The EU CAP damages developing economies – and ours

We are still paying £11.3 billion a year to be part of a club which cuts the disposable income of the neediest in our society.

We are still paying £11.3 billion a year to be part of a club which cuts the disposable income of the neediest in our society

Not a week goes by in domestic politics without the Labour Party referring to the cost of living crisis, or the Tories banging on about the European Union.

Whilst these seem like very different issues, they overlap when the EU’s Common Agricultural Policy (CAP) is considered.

Whether you agree with the coalition’s programme of austerity or not, it is incontrovertible that the poorest in society have had to tighten their belts in recent years.

There are plenty of ideas for how to deal with the cost of living crisis, from raising the minimum wage to freezing energy prices. 

One of these yet to catch on is for Britain to withdraw from the EU including from its CAP mechanism, which forces food prices to escalate right across the EU.

The CAP was originally designed in the 1950s to prop up the French agricultural industry by granting subsidies to farmers in order to keep them in profit, despite their inefficiency. In 2012, €56 billion was spent on this, making up 41 per cent of the EU’s total budget.

More importantly, the CAP introduces a tariff against food being imported from the rest of the world. This drives up prices and cuts into the disposable income of British citizens who are forced to spend more on food.

Estimates for how much the price of our food is affected by this vary greatly, but most fall within the region of a 14-17 per cent increase.

By discouraging us from buying produce from developing countries, the EU is effectively preventing African countries with agriculture-based economies from selling to Europe.

Moreover, the CAP inevitably leads to the overproduction of farm produce with the surplus – which cannot be sold in the EU – being sold on the cheap to the developing world, undercutting local producers.

This arrests the growth of these countries’ economies and blocks their citizens climbing out of poverty.

The CAP’s negative effects could be overlooked if the policy helped our struggling agricultural producers and sustained British jobs and pay packets.

However, only 7 per cent of the CAP budget is granted to British farmers, with France getting the lion’s share of 17 per cent. More importantly, with around 80 per cent of the budget going to just 25 per cent of farmers, the CAP is effectively a way to help rich farmers get richer.

Unfortunately, as the only mechanism which keeps the bloated French agricultural system afloat, France will never allow the CAP to be reformed.

Whilst the British people are forced to tighten their belts in these times of austerity, we are still paying £11.3 billion a year to be part of a club which not only cuts the disposable income of the neediest in our society, but also those living in abject poverty in the developing world.

We need to engage in free, fair trade, importing the best food at market value and having our own choice from all around the world. This will lead to a fall in the cost of living for the British public and a rise in profits for producers in the developing world.

This is only possible if we vote to get Britain out of the EU and into the globalised world. Ed Miliband must match David Cameron’s referendum pledge so the electorate can have their say on this crucial issue – preferably in 2017 – if not before.

Luke Stanley is research assistant at Get Britain Out

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