The second group was the anti-reform alliance consisting of France, Germany, Ireland, Italy, and Spain. These countries took issue with nearly every aspect of the reform package, in particular decoupling and modulation. Germany, with large farms in the east and highly efficient farms in the west, opposed a limit being placed on total CAP payments. Both of these sets of farmers would be adversely affected by a limit on the total payment a farmer could receive. German farmers in both the east and west were already receiving more in direct payments than the proposed payment cap would allow. These member states also opposed the timing of the reforms, arguing that Agenda 2000 should be fully implemented before any further reforms were adopted . France’s position became even more staunchly anti-reform after a leftist cabinet was replaced by a center-right government in 2002, and Hervé Gaymard, a member of Chirac’s own party, was installed as minister of agriculture. Several agricultural lobbies posed three main reform critiques of their own. The lobbies argued that the new system of payments would not allow farmers “in the least-favoured regions, where low productivity and lower competitiveness” predominates to earn a livable income . The result, they argued, would be land abandonment and an increase in unemployment. Second, they voiced the concern that paying farmers regardless of production would negatively affect public opinion and could ultimately result in the complete termination of direct payments to farmers . Third,vertical farm tower the proposal to base the direct payment on historical yields would serve to perpetuate past discrimination in favor of certain products, producers, and regions .
The third group represented those countries in the middle that, while not completely opposed to the reforms, had some specific objections. Countries in this group were Austria, Belgium, Greece, Finland, and Luxembourg . Finland and Austria were traditionally protectionist agricultural countries and thus supported subsidies as a means to help their farmers. However, because Austria and Finland each had an agricultural sector that was predominantly small-scale and high value added, they favored strategies for rural development, greening, and multi-functionality, as opposed to production-based subsidies that favored large scale cultivation of commodity crops . At a meeting of the Council of Ministers on 8 April 2003, decoupling was discussed for the first time. Only the UK, the Netherlands, Sweden, and Denmark expressed support for Fischler’s proposal to completely disconnect payment from production . Most of the other member states preferred partial decoupling, whereby a portion of a farmers’ income payment would continue to be linked to how much he or she produced, but no member state offered any concrete ideas or proposals for how partial decoupling could be carried out . While many countries were neither fully opposed nor fully in favor of the reform, no agreement could be reached without breaking the French-led blocking minority. Under the rules of QMV, a blocking minority consisting of a minimum of 4 countries that represented at least 35% of the population could prevent the passage of a proposal. Given the existence of this blocking minority, member states in the middle had no incentive to officially back reform, particularly since their formal support might provoke the ire of the farming community at home. There was no incentive to express support or even negotiate on the terms if the blocking minority could thwart the whole package. Though the Commission preferred to pass reforms with unanimous support, with the continued expansion of the EU, it was no longer feasible to pass reforms only with unanimous support.
The adoption of QMV facilitated a faster negotiation process than was possible under unanimity rules, and ensured that a single country could not use a veto to stymie reform. Ireland ended up abandoning the anti-reform group early. Irish farmers’ unions opposed the reforms, but their members did not. The farmers supported the reforms because they felt they would provide them with adequate income support while also giving them the freedom to farm a greater diversity of crops . Even without Ireland, however, the other four countries, France, Germany, Italy, and Spain, could form a blocking minority on their own under the rules of QMV. In order to break this minority alliance of France, Germany, Italy, and Spain, Fischler targeted the Spanish delegation, as it was believed that “Spain joined the French to gain some breathing space” rather than because of outright objection to the reforms . Fischler asked British Prime Minister Tony Blair to reach out to Spanish Prime Minister Aznar . Spain was a crucial country to flip, because it would break the blocking minority led by France. Blair agreed but asked Fischler to drop the capping of direct payments in exchange. These caps, which would be applied primarily to big farms, would hit the UK especially hard . Fischler agreed and Blair began working with Fischler to swing the other member states in support of reform. One of Spain’s central demands was to amend the decoupling proposal to allow for partial decoupling in certain sectors, at the member states’ discretion. Partial decoupling would allow the Spanish government to continue allocating a percentage of income payments based on production in sectors important to Spain, namely sheep and goat farming. Once that concession was made, Spain shifted in favor of the reform. With the blocking minority broken, France and Germany quickly followed suit, hoping to grab some concessions in exchange for their support of the reform Similar to Spain, Germany and France also received a concession that allowed them to keep a certain percentage of income payments coupled to production for sectors of importance.
The French switch was also motivated by pressure from the Association Générale des Producteurs de Blé , the cereals division within the FNSEA. Chirac’s opinion was strongly influenced by that of France’s national farming union, the Fédération nationale des syndicats d’exploitants agricoles , with some Commission officials describing Chirac as “entirely beholden” to the FNSEA . Chirac completely opposed decoupling until he was approached by AGPB leaders, who told him that they supported the policy change . The cereals farmers reasoned that Fischler’s reform, with cuts to price supports being compensated for by direct income payments,vertical plant tower was far better than the uncertainty of an unreformed CAP. They feared that if left unreformed, the CAP would be subject to dramatic price cuts in the future to bring it into alignment with budgetary standards, and that no compensation would be offered for the price cuts. In addition, given that the French cereals sector was highly efficient and competitive independent of inflated prices, they believed that the new system would allow them to conquer additional market share. Farmers from other member states would be less competitive without inflated prices to support them. In exchange for its support for the reform, Germany was able to secure a concession that allowed for the SFP to be based on a regional calculation, as opposed to historic production receipts. The EU’s proposed historical method of calculation tended to perpetuate past inequalities across products, producers, and regions . Under Germany’s regional model by contrast, all farms in a region would be eligible to be paid the same amount, regardless of what they had produced in the past. This model was preferred by Germany in large part because of internal diversity in its farming community. Of course, there was a large gulf between the west and the east, but more importantly there was diversity within the same region depending on the type of farming undertaken and the location of a farm within a given region. The regional model, then, would eliminate the inequalities in payment perpetuated by the historical model and ensure that all farmers in a given region were paid the same. The calculation for payments under the regional model was based on all eligible hectares of agricultural land in the region. This method allowed both grassland and arable land to be included in the calculation, potentially increasing the amount of support included in the financial envelope for each region. After calculating the amount each region was entitled to, member states using this calculation method could, if they wanted, move money from one region’s financial envelope into the envelope of another region. For example, the government had the option of redirecting some of the money owed to farmers in the most fertile regions, such as Bavaria, to farmers in areas that would earn far less under the regional calculation, such as those farmers in the difficult to cultivate lands around the Alps and to the large but inefficient farms of the East. This modification of the regional calculation method was intended to help counties address disparities in farmer incomes within their country.
France, Italy, and Spain also extracted amendments to the decoupling proposal allowing member states to avoid full decoupling in certain sectors if the member state believed that “there may be disturbance to agricultural markets or abandonment of production as a result of the move to the single payment scheme” . In other words, if countries feared that the transition to full decoupling might result in many farmers abandoning their land or would “disturb agricultural markets”, a vague phrase, left open to interpretation, they could avoid the transition to full decoupling. This concession essentially allowed member states to protect nationally important or favored sectors. The sectors where partial decoupling was permitted included: cereals and arable crops, sheep, goats, suckler cows, and slaughtered cows. In the end, the reforms passed with the support of every country but Portugal, which still wanted a higher milk quota . The final agreement on the MTR achieved Fischler’s goal of implementing the reforms necessary to save the CAP. The Single Farm Payment changed the way farmers received income support, weakening the link between these payments and production. By implementing this reform, the CAP would be able to continue to function once the new member states were fully incorporated in the CAP income payment scheme. The level of production in the current EU was already financially unsustainable if support was coupled. Adding the new member states, with a larger percentage of the population employed in agriculture and higher levels of production, to the existing system would explode the CAP budget. The final agreement also included modulation and cross-compliance, two programs intended to strengthen the environmental objectives of the CAP, addressing public dissatisfaction over unsafe food, agricultural pollution, and inequalities in CAP spending. Modulation re-directed a percentage of a member state’s income support funds into programs that supported rural development and environmental objectives. Some of the funds collected through the modulation system could also be re-distributed amongst the member states in an effort to correct inequalities in allocation of CAP support across the member states. Cross-compliance conditioned the receipt of income payments on meeting environmental standards. Despite their importance for the long-term survival of the CAP, these policies were only agreed to after many concessions and revisions were made to Fischler’s initial proposals. Table 5.1 highlights these concessions by comparing Fischler’s initial proposal to the final outcome.A new system of income support payments was agreed to, but payments were only partially decoupled from production and member states were offered numerous opportunities for exemption and delays in implementation across multiple sectors. Modulation was adopted, but at a much lower rate than Fischler hoped. As a result, little money would be directed toward environmental initiatives. Member states would also be allowed to keep a higher percentage of modulated funds than initially proposed, meaning that little redistribution among the member states would result from the program. Finally, new environmental standards were imposed under cross-compliance, but only at a lower level than initially proposed and with financial incentives attached to induce farmer cooperation. The discussion of the Fischler Reform in this chapter demonstrates four major claims in this dissertation. First, the case of the Fischler Reform, particularly when considered in comparison to Agenda 2000, illustrates how important disruptive politics, such as trade negotiations or enlargement, may allow for further-reaching reform than would otherwise be possible. Second, this case illustrates that even when other factors and influences combine to create an opportunity for major policy change, CAP reform still resembles the logic and process of welfare state retrenchment. The changes that were adopted are limited, are less dramatic and far reaching than initially proposed, and were often slow to take full effect.