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Arla, Danisco swallow Denmark's EU subsidies

By Chris Mercer , 06-Jun-2006

International food giants Arla Foods and Danisco got more subsidies from the EU than anyone else in their native Denmark last year, says a new report, adding yet more controversy to Europe's farm support scheme.

Dairy group Arla Foods raked in DKK714m (€95.7m) in EU agriculture subsidies last year, while top ingredients firm Danisco got DKK510m (€68.4m), according to official figures newly obtained by campaigns group farmsubsidy.org.

The release again shows top European food firms creaming off large sums of money from the EU's €43bn Common Agricultural Policy (CAP) budget.

 

The news follows other data releases detailing multi-million euro aid for several big food firms, including Danone, Tate & Lyle and Nestlé.

 

Data collected by farmsubsidy.org from across the bloc shows that around 80 per cent of subsidies generally go to the top 20 per cent of recipients.

 

Arla Foods, one of the EU's biggest dairy firms and an exporter of dairy products to several non-EU countries, received more than DKK6bn (€862m) in aid between 2000 and 2005.

 

Critics say the real problem is the CAP itself, which they accuse of encouraging big food firms to overproduce and work inefficiently.

 

Arla's €95.7m subsidy for 2005 was only slightly below the company's DKK801m (€107m) profits for the 2004/05 year.

 

Still, the group actually received DKK400m less in 2005 than 2004, mainly reflecting cuts in export aid as the European Commission looks to curb reliance on subsidies by bringing EU market prices closer to world prices.

 

The Commission's strategy comes part of the CAP reform programme, agreed in 2003.

 

This reform, however, caused major rows between member states last year. Some criticised a clause in the 2003 reform deal, which locked EU agriculture spending at the same level until 2013.

 

The arguments also erupted as the European Commission came under pressure to cut aid to secure a deal on global trade with other nations at the World Trade Organisation.

 

But, calls by the UK to radically cut agriculture support in favour of more research and development funding were eventually shouted down during EU budget talks last December. And, France led several other countries to block the Commission from making concessions at the WTO talks that went further than current the current CAP reform envisaged.

 

A mid-term review of CAP reform is now expected in 2008.

 

The Commission did pledge to cut export subsidies by 2013, and slash domestic aid, at last year's WTO talks, but is under pressure to go further to prevent talks dying off.

 

Some outside the EU say the bloc's food firms must adapt to life without aid.

 

A spokesperson for New Zealand dairy group Fonterra said the New Zealand dairy industry went through this in the 1980s, after the government there abandoned subsidies.

 

""We went through a lot of pain, but you look at the [New Zealand] industry now and it's in an extremely strong position because of that deregulated environment."