to go down.

But it will also bring about stiff competition for local farmers and processors who will gradually be exposed to competition with EU products. This is why, as part of its negotiating position on agriculture, Malta is putting forward what has been referred to as a "special package" for Maltese agriculture.

This provides for a gradual removal of levies on imported products between July this year and 2008 at the latest, or exceptionally by 2010, depending on the product. In return, it also provides for direct financial assistance to Maltese farmers that adds up to Lm70 million over a period of 12 years.

Subsidies will be paid to all farmers, whether full-time or part-time and irrespective of whether they are part of a cooperative or a producers` organisation.

It is important to note that during negotiations, Malta is requesting the EU to co-finance this direct financial assistance to Maltese farmers after membership. This means that those who claim that these subsidies will be shouldered by the Maltese taxpayer are assuming, prematurely, that negotiations on this point will not be successful.

Furthermore, a rural development programme is being finalised. This will provide support for the agricultural sector over and above the direct assistance to compensate for the removal of levies. Rural development supports projects such as improving the processing and marketing of agricultural products as well as training.

Some rural development initiatives will start before membership and will be co-financed by the EU through pre-membership funds (Lm1.3 million). After membership, Malta will be eligible for rural development funds from the EU just like other member countries.

However, it must be said that farmers` representatives are generally still unhappy with this package outlined above.

The second major negotiating issue in this sector relates to goods, such as beef, wheat and sugar, that we currently buy at international market prices, which are cheaper than EU prices. As a result of membership the price of these products will increase. At times significantly. This would have a direct and negative impact on consumers.

However, it must also be said that during negotiations, Malta is specifically requesting to continue buying these products at international market prices even after membership, until they remain cheaper than EU prices. If this request is accepted, the fear of higher prices on these products for industry and for consumers will be addressed.

Again, on this issue we must await the outcome of negotiations. But one should not prematurely assume that it cannot possibly be negotiated.

Throughout, Malta`s negotiating position is based on a very simple premise, namely that left to its own devices, Maltese agriculture will not be able to compete effectively in the EU market. Yet, it is clear that our country cannot afford to lose this sector, not least because we need to preserve it for environmental reasons.

And if we want to preserve our agriculture, it must be supported. This is why Malta is making a case for our agricultural sector to be supported.

Of course, this support comes at a price. The question is who will pay the price. During negotiations, the thrust of Malta`s negotiating position is that this price must not be shouldered entirely by the Maltese consumer or the Maltese taxpayer but it must be shared by all involved, including the EU itself.

Negotiations in this area are still at an early stage and understandably they are considered among the toughest and most sensitive. This should not come as a surprise because there are important interests at stake. Both for farmers as well as for consumers.

Even from an EU point of view, it is also sensitive because rich EU countries are being called to dig deep into their pockets to support the poorer agricultural sectors in the new countries that will be joining.

Negotiations in this area are expected to be concluded towards the end of this year.

Malta-EU Information Centre: Tel: 25909192; Fax: 227580; E-mail address: euinfo.mic@magnet.mt; Website: www.mic.org.mt

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