Farming is arguably the most subsidised economic sector in the EU. Farmers represent three per cent of the European Union’s population. Farming and the agri-food business generate roughly six per cent of the Union’s GDP. But they receive 30 per cent of the EU’s total budget through the Common Agricultural Policy (CAP) handouts.

Many understandably argue that while this support from taxpayers is significant, it gives Europe food security. Without it, Europe would be dangerously dependent on fluctuating imports from other countries outside the EU.

Yet, we often hear of particular sectors in the agriculture industry that face threats of going out of business because they are unable to sell their products despite grants given under CAP.

COVID has exposed the vulnerability of the farming sector in most member states. Malta’s minuscule farming sector has been significantly adversely hit in the last few months.

Dairy farmers complain that, as a result of the economic slowdown, especially in the hospitality and catering sectors, demand for their fresh milk has fallen drastically in the last few months. Malta Dairy Products, the leading local producer of dairy products, has indicated that it may soon have to reduce the amount of milk it buys from local dairy farmers. 

Dairy farmers are not the only ones feeling the pinch of competition from

European producers who benefit from economies of scale and much more intensive investment in their farms. Last year, pig and poultry farmers, as well as vegetable and fruit growers, asked for government assistance to help them survive the onslaught of foreign competition.

One needs to distinguish between the short-term challenge that the farming industry faces because of the economic slowdown caused by the pandemic and longer-term difficulties relating to the sustainability of the business model of the various sectors of the industry.

It is reasonable to expect the government to support local farmers to survive the economic lull. Janusz Wojciechowski, European Commissioner for Agriculture, has committed the Union to continue helping farmers and food producers by taking whatever measures are necessary to ensure the health and wellbeing of the people of Europe.

Malta’s dairy farm cooperative is, in fact, holding talks with the government about the possibility of tapping some EU funds to assist local farmers, its head has said.

But the longer-term survival of the agriculture industry in Malta must not be tied to even more subsidies. Ignoring the rules of supply and demand is hugely wasteful and should be limited to achieving the objective of minimising dependence on food products from non-EU producers.

Consumers – the taxpayers – would be prepared to pay a small premium to ensure that they can always find fresh products in our markets, although they would, of course, not want to be overcharged.

The industry needs to diversify its activities to reduce its dependence on the sale of one or just a few products. Excess milk, for instance, can be transformed into dairy products with more added value like butter and cheese to ensure that waste is minimised.

This will, no doubt, require more intensive investment. Here is where government support should be focused. CAP ensures that EU funds are applied fairly across the Union to ensure that subsidies are granted on common criteria that encourage economic sustainability.

Do-it-yourself efforts by individual farmers and food-producing entities are unlikely to succeed. A strategy that promotes the pooling of resources to promote local farm products, combined with government support for more investment in the industry, is the best way forward to empower farmers.