Europe's farmers should not be allowed to go on harvesting subsidies

Franz Fischler, the European Union's Agriculture Commissioner, must wonder what he ever did to deserve such punishment, for his is the worst job in the EU. Every commissioner likes to think that it is his destiny to reform the Common Agricultural Policy (CAP); one by one they bite the dust. Today it is Mr Fischler's turn to publish his proposals.

Unlike with previous efforts, which were never really backed by the political will for reform, this time round there is – or, rather, should be – no alternative. Reform must happen. The accession of 10 new member states in 2004, due to be agreed at the Copenhagen summit in December, makes reform imperative. Payments to Europe's farmers already account for almost half of the EU's annual budget of £26.5bn. Poland alone, one of the would-be entrants, has more people dependent on farming than France, Britain and Italy combined. The new members will more than double the number of farmers in the EU and add an impossible £6bn to the cost of the CAP.

Mr Fischler proposes that the new entrants receive only 25 per cent of existing CAP subsidies in their first year of membership, rising to 100 per cent by 2013. That should, in theory, not be so great a burden as it appears, since his parallel proposal is for subsidies to existing member states to be cut. He is selling his scheme on the basis that, by transferring 20 per cent of existing direct payments away from farmers and into new rural development schemes, it is also environmentally friendly.

On one level, he deserves support. Even such relatively modest proposals – he is not proposing to alter the basic principle of an EU farm subsidy – are beyond the pale for French, Irish, Portuguese and Italian farmers, and thus their governments, the greatest beneficiaries of the CAP. Hervé Gaymard, the new French agriculture minister, has said that France will not accept what he describes as the "tactical" use of EU enlargement to change subsidy arrangements.

Yet the mere fact that subsidy junkies oppose the proposals does not alter the fact that, as a programme for putting agriculture on a sensible footing, Mr Fischler's plan is still fundamentally flawed. If anything, his aim of switching some subsidies for existing member states to investment in rural areas is more suited to the new entrants, which are characterised by their many small, and often archaic, farms and infrastructure.

But there is a deeper flaw still. So long as we continue to accept the subsidy principle, then we will only ever be stuck in frustrating arguments about the share of the spoils. Subsidies were a useful device in the post-war years, when the overriding need was to ensure regular food supplies. No such need exists today – the problem is overproduction, not underproduction.

Indeed, subsidies not only warp the EU budget, they also have a devastating impact beyond our borders. A 40 per cent liberalisation of agriculture is estimated to generate the same gains – $70bn – as a 40 per cent liberalisation of manufacturing, despite the agricultural sector's much smaller size. That is the scale of the CAP's distortion. The best thing we can do for the developing world is to move towards free trade. Everyone would gain – consumers would pay less, the EU budget could be more sensibly spent and developing world farmers would be given access to the markets they need. Even the EU farming industry here would benefit by a restructuring which enabled it to stand on its own two feet.