EU aid for agriculture to reach "at least" €26m in four years

Agriculture Minister Ninu Zammit told parliament yesterday that the European Union had so far agreed to contribute €26 million for the Maltese agriculture sector over the next four years. This amount, he said, amounted to a third of total expenditure of some €80 million euros on the package for agriculture up to 2006 and a higher amount of EU aid was currently under negotiation.

The minister also announced that the EU had agreed on a "safeguard clause" with regard to agricultural imports, whereby Malta may take remedial action over the next five years if those imports distorted local agricultural production.

The minister, who was speaking during the budget debate on the Ministry of Agriculture and Fisheries, said supply measures had also been negotiated with the EU whereby Malta could continue to import agricultural products for the domestic market from non-EU countries at current prices.

Yesterday's debate, however, was dominated by the new tax system for farmers announced in the budget.

Opposition agriculture spokesman Noel Farrugia called on the government to revise the system, saying the figures on which it was based were "laughable".

He said the government had estimated that farmers' costs were an average of 20 per cent of the value of their products, but the figure of 40 per cent had been established for tax purposes.

Although the government was claiming to be generous, the opposite was the case because the average costs for farmers were actually some 60 per cent and in some cases rose to 80 per cent.

The figures that the government had announced needed to be urgently revised. The government also needed to apologise to the farmers, more so as they had first been told that the agricultural census would not be used to calculate their profits.

But Mr Zammit said the workings of the new system were based on information given by the farmers themselves through the agricultural census and confirmed in a survey among a voluntary group of farmers.

He said the government had doubled the estimate of farmers' costs to 40 per cent, leaving a taxable amount of 60 per cent of their sales. Farmers who could prove they had higher costs would have their tax calculated accordingly.

Thanks to the new scheme, farmers would not pay any tax on net sales of up to Lm7,166 compared to Lm5,375 as at present.

The new tax system would initially apply only to fruit and vegetable growers.

Under the new system, the subsidy would be given only to those who declared their production at the vegetable market.

Mr Zammit also spoke on the package of assistance to farmers. He said the package would cost €80 million between 2003 and 2006 and the EU had already agreed to pay €26.5 million, a third of the total. More amounts were currently the subject of negotiation.

Mr Farrugia said earlier that while in Brussels recently, he had come across a document published in October by the EU which said that Malta had made some progress in alignment with the acquis insofar as fisheries were concerned, but it had neither completed the fishing register nor developed a management plan for the fleet capacity according to fish resources. This meant, Mr Farrugia said, that the talks on the fisheries chapter were held in the dark and there would be uncertainty. It was bad enough that Malta had lost its 25-mile fishing zone.

The report also said about agriculture that while Malta had set up administration structures, these remained very weak. The rural development plan had been completed but the structures for the implementation of rural administration were delayed. The word "delayed" showed up throughout the report, despite this government having been in power for four years.

It was no wonder that farmers and fishermen still did not know what had been agreed with the EU.

Mr Farrugia criticised the government for having shelved the rehabilitation of Wied il-Qlejja. Indeed the rural environment had not been taken care of throughout Malta and in some cases, rubble walls had been replaced by concrete, such as at the Mtarfa Bypass.

He also complained that no progress was made in the past four years on organic farming.

Touching on tuna fishing, Mr Farrugia said it was not clear whether fishermen's cooperatives were to be allowed to use purseiner nets. Would they be compensated for the damages they suffered in clashes with foreign fishermen on the high seas?

Mr Farrugia insisted that the MLP's option of seeking a partnership with the EU would be better for agriculture and fisheries than membership. The partnership policy would allow Malta the option to import its food from third countries, rather than EU states, when that made financial sense.

Through EU membership, imports had to be made from EU countries, or else they would be subject to high tariffs, and hence, high prices for consumers.

The partnership policy would also enable Malta to impose import levies only on products it did not produce.

Were Malta to join the EU, Maltese taxpayers' money would end up subsidising the European agricultural sector, even for products which Malta did not produce, such as tobacco.

Maltese taxpayers' money could be better channelled to support the building of a new dairy, apprenticeship schemes and organic farming.

The government was arguing that it was negotiating supply measures to allow importation of certain products, such as sugar and beef, from third countries. But such supply measures would only cover the demands of the local market. If, say, caterers or juice makers wanted to export their output, their sugar imports for export products would cost more and hence their costs would rise.

Referring to potato exports, Mr Farrugia asked the minister to explain what export refunds had been given to Malta on its potato exports.

He also referred to the land registration scheme and asked what the position of farmers would be on the title of the land they worked once Malta joined the EU and foreigners could also work the land in Malta.

Mr Farrugia said it was about time that the government concentrated on the needs of the local agriculture sector, rather than the EU's.

Nationalist MP Tony Abela said it was significant that Mr Farrugia had not spoken on the way the government had negotiated with the EU on the assistance scheme for farming.

Apart from direct aid, farmers and fishermen would also receive financial assistance to upgrade their operations. Neither had Mr Farrugia said anything about the diesel subsidy for fishermen.

Farmers were also getting assistance to set up vineyards.

The past four years had also seen the enactment of laws to put cooperatives on a firmer footing, and there was also a new law on food safety.

Mr Zammit referred to remarks made by Opposition leader Alfred Sant. He said he could not understand how Dr Sant had said that power and water rates today were higher than they would have been under Labour. This was outrageous. Had Labour been in government, the bills farmers would have faced would have been seven times higher.

Mr Zammit said the government's policies were always aimed at protecting farmers' fair income, fair consumer prices, and protection of the rural environment.

The package negotiated with the EU met those purposes and accession would mean an urgently needed cash injection for the agricultural sector.

The assistance package prepared for farmers had already started being implemented.

In contrast, the EU in 1997 had told the Labour government that its plans to keep agriculture out of its proposed free trade area could not be entertained. Import levies had to be lifted, whether or not Malta joined the EU, even under World Trade Organisation rules, because they distorted the free market. WTO exceptions applied only for developing countries. Was Malta to continue to be considered as a developing country?

Labour had been unable to come up with an alternative to the levies, but the present government had done so through its package for the farmers which would cost a total of €184 million (Lm76m) over 10 years.

Referring to supply measures, Mr Zammit said it was obvious that such measures could only cover domestic demand. One could not import products at lower prices than other countries and then export those products to those countries.

As a result of the supply measures it had negotiated, Malta would for a defined period continue to purchase products such as meat, sugar, wheat and milk products such as butter from third countries at current prices, and prices for consumers would not be affected.

All this would not have been possible with the free trade arrangement the MLP wanted.

Mr Zammit reviewed the activities of his ministry over the past year, saying they were meant to ensure that the agriculture and fisheries sector became more efficient and sustainable. He said funding for this sector had risen from Lm7.7 million in 1998 to Lm20 million next year.

Mr Zammit recalled how Malta had overcome the threats of BSE and foot-and-mouth disease. The abattoir continued to be updated and a dairy compensation scheme had replaced the beef intervention scheme, thus encouraging farmers to produce more milk.

Fishermen, Mr Zammit said, had so far saved Lm500,000 through the government subsidy on diesel.

He said that a group of 18 experts would be coming to Malta to help the local industry in vine production by ensuring that the vines here were ideal for wine production. This project was being financed by the EU and was worth Lm500,000.

He said the agriculture ministry was being restructured to better regulate the sector.

The minister also defended the agreement reached with the EU on fisheries, and said the designation of a 25-mile fisheries protection zone around Malta would protect fish stocks. New fishermen could only enter this zone if anyone of the existing ones dropped out.

He said local fishermen's cooperatives could use purseiner nets in agreement with the Fisheries Department.