At G-8, E.U. pledges €1 billion for agriculture in Africa and beyond

High food prices are allowing Europe to reallocate money usually budgeted for European farm subsidies.

There may be a bright side to the food crisis, at least for farmers in the developing world. The European Commission has announced that it will divert the funds it normally sets aside to buy up surpluses from European farmers to agriculture in Africa and other struggling regions.

"Our idea is to use unspent Community funds in a creative and positive way," European Commission president José Manuel Barroso said Monday at a meeting with African leaders at the G-8 summit. "I am announcing today our intention to establish a €1 billion ($1.57 billion) facility to support agriculture in developing countries. This will aim to generate a strong and rapid agricultural supply response."

In the past, that €1 billion would have gone to paying for the so-called "grain mountains" and "milk lakes" that resulted when EU farmers produced more than they could sell. The European Union's Common Agricultural Policy (CAP), which consumes 40 percent of the EU's total budget, provides subsidies for farmers who produce surpluses of certain crops.

But with spiraling food prices (7.1 percent higher in EU member states this April than the previous year), European agriculture no longer needs the safety net. And with many parts of the world suffering food shortages, the EU, said agriculture commissioner Mariann Fischer Boel at a conference on the crisis last week, "needs to act now to boost harvests [in developing countries] over the next seasons."

According to Ms. Fischer Boel, whose office expects to announce details of the plan next week, the money will be used to help impoverished countries feed themselves. "If European farmers effectively give a helping hand to developing countries' farmers to get access to seed and fertilizer, this would be a clear sign of international solidarity and would – in the interest of us all – increase production and help to stabilize the markets."

For those on the front lines of the food crisis, news of the funding is welcome. "It's very important that this kind of aid reach Africa," says Germán Rojas, Spanish spokesperson for the UN's Food and Agriculture Organization.

Wyn Grant, a professor of political science at Britain's Warwick University who specializes in agricultural policy, favors the plan because it provides that aid without jeopardizing the interests of European farmers. "Given that there's a surplus, it's a good way of helping developing countries at a time of agricultural crisis," Professor Grant says. "And it doesn't affect the money available to each member state, or the entitlement of the individual [European] farmer."

But newer members of the EU, whose share of the CAP will only gradually reach the levels of older members, are less enamored of the plan.

"My official position is that this is good for developing countries," says Achim Irimescu, agricultural minister for Romania's permanent mission to the EU. "My unofficial position is that it's not the best idea. We're facing huge problems in the new member states, and we still have a lot of poor people in Europe."

Romanian farmers receive, on average, only 30 percent of what German farmers get in direct CAP payments. They will soon see other subsidies disappear, like the €45 per hectare they receive for growing biofuel crops.

Mr. Irimescu argues that the money could be better spent to modernize production in the new member states and help farmers there meet the EU's high standards regarding the environment and animal welfare. "In Romania, we have lots of farmers who are still using horses to plow their tiny 10 hectares of land. Think what they could do with that money."