by G.E. Rossmiller and Frances Sandiford-Rossmiller
Overview
The project upon which this book is based began with the hypothesis that there are fundamental differences in values related to agriculture between the countries that presently comprise the European Union and those Central and Eastern European countries that have applied for membership (or indicated their intention to do so at some stage). Moreover, the hypothesis held that differences in beliefs about how those values might be realised would make any accession negotiations difficult at best, and, at worst, would be a source of tension and dissension long after actual accession. At the very least, it was postulated that the values and beliefs brought to the EU table by the Central and Eastern European countries would change the future balance of views and power within the EU by shifting the weight of opinion in as yet unpredictable ways on any given agriculture-related issue.
When we raise these questions, we are focusing on the 40 plus years of communist rule with central planning and little private sector activity that occurred between the aftermath of World War n and the end of the 1980s and early 1990s. Had the post-war communist era not taken place, it is tacitly assumed that Central and Eastern Europe (note the exclusion of the former USSR) would have evolved along lines similar to those of Western Europe. Obviously, the counter-factual evidence does not exist to support or rebut such a heroic assumption: the heroism lies most particularly in the avoidance of the question as to how the individual countries of Western Europe, as well as what is now the European Union, might have evolved during the post-war period had there been no Communist bloc to divide the continent economically and socially, as well as politically and ideologically. One might think especially of pre-democratic Spain, Greece and Portugal, and the economically premature accession of the last two to the EU to secure their newly democratic regimes. There is, however, lime profit, albeit much pleasure, in speculating and theorising about what might have been. What does lie in our power is to look at where we all are now; where we wish to go; how we see ourselves getting there; and the obstacles that might be encountered. A project of this scope does not aspire to address any of these issues comprehensively, even for the agriculture sector, but maybe it has illuminated some of the rarely seen comers, if only to show what dust and debris have accumulated.
The deliberations of me project workshop indicated that there are indeed a number of fundamental areas of difference with implications for agriculture of which policy-makers within and without the EU should be aware. Some of these differences are between EU member states, and a better understanding of them might be of use in improving intra-EU relations. Others are between me CEE countries and some of the EU member states. The major findings are discussed below. First, we look at what East and West may understand by 'Europe' in order to set the stage for our investigations into the agricultural and rural sectors of the EU and CEE countries. Then we focus on the Common Agricultural Policy, in particular in relation to the family farm, agricultural trade, market intervention policies and consumer food policy, all areas where important divergences of opinion have emerged. Of indirect relevance to the CAP,- but bearing on sectoral efficiency, are differing views about the agricultural marketing system.
A relatively recent development of agriculture-related EU policy reflects a growing concern in parts of Western Europe about agriculture's impact on and relationship with the natural environment and resource use. Some of these concerns have led to changes in the CAP, and others fall within the ambit of the Environment Directorate. It is argued that the evolution in Western Europe constitutes a policy sea-change, with a new contract between farmers and society being the outcome. Major differences between East and West, as well as within the EU became apparent, and these are discussed within the broad framework of agriculture and the environment.
Finally, we look at the impact of the widely differing views held about the rural areas within which agriculture operates, and the shift towards broader rural and environmental policy from a more narrow focus on agriculture.
The EU and eastward enlargement
As noted in Chapter 2, ten CEE countries have entered into Association Agreements with the EU: the five CEFTA countries (Czech Republic, Hungary, Poland, Slovenia and Slovakia); the three Baltic states (Lithuania, Latvia and Estonia); and two Balkan countries (Romania and Bulgaria).1 What factors will determine who joins and how quickly? Most Western European sources, including the Commission itself, see future EU enlargement as taking place in phases, the most realistic date for the first wave being 2005 with just three or four countries, including Hungary, Poland and the Czech Republic, comprising the first wave. Individuals from those three countries (CEE-3) were, therefore, selected for participation in this project.
1 There are other Associated countries, including Cyprus, Malta and Turkey (whose association is the oldest and of more than thirty years' standing).
The next obvious question is what is it that those countries are joining? Any serious discussion about eastward enlargement of the EU raises questions such as "where is Europe?" and "what is Europe?", as well as "what is the EU?" Although not treated as a separate topic in the project's deliberations, these questions lay just beneath the surface of the papers and occasionally erupted during the discussions. It is worth weaving some of these threads of discussion into a bigger tapestry since they reveal beliefs about the nature of Europe itself, as well as values relating to the Grand European Design laid down in the Maastricht Treaty as the masterplan for the future EU.
If one tries to view the present situation and problems in the Central and Eastern European countries, particularly in relation to Western Europe, through the eyes of those who are living through it and the politicians who are trying to shape the transition and change according to their separate visions, the gap between eastern and western realities might appear to be enormous - even insurmountable. The concern is that the underlying values have diverged so far that lime common ground is left upon which to build a compatible reunification. For reunification it surely is, so one argument runs, when after 40 years a Europe divided (in some areas physically) now has the opportunity and is following the imperative to become a single Europe, however ill-defined and incoherent opinions may be as to what constitutes a 'single Europe.' Such a perspective presupposes, on no historical grounds whatsoever, that there once existed such an entity that was broken, and can now be made whole again. But despite large shared areas of culture, religion and history, there have always been divisions and divergences, and vastly different historical experiences. For example, a major split with far-reaching consequences - the Great Schism - occurred between Western and Eastern Christendom, i.e., between what became me Roman Catholic West and the Orthodox East; and the fall of Byzantium to the Ottoman empire subsequently split the Orthodox world. Interestingly, discussions today about where the boundaries of 'Europe' lie - 'European countries' with whose perceived values and beliefs Western Europeans feel comfortable enough to accept them as part of the EU - often hark back to those old fault-lines.2 And where, therefore, are the eastern and southern boundaries of this Europe?
2 This might be because western Europeans are using some sort of historical geopolitical understanding of their common culture to determine who is an insider and who an outsider.
Although the idea of a reunited Europe is mythical, it is one that has clearly had real importance as a lodestone to point the way out from under the communist yoke. In this understanding, the values perceived to be associated with 'free Europe' underpinned and effectively legitimised the democracy movements. The problems then came during the period of transition when the achievement of the perceived values was found to have a much higher cost than had been anticipated, with the consequence that to a greater or lesser extent the values themselves have been called into question, and even compared unfavourably with some of the values expressed by communism. This is most apparent in the concern over the loss of social protection and cohesion to pay for individual economic freedom. The effect of some of the outcomes of the liberalisation process, such as high levels of unemployment in Poland and Hungary, inadequate safety nets and rising consumer prices in all three countries, and a rapid fall in agricultural profitability, production and employment has been a disillusionment with the new set of values that has tended to undermine public support for reform. Behind the divergence of values, and subsequent disillusionment, lies something much bigger: the collapse of an entire belief system, a deeply traumatic event for the peoples concerned.
As ever, with history being written by the winners, there has hitherto been relatively hide discussion that seeks to establish what the different countries and regions of Central and Eastern Europe wish to understand by the concept of 'Europe.' It has become at the superficial level simply a western club, synonymous with the European Union, to membership of which most aspire, either openly or privately.3 But this is not how the EU sees itself. Since Maastricht and Thatcher, the possession of a common EU vision has been attributed to all members except the UK. In fact, this is not true: although the UK has been particularly vociferous and abrasive (even obnoxious) on the subject, other countries, notably the neutrals (Ireland, Sweden and Finland), have serious reservations about the foreign and defence policy 'legs' of the Maastricht Treaty, for example.4 Beliefs genuinely differ about the values expressed in the 'grand European design,' and the 'broadening' versus 'deepening' debate represents far more than a bad-tempered wrangle about CAP payments and mad cow disease. A European Monetary Union that many believe will fossilise high levels of unemployment and protectionism must raise serious questions about what is offered in return. The equation of Europe with the EU and the EU with Europe is a source of profound difficulty for many people, and concern about the implications of this equation in the aftermath of both the Maastricht Treaty and the collapse of the communist regimes cannot be dismissed lightly. The reunification perspective raises questions about 'European-ness' that are germane to EU enlargement at the conceptual level, as well as to the future within an EU-dominated Europe of those European countries that are excluded from the EU's vision of itself, or that choose to exclude themselves.
3 This is clearest in the unique case of the two Germanys where "German reunification" meant the absorption of eastern Germany into the Federal Republic of Germany, with all the adjustment that this implied for the eastern way of life and its belief system.
4 It has been argued that the UK has particular problems with the EU vision and the Maastricht Treaty by virtue of the fact that Britain has no written constitution. The UK, therefore, confuses form with substance, state with process, and takes form very seriously. The British instinct is pragmatic in intention: if codification is necessary at all, then do it when the desired state has been achieved and you know what you want to codify; better still, don't codify at all as it reduces flexibility. The rest of the EU seems to be mostly happy with an idealistic instinct, to regard the form as a symbol of the vision, the starting point for directing future action, not as the outcome of that action.
An alternative perspective is to see the four decades of post-war communist rule as a 'historical discontinuity,' an aberration, a political, social and economic experiment that failed, just as other experiments, such as twentieth century European fascism, failed. This leads to a focus on reintegration rather than reunification - it is time to rejoin the 'mainstream' of European evolution as represented by those countries that did not form part of the Soviet empire, the last of the European empires to break up; to pick up the pieces and move on, with a lag surely relative to the mainstream countries but with little irreversible effect on the underlying social values and beliefs as to what is good, what is bad, what is right and what is wrong. But on this view, it cannot be taken for granted that all CEE countries have similar values and 'European' aspirations (or acceptability). The questions raised by the reintegration view with regard to EU enlargement are more pragmatic.
Gros and Steinherr5 argue that the conditions that aspiring EU members need to satisfy are quite demanding if EU expansion is to be "positive for the incumbents." Their list is interesting, ranging as it does from the 'grand European design' to the nitty-gritty of CAP prices, and breath-taking in its EU-centricity. (Where the authors use the term 'Visegrad countries,' we have been referring to CEFTA countries.)
5 D. Gros and A. Steinherr. Winds of Change: Economic Transition in Central and Eastern Europe. London and New York: Longman, 1995.
It would be helpful if newcomers had political preferences close to those of the EU, taking into account that membership is likely to make preferences more convergent. On that basis Austria was and Hungary will be more readily admitted than Turkey or Belarus. Furthermore, the newcomer should show evidence of an aspiration to become a member of the European family -as is the case of the Visegrad countries - and not be absorbed by internecine struggles. Moreover, to fit into the EU the whole political apparatus of the newcomer must conform to European institutions: democracy, human rights and a decentralised economic structure must be firmly established, otherwise the country could not operate within the political, legal and institutional framework of the EU.And finally, the level of economic development must be above a certain threshold: first, to be able to keep pace with the speed of integration deepening; and, second, in order not to stretch the structural funds of the EU beyond acceptable levels.
The crucial issue is... money. Eastward expansion will require a radical reform of the CAP to limit the financial cost of accepting new members with an agricultural sector that could explode with current CAP prices.6
6 Ibid.
Of course, the actual costs will depend on the details of the CAP itself, the specific candidates for enlargement, the time of accession and the state of the new members agricultural sectors at that time. And indeed the CAP costs are far from being the only important agriculture-related issue: existing member states that are net budgetary contributors may worry about CAP costs (although in EU GDP as opposed to budgetary terms, any increase will be very small), but real opposition to enlargement is much more likely to come from the net recipients who will see their share of the increasingly significant regional and structural funds fall absolutely and relatively.
If the CAP fits...
Part of the disquiet about the EU lies in the apparently deliberate exclusion of so many countries from the decision-making process. The accusation has been made that the EU is trying to prevent new members from having a material impact on any of its major policies both existing and future. As far as the agricultural sector is concerned, the attitude is very much "here is the CAP - take it or leave it," and if you leave it, of course, that means no membership.
Family farms
The most important area of divergence identified by participants in the project between the EU and the CEE-3 (the Czech Republic, Hungary and Poland), as far as the Common Agricultural Policy is concerned, lies in the underlying attitudes to the family farm.
The family farm as the societal stabiliser, the epitome of virtue and morality, the conserver of the natural resource base, the steward of the rural areas, in addition to being the guardian of food security, is enshrined in Article 39 of the Treaty of Rome. The beliefs surrounding the role of the family farm in Western Europe have elevated it into a 'value,' a standard to be adhered to. Most of the EU's agricultural and agriculture-related policy for rural areas is therefore geared towards assuring the continuity of the family farm.7 The UK does not share this mystique about the 'family' farm in the same way. Capitalist agriculture with diverse ownership of the factors of agricultural production came very early to England, and the family farm as understood in continental Europe was never the development model. However, while the UK does not hold the family farm as a value in itself, it shares a number of the beliefs about the centrally important role of the farmer, and superficially the fanning structure appears to be quite similar. The UK has carried out an active agricultural support policy: the underlying differences between the UK and the other EU countries emerge in their differing attitudes towards changes in agricultural structure that would be consequent upon changes in support policy.
7 The UK does not share the mystique of the family farm as such. For historical reasons (see Chapter 7), it was never seen as a development model.
The EU attitude to the family farm has evolved somewhat over time. In the immediate post-war period the concern for food security in Europe was paramount. The importance of the farmer in society was self-evident as food producer and social stabiliser in a time of great social disruption. Farming was a family affair, and the land passed from father to son through successive generations, providing the sort of permanence and stability not found elsewhere in society. Further, society recognised that the farmer was always at risk, at the mercy of the weather and the market. Society's strong support of agriculture and the family farmer was given expression in Article 39 of the Treaty of Rome, and realisation through the Common Agricultural Policy.
All went well with the CAP through the 1960s and early 1970s as agricultural markets expanded. By the late 1970s significant surpluses were accumulating in the then EEC as the effect of high CAP prices were not tempered by supply control measures. Budget costs to deal with surpluses escalated rapidly, and tensions developed with trading partners. Declining agricultural populations reduced the role of agriculture in ensuring social stability although not the role of farmers in representing that stability. With agricultural over-abundance, the old worries about food security faded, to be replaced with concerns about food quality and safety. The environmental costs of the CAP and the agricultural technologies it had encouraged all conspired to tarnish agriculture's golden image. The 1992 MacSharry reforms, under cover of an anticipated GATT Uruguay Round agreement, were an attempt to stem the budgetary haemorrhage and to restore agriculture to public favour.
Now 'agriculture' is not the same thing as 'the farmer' who has generally managed to retain the support of society at large. The nature of that support has changed, partly as a result of the WTO agreement which defined environmental payments as non-distorting of agricultural trade (often called the Green Box), shifting from payments for agricultural production to compensation for producing environmental public goods. But the notion that the family farm must be preserved, nurtured and compensated by society has not died out in the Western Europe of today.
The story in Central and Eastern Europe is very different. Indeed, with the partial exception of Poland, the family farm had been abandoned in favour of state, collective and co-operative farms, usually on a huge scale by Western European standards. While these farms were structurally positioned to capture economies of size, they could not do so because economies of size is not a working concept under central planning. Workers were specialised and waged, and there was neither profit incentive nor entrepreneurial spirit. After the breakdown of central planning, privatisation was based first and foremost on ideas of equity and justice with regard to former ownership, not on creating the conditions for the development of family farms. Even in Poland the family farm was not singled out for any special consideration. It is worth repeating a 1989 quotation made in Chapter 2 by the Prime Minister who was the author of the economic reforms in Poland when asked about agriculture. His response was:
If somebody would come to me and ask for special preferential credits for agriculture, or for any special treatment of agriculture, I would resign immediately. There is no reason to treat agriculture as a special part of the economy. Mining and ore extracting industries are in a terrible situation, construction industries also. Why not treat construction industries or extracting industries in the same way, as a special case also?
In the Czech Republic agriculture is also viewed like any other sector. In 1994, Minister of Agriculture Josef Lux is quoted as saying:
Ova conception of agricultural policy is based on the output of our producers. It aims for a balance between the interests of the producer and those of the consumer. We will also be concerned with raising quality and with ensuring that food products are healthy through tightened control. The transformation of our agriculture must take account of change in the agrarian policy of the European Union, but it would be a mistake if we were to try to copy current strongly protectionist policies, such as those of Bavaria or Austria. Competition between our agricultural producers and those abroad is desirable, but not when this is underpinned by me states concerned. In comparison with the EU states Czech agriculture has the indisputable advantage of a high concentration of production and of efficiently structured land holdings.
The report to which the above statement is attached8 goes on to state:
8 The Ministry of Agriculture of the Czech Republic. Basic Principles of the Agricultural Policy of the Government of the Czech Republic up to 1995 and for a Further Period. Prague, 1994.
The government is aware of the need for a continuing policy of financial support for agriculture. Government subsidies will be targeted in such a way as to support transformation of agriculture in the direction of quality and a market of production which is genuinely saleable, and not to preserve the current survival of non-profitable agricultural production in a number of agricultural concerns and areas.
Three points are important in these statements. There is no mention of family farms, there is no indication that agriculture is special, and to the extent that government support is forthcoming it will be targeted to specific producers to achieve specific objectives. Of course, free-market political rhetoric may hide a multitude of interventionist sins, and agricultural interests will no doubt work hard to establish agriculture's credentials as a special case. But the 'family farm' will not be the guiding principle. Nor, it seems, will food security.9 The dismantling of the communist era's massive subsidies to agriculture and food consumers, and the disruption of trading patterns have led to problems of surplus disposal and reduced purchasing power - not to food shortages.
9 The exception is Slovakia, a country not represented in this project, although a CEFTA member. Slovakia has defined food security to be achieved when 90 percent of requirements are produced domestically, and has declared that exports are to be permitted only after this level has been reached.
As CEE-3 agriculture progressively adapts to the market economy, competitive advantage is likely to assume greater importance than any particular type of ownership and management structure. At present there is an uncertainty, an apprehension within the CEE countries about whether CEE agriculture can compete with the West. At the same time there is a recognition that the structural advantage is potentially with the East, although legal institutions and legislation governing property rights have to be established to enable this potential to be realised, particularly perhaps with regard to agricultural tenancies.
The differences in beliefs about the role of the family farm in agriculture, the rural community and society as a whole could lead to some tensions and political difficulties between East and West in the formulation of support versus competitiveness policy for agriculture. An expanded EU is likely to have to confront the question of targeting support as the serious issue of society's willingness to continue paying for agricultural support, either through higher food prices or through the tax system comes under increasing debate. Those farmers who are now receiving the bulk of support might well be cautioned about putting all their targeting hopes on environment and rural development. It is likely that environmental and rural development targeting will not focus on areas that consist mainly of larger farms.
Trade
The implications of the continuation of a thriving family farm as the driving force behind agricultural support policy needs to be looked at more closely. That maintenance of the family farm is a major objective of the CAP is sure. It is also true that the means of policy implementation chosen by the CAP's founding fathers - market intervention to maintain high domestic producer and consumer prices backed up by border measures, originally variable import levies and export restitutions - ensured that agricultural trade policy would become effectively an arm of domestic support policy. This was not inevitable, nor is it irreversible. Denmark and the UK, for example, had liberal trading regimes for agricultural produce before EEC entry that were not incompatible with high levels of domestic support for agriculture, which in Denmark's case centred very much on the family farm as the development model. Nor were the high consumer prices attendant upon the CAP instruments necessary for achieving the high producer prices that are still believed to be fundamental to the survival of the family farm. Between World War D and EEC accession the UK combined its historical cheap food policy (that ensured the final repeal of the Corn Laws) with good producer support by using deficiency payments: the difference lies in the source of the transfer payments - taxpayer or consumer.
The nature of the CAP support mechanisms (the policy instruments), rather than the fact of support, has been a bone of contention between the EU and its trading partners world-wide, and a source of irritation between some of the EU member states. The CEE countries have long pointed to the trade restrictions consequent upon the CAP mechanisms as being a substantial obstacle to the reconstruction and development of their agricultural sectors, complaining that they have been offered only aid when what they asked for and needed was trade. (Nevertheless, the vast bulk of agricultural trade for each CEFTA country10 is with the EU rather than other CEFTA members.) There is a very strong belief in the CEE-3 at least that their agricultural sectors can compete with those in the EU, if trade barriers are removed and the playing field levelled. However, this co-exists with an equally strong fear that competition will destroy CEE agriculture unless it is heavily protected, but that is competition of the form being faced now, i.e., with the EU treasury rather than the EU farmers.
10 The partial exception is trade between the Czech and Slovak Republics, which is still at high levels because of their recent history as a single state, but declining.
The agricultural policies that the CEE-3 have implemented in the 1990s are in many particulars very far from the CAP. The European Commission are consistently urging the aspiring members to use the time until accession to align their agricultural policies with the CAP, as guided by the Commission, in order to ease the transition. The European Association Agreements are supposed to assist the transition process, not least through progressive opening of agricultural markets, but there is strong feeling on the part of the CEFTA countries that the agricultural trade provisions are at best inadequate and at worst unhelpful. Even if CAP-type policy instruments were affordable for their tax-payers or consumers without massive financial transfers from Brussels, they are not believed to be desirable. Increased trade is seen as a good thing in the CEE, important for economic growth and development. Without the hindrance of agricultural trade policy as an arm of domestic support policy, the opportunities ought to be great. Expansion is stymied, however, by all those countries and groupings for whom this is not the case, the EU being the worst if not the only culprit. The opinion has been expressed that the danger exists in the CEE countries that trade will become an arm of domestic support policy not willingly but because border measures are the cheapest way of increasing domestic producer prices. But it is extremely questionable whether such a move would be permissible under the GATT agreement.
The genuine commitment to more open agricultural trade on the part of the CEE countries is seen in the creation and development of CEFTA. Most regional trade groupings exclude agriculture, as did CEFTA. It is only a few years since the CEFTA members (with the exception of the Czech Republic) were saying that agriculture was unlikely to be included in the foreseeable future. Yet by late 1996, plans were well advanced for finalising the integration of agricultural trade by 1998. Indeed, CEFTA appears to be fulfilling one of its functions - as a training ground for aspiring EU members -rather well:
Last month's summit meeting of CEFTA heads of government featured acrimonious argument over alleged failure to live up to agreed commitments, grand plans for market liberalisation, heart-searching over possible enlargement, and a squabble over whether the organization should have a headquarters (and if so where). There's no doubt about it, CEFTA is coming to look more like the EU everyday..."11
11 East Europe Agriculture and Food Monthly. No. 169, October 1996. London: Agra Europe.
Food consumers
The reliance of the CAP mechanisms on high consumer prices is another source of friction. For Denmark, the UK and Ireland, EEC entry involved such substantial rises in food prices that a ten-year derogation period was agreed for adjustment. The UK tried to minimise the pain by zero-rating food for purposes of value-added tax, and to that extent has remained faithful to its cheap food policy. In contrast, Denmark levies VAT on food at the rate of 25 percent, the highest in the EU. By the time of the latest wave of new entrants in 1995, the EU had decided that an adjustment period would no longer be permitted. For those entrants, Austria, Finland and Sweden, the issue was one of falling consumer prices as the national agricultural support levels had been much higher than those of the EU. The CEE countries are expected to adapt to very much higher consumer prices immediately on accession.12
12 In 1994, for example, the prices for wheat, milk and beef as a percentage of the EU price were: 73 percent, 33 percent and 40 percent in Poland; 56 percent, 70 percent and 52 percent in Hungary; and 66 percent, 54 percent and 59 percent in the Czech Republic. However, pork was about the same price as in the EU and poultry was not that much lower.
They have a history of heavily subsidised consumer food prices. Although the subsidies were removed early in the transition process, both the level and rate of growth of food prices since have been a very sensitive subject because of low incomes and a high proportion of the household budget spent on food. Certainly the CEE-3 do not suffer from the belief that consumers are rich enough to be able and willing to pay higher than necessary food prices solely in order to transfer income to farmers,13 but neither is any justification felt for consumer subsidies. This could become a rather explosive issue if under the CAP at the time of accession, relatively poor East European consumers are asked to pay significantly higher food prices to support relatively rich Western European farmers. The VAT on food varies by food-stuff type and between countries in Central Europe. In Poland the VAT is seven percent on most food items, but zero percent for unprocessed agricultural products. In the Czech Republic the VAT is five percent on basic food-stuffs, with a higher rate of 22 percent for luxury food items, such as caviar. Hungary assesses a 12 percent VAT on basic food-stuffs, and 25 percent on luxury items such as coffee, tea, beer, wine, brandy and soft drinks.
13 In 1993, per cap GDP and per cap PPP GDP as a percentage of EU levels were: 12 percent and 30 percent in Poland; 20 percent and 38 percent in Hungary; and 16 percent and 47 percent in the Czech Republic.
Given the take-it-or-leave-it attitude of the EU with regard to the CAP (amongst other policies), these sticky points seem to be unlikely to hinder accession discussions. However, it is possible that they could have a bearing on the accession decision if consumers are given the opportunity to vote on membership in a referendum at a time when the domestic economy is still far short of EU norms. The fact that countries such as Greece and Portugal are well below the EU average is likely to be of little consolation to the CEE countries who look to the core EU countries for their standard of comparison.
Marketing system
Another major finding about difference in values and beliefs relates to the CAP only indirectly, but directly to the efficiency and development of the agriculture and food sector, and hence to a CEE country's ability to adapt to the CAP. As the up-stream and down-stream state and parastatal enterprises that served agriculture in the centrally planned economies are dismantled and replaced by private-sector enterprises, the extremely negative attitude towards the middleman that had developed under the communist regimes has persisted. The middleman is viewed as exploitative at best and an outright robber at worst. There may be some justification for this view in those significant number of cases in which the state monopoly was merely replaced by a private one, at least geographically. Interestingly, in the East the multinationals are viewed, by and large, as more responsible than the indigenous private entrepreneurs; in the West they are viewed with a certain amount of suspicion and concern that they can put themselves beyond the reach of any single nation, and in fact do so in order to pursue their own objectives at the expense of those of the countries within which they operate. On both sides, therefore, there is at least a lingering doubt about the social respectability of free enterprise, and the extent to which farmers are exploited by virtue of their lack of market power.
In many parts of Western Europe, farmers have sought to redress the balance of market power through the formation of purchasing and marketing co-operatives, and in some countries these organizations have become formidably strong. (There is a tendency in places for large powerful co-operatives to transform themselves into private or public limited companies.) Perhaps with the exception of the Czech Republic, the CEE countries have a lasting distrust of the co-operative structure, which was an arm of state control in the communist era, not a grassroots organization controlled by and operated in the interests of its farmer members. The outcome is that the development of new organizations that can support an efficient and effective modem marketing system while being seen to represent farmers' interests fairly is turning out to be a slow process that is hindering agricultural development as a whole.
Environmental policy
In Western Europe, under the broadest interpretation the term environment encompasses a host of disparate concepts, issues and activities. Perhaps the most immediate image that environment brings to mind with respect to agriculture is erosion and chemical pollution. But it includes much more when related to farms and farmers, especially the landscape and scenic impacts of agriculture on the natural environment. The concept of environment as applied to agriculture also includes some of the dimensions of food safety and quality as controlled by the farmer and influenced by production practices - so organic farming and farm animal welfare have found shelter under the 'green' umbrella. Agricultural pollution, broadly defined, and food safety are increasingly subject to restriction and regulation.
Increasingly, in Western Europe farmers are viewed as the producers not only of agricultural products but also of public goods based on countryside amenity and access, and landscape preservation and maintenance, for which they have a right to compensation. However, more and more, farmers are perceived as producing negative externalities as well, not only in the form of erosion and chemical pollution, but also in the form of barnyard smells, noise, traffic congestion with large and slow-moving farm machinery on public roads, and other irritants to the increasingly urbanised population that is repopulating rural areas. While the 'polluter pays principle' is accepted in principle, it is applied less than enthusiastically in respect of agricultural pollution. New schemes are offering farmers the opportunity to be paid for producing 'environmental goods,' and in some cases for not producing negative externalities. In fact, a recurrent theme running through the papers in this volume and the discussion at the workshop was that society has wearied of supporting farmers to produce agricultural products (or to not produce agricultural products in some cases) for a variety of reasons. Yet society is still convinced that farmers are special and in need and deserving of support. A new alignment of the farmer's needs along these lines and society's interests in the environment and landscape are providing for the emergence of a new social contract between society and the farmer. This new social contract calls for the farmer to produce environmental public goods of value to society, for which society in return is willing to pay the farmer on an ongoing basis.
In Eastern Europe, while the concepts might be the same, and it is recognised that modem agricultural practices are going to have just the same sorts of negative environmental impacts as in the West, the intensity of concern is much less. in the West, the state (purportedly) stands between the polluter and society with restriction and regulation in the public interest. In the East, the polluter until very recently was the state.
When the aim of increased agricultural production conflicted with environmental quality because of the associated negative externalities, the resolution was simple. The environment suffered: resource pricing in the centrally planned economies was not geared towards reflecting relative resource scarcity, and the use of natural resources (water, air and land) for waste disposal was not priced at all with the inevitable overuse that this implies. The belief still prevails in the East that society cannot afford environmental amenities and will not be able to do so until the economies are much more robust. This belief covers both payment for the production of environmental public goods by society and measures to prevent agricultural pollution.
Although concerns about environment and landscape in the CEE countries may lag behind those in the West, it is expected that the eastern farming community will be just as eager to be part of the new social contract and to participate in environmental and landscape schemes as their western siblings as long as EU enlargement brings them under a CAP that makes provision for appropriate payments. Where the divergence of beliefs is likely to cause conflict is where the 'polluter pays principle' is applied to the farmer as a polluter. An example of this is the Nitrate Directive, which is an EU environmental, not an agricultural, policy measure.
Rural policy
For a long time in much of Western Europe, agricultural policy measures centred on the preservation of the family farm have substituted for any real policy for the development of the rural areas. In fact most of the rural development that has taken place under the auspices of the EU has been under the FEOGA part of the EU CAP budget. However, as the agricultural sector declines in absolute as well as relative importance with economic development, and the structure of agricultural production changes, the nature, as well as the magnitude, of agriculture's role in the rural economy changes as well. Changes in the wider economy, particularly with regard to the relocation of many economic activities from city centres to suburban and rural sites, as well as innovations in communications technology, are also having a substantial impact on life in the rural areas. Agricultural policy becomes increasingly limited in its ability to support overall rural development, and so policies for the rural areas come to assume greater importance with environmental policies playing a major part.
Within the last ten years, the promotion of rural development has become one of the objectives of EU structural policy. This is leading to some tensions within the EU as agricultural interests try to appropriate or divert regional funds to compensate for reductions in agricultural support.
In the CEE countries, there appears to be much more interest in pursuing a broad rural development strategy than in focusing more narrowly on agricultural support policies as such. One of the consequences of the economic reforms has been the loss of social services, such as schools and medical facilities, provided in rural areas by the large-scale, state-subsidised agricultural and industrial entities. Local government, even if reformed, does not have the money to provide equivalent facilities in all locations for a rural population that has in many places declined rapidly in the transition years. There is a fairly widespread belief that many rural areas are in crisis, facing depopulation (and even, perhaps, complete abandonment) and high levels of unemployment among those remaining.
Despite the fact that both sides are approaching rural development from very different starting points, there seems to be a shared belief that rural policy is going to be increasingly important in the future. Agriculture may be necessary for the development of the rural economy, but it is no longer regarded as being sufficient
Similarities and differences
While large differences in fundamental values and in beliefs about those values as well as about facts were expected between me EU and the CEFTA countries as a whole, such appears not to be the case. Rather, the differences within the EU and the differences between the CEFTA countries appear in many cases much greater than the differences between the two country groupings. This suggests that at the EU level the political institutions will find, not a 'we versus they' mentality on most issues but rather different country groupings containing both east and west countries coalescing around any given issue.
While current comparisons among the countries of Eastern and Western Europe are not readily available, recent surveys within the EC-12 are instructive. To a 1993 statement that membership in the EC is a good thing, 80 percent of the respondents from The Netherlands agreed while only 43 percent of the British respondents did so. To the statement that the CAP is a good thing only 15 percent of the Danes and 16 percent of the British agreed while at the other extreme 48 percent of the Irish and 55 percent of the Greeks agreed. This shows something of the disparity of views within the EU and how alignments with Eastern European countries might be likely.
Will any of the aspiring members decide that signing up for the CAP is too high a price to pay for EU membership? Certainly, the Common Fisheries Policy was material in the decisions of Norway and Iceland not to" join the EU, but is agriculture important enough in the CEE-3 to affect the decision? The feeling of the workshop on both EU and CEE sides was that the other benefits - economic and non-economic - of EU membership outweigh any disadvantages of a single policy area - even the CAP. At the moment, the European vision, Europe united or just Europe integrated, still seems to have enough carrying power, although evolutions over the next five to ten years in Western, Central and Eastern Europe are quite unpredictable: the post-Maastricht EU and the post-communist CEE are both processes without precedent.
