EC Farm Crisis Likely to go to End-June Summit

Plans for key reforms of the European Community’s (EC) controversial farm policy will almost certainly have to be referred to the bloc’s heads of government at a summit meeting on June 29 and 30, Belgian finance minister Mark Eyskens said today.

Eyskens was speaking at a news conference after chairing a joint meeting of EC finance and agriculture ministers which was designed to help break a deadlock over this year’s EC farm price package which has endured since March.

Diplomats quoted EC Executive Commission president Jacques Delors as saying at the same meeting that it would be a disaster if the two most difficult issues at the farm talks had to be referred to heads of government.

These issues are a Commission plan for a tax on marine and vegetable fats and oils, and proposals to change the system by which EC farm prices, expressed in European currency units (Ecus), are translated into the currencies of member states.

The oils and fats tax is opposed by a group of countries which fears it could provoke trade retaliation by the U.S., A major exporter of soybeans to the EC.

West Germany, meanwhile, is strongly against the technical currency move, which would result in additional price cuts for farmers in countries with strong currencies, such as the mark.

Commission sources said Delors is anxious that the two issues are not referred to the summit because this would mean heads of government diverting their attention from much more important world and Community issues.

Eyskens said decisions from heads of government were also likely to be less sound since they do not usually interest themselves in such technically complex questions.

However, Eyskens said today’s meeting had thrown up some nuances in member state positions “which may make the dialogue more constructive in the next few weeks.”

If farm prices are not decided by the end of this month, the Commission could use its own powers to impose a seven pct cut in cereals prices, farm trade sources said. It originally proposed measures to cut farm spending by 1.1 billion Ecus this year, with effective price cuts of over 10 pct for some crops.

Diplomats said farm ministers might be able to agree a price package cutting spending by around 340 mln Ecus but for their disagreements on the oils/fats tax and on currency reforms.

The finance ministers were called in to emphasise the need for budgetary restraint in the face of an almost certain EC budget deficit of over five billion Ecus this year.

Although Delors was said by aides to have found today’s meeting very useful, diplomats said there was little sign of a major shift in the position of member states, or of finance ministers adopting a different line from that of their agriculture colleagues.

The farm ministers are expected to meet for most of this week in Luxembourg in a pre-summit attempt to bridge their differences.