A website dedicated to shining daylight on subsidies, farmsubsidy.org, has published a list of the agrimillionaires from 2008, the 710 businesses or individuals who received more than 1 million euros from the European common agriculture policy.
An Italian sugar company received the most – nearly 140, million euro. The smallest subsidy millionaire was an Austrian cheese company which received a relatively modest million euro.
These are large sums of money. However, Phil’s Business Blog reckons that demonising companies and individuals receiving large payments is misdirected.
For a start, it’s little surprise that sugar processors currently top the CAP payments league table, since they are involved in a major restructuring scheme designed to cut EU production and comply with WTO rules.
And at farm level, there has never been any logic to subsidy caps. Since decoupling, direct payments to farmers are supposed to be about the delivery of public goods, and it is often large farmers that are doing the most.
It is also the case that large farmers tend to employ more people, both directly and indirectly. Furthermore, restricting subsidy according to farm size can only act as a disincentive to efficiency.
That may be right but it still doesn’t justify taking money from taxpayers, giving it to producers and manufacturers who then compete unfairly with other more efficient producers elsewhere and increase costs for consumers, most of whom are taxpayers who funded the subsidies.
It’s just a giant money-go-round supporting a giant bureaucracy and handicapping free trade initiatives.
New Zealand farmers were forced into the real world when subsidies were taken away more than 20 years ago. It wasn’t much fun at the time, but it’s made us much better at what we do and much more attuned to the market than we ever were when farm incomes went up and down by government whim.
Free trade is better for consumers and, while the transition from subsidies to standing on your own feet isn’t easy, it’s also better for producers.