The European Union pays its cow farmers a subsidy of about $2 a day per cow. One reason for this bovine benefit is simply to keep certain rural parts of Europe looking quaintly rustic for tourists. Yet a billion people in the world live on less than $1 a day, and many of them grow food they can't export to Europe.
Statistics like that are forcing a new global effort to reduce trade barriers, starting with the hefty EU agricultural subsidies that distort world trade in farm products and eat up nearly half the EU budget at a $50 billion cost.
Reducing EU farm subsidies will be the key to reaching an agreement at global trade talks this September in Cancún, Mexico. Without it, trade officials say the meeting could end up being a diplomatic disaster like the one in Seattle in 1999.
Thursday, however, the EU announced it had reached a compromise plan among a majority of its 15 members to greatly reform its 45-year-old Common Agricultural Policy (CAP). The key element will break the link between farmers' production and the subsidies they receive, which now encourage massive surpluses in food that are then dumped on the markets of poor countries.
France was key to the deal. It has been the main opponent of change, mainly because it receives the most in farm subsides from the EU. French farmers are a strong political force, arguing that their land and way of life deserve to be preserved.
But France, like other developed nations, realizes its economic well-being relies on open markets and open competition. While progress has been made to reduce trade barriers in industrial products and financial services, further liberalization relies on a grand deal in agriculture. The 146 nations in the World Trade Organization set a deadline of 2005 for a new trade pact, with the Cancún meeting seen as the pivotal point for agreement.
Not all EU payments to farmers will end under the compromise. The plan would allow countries to keep farm aid tied to production for up to 25 percent of subsidies for cereals and up to 40 percent of beef subsidies. The United States and other nations will now need to decide if the EU proposal at Cancún will be enough for them to compromise on their own trade-protecting policies. The US must also look hard at its own farm-supporting measures.
What unites the rich countries in this effort is a need to uplift the 97 percent of the world's farmers who live in poor countries. With that goal, compromising can be made easier.