Discussions in the European Community these past few months have once again, and indeed for the umpteenth time, led to the conclusion that "something must be done" about its expensive common agricultural policy, or CAP. Failing that, the EC would either run out of funds or not have money available for other at least equally worthwhile tasks.
In this context, and not for the first time, there has been talk about the ''re-nationalization" of agricultural policies. Expressed less elegantly, let each member state foot at least part of the bill run up by its own farmers.Without going into the merits of such proposals, they would bring about a situation partly akin to conditions existing elsewhere in Western Europe. For it must not be imagined that those European countries that are not in the EC and hence do not enjoy the blessings of the CAP lead charmed lives when it comes to protection of their farmers. Far from it.
In Norway for instance, as noted recently by the International Consumers Union, produce prices are extremely high and a shopping basket of foodstuffs costs 130 percent more than in the Netherlands. This is due mainly to restrictions imposed by the authorities for the sake of Norwegian farmers.
It is not all that different in Switzerland. None less than Fritz Leutwiler, former central bank governor, has scored the exorbitant costs (to the federal budget and Swiss consumers) of protecting Swiss agriculture.
And while everybody in Europe has heard of the EC's butter mountains and similar "achievements, it is not so widely known that little Austria has much the same problems. Although that country has often been regarded as a happy island, not exposed to the storms that constantly buffet other European nations, the sad truth is that it has its cereal and butter mountains, too. What is more, things threaten to get worse.
"If cereals production keeps increasing at the current pace, Gerulf Murer, state secretary in the Austrian ministry of agriculture, has noted, ''We shall have 300,000 hectare (about 750,000 acres) of surplus acreage within 10 years and will need six billion schilling ($365 million) annually to dispose of excess crops."
Even now Austria produces 1.3 million tons of cereals beyond its own needs. Although farmers contribute four billion schilling to financing sales, it costs the federal budget another 3.3 billion schilling a year to subsidize export sales. There are 220,000 hectares of surplus acreage, and 12,000 hectares more are being added to this annually. At the same time new grain varieties and improved fertilizers keep pushing up yields.
The problem could only be solved, says Peter Kaprel of the Austrian Industry Federation, if agricultural policy underwent an extensive reorientation. Among other things this might mean giving farmers an incentive for turning to other products, such as oil seeds. This would reverse the trend of the past 25 years, during which the share of total farm land devoted to cereals production rose from 52 percent to 85 percent.
Another promising venue might consist in producing (for export markets) specialty products, such as Tyrolean hams and brand name cakes. Switzerland, it is pointed out, is not known for its exports of cereals and milk, but for chocolates and cheese.
Meanwhile, surpluses are not the only problem plaguing the Austrian economy, directly or indirectly. There are others. Bread for toasting, where flour accounts for 70 percent of production costs, is a case in point. "We pay 10.50 schilling for a kilogram (2.2 pounds) of flour, moans the executive of a leading Austrian bakery firm, "while the producer in the ECpays 6.50 schilling. In addition, a German company gets a 35 percent to 45 percent restitution when exporting outside the EC."
The result is that Austrian discounters can offer customers a 500 gram loaf for 6.90 schilling, while the Austrian firm's wage and materials cost alone tops five schilling. Perhaps this is one reason why West German consumption of bread and other bakery goods has risen during the past decade, whereas Austria's has stagnated. German annual per capita consumption of such goods is 10 kilograms higher than Austria's.
It has been calculated that if Austrian consumption figures matched those of the Federal Republic, this would use up an additional 60,000 tons of cereals. Though hardly a solution of the surplus quandary, this would be a step in the right direction all the same.