12 - 18 July 2001

EU impact report on agriculture: Report omits some crucial details

by Ivan Brincat

The report on the impact of EU accession on agriculture is seen as one of the best ever carried out on the state of the agriculture sector in Malta. It does, however, leave out some details which could be crucial for the sector to survive EU membership.
Industry sources told The Malta Business Weekly that the authors of the report admitted that it is static, adding that if levies were to be removed, then the percentage sale of Maltese products will go down.
“We do not spell a disaster but it is obvious that if the price of foreign products currently protected by levies goes down, then some consumers will chose foreign products,” the sources said. “This fact is not taken into consideration in the report and is deemed to be very important for various sectors of the industry from farmers to the dairy producers.”
For example, when the levies for wine are removed, the price of imported wine is expected to drop tremendously. “There will still be a demand for local wine, especially from tourists but the Maltese can shift to an imported product if the price is the same or even cheaper. Such an impact should have been calculated.”
In the report it is calculated (a pessimistic figure) that the government will have to fork out Lm7,200,000 in subsidies a year to farmers and operators in the agriculture industry.
The report of CIHEAM-Iam Bari is deemed to be one of the best ever. “It was carried out by very competent people and clearly shows the problems faced by the sector.”
The Agriculture Chapter will be discussed during a MEUSAC meeting next week and is expected to be opened under the Belgian presidency of the European Union which has just begun.
The sector is deemed to be very important. “What we have to realise is that for 50 years, the government (all governments) has built a huge wall around agriculture introducing levies and protection instead of subsidising farmers and people in the sector. This was being done when other countries were subsidising their farmers.”
Now the agriculture sector will be liberalised whether Malta joins the European Union or not.
The sources who spoke to The Malta Business Weekly said that if Malta did not join the EU, it would still have to adhere to World Trade Organisation (WTO) rules which call for the liberalisation of the sector. “This might come a bit later but it is a challenge we will have to face.”
“A 50-year-old problem cannot be solved in just a few months, how-ever, and we need a transition period so that the sector can have a soft landing. We also need huge reforms in the Department of Agriculture and in the Ministry and these have to be geared in a way to be able to tap the EU funds available for agriculture.”
The sources said the ministry and the department should be geared up to make full use of the funds available for agriculture since this represented a huge chunk of the industry.
Moreover they are calling on a rural development plan to be carried out because so far 10 per cent of the CAP goes to rural development and this is set to increase in the coming years. “To benefit from this fund, we have to prepare programmes from now, otherwise we risk losing on funding,” the sources said.
Operators in the industry are therefore very anxious to see what the special package, which the government will propose to the EU, will consist of.
“Next week’s meeting should give us a precise idea of what the government is requesting. It has already been stated that a special package for Malta will be requested but we still have to see the details of this request.”
The report of CIHEAM had highlighted various areas which the government could focus on during the negotiation process as good reasons for asking for substantial compensation which the EU should be prepared to discuss with a sympathetic attitude.