X Close

The EU cartel was designed to crush farmers Rural workers didn't stand a chance

Farmers protests at the European parliament. (SAMEER AL-DOUMY/AFP via Getty Images)

Farmers protests at the European parliament. (SAMEER AL-DOUMY/AFP via Getty Images)


February 19, 2024   5 mins

Manos, a sixth-generation farmer from Thessaly, put it to me bluntly when I asked him to explain why he was prepared to drive his tractor 400km to Athens to camp outside Parliament: “If I don’t, my farm will soon follow our village school, co-op, post office and bank branch into oblivion.”

His story is neither novel nor confined to Greece. We are accustomed to French farmers, in particular, blocking roads and exacting a significant price from politicians before returning to their home turf. Occasionally, an impressive stunt has been staged in Brussels — as in 2012 when a multinational farmers’ coalition sprayed the European Parliament with tons of milk, in protest against cuts to EU milk quotas.

What is new, in this latest round of farmers’ protests, is that it is not only the usual suspects who have taken to the streets of our capitals. Our television screens are showing farmers mobilising across the European Union, from Poland to Ireland. We are not used to German and Dutch farmers, traditionally much wealthier relative to their Graeco-Latin colleagues, entering our cities with the passion — and in the numbers — that we are now witnessing.

If you ask the Dutch or the German farmers why they are revolting, their answer is similar to the one Manos gave me: they will tell you that their way life, their capacity to keep working the land, is in jeopardy. I believe them. But British farmers are also facing an existential threat and they are not blocking motorways. Almost half the UK’s fruit and vegetable growers and a third of dairy farmers face bankruptcy within less than two years. So why are they not blocking Piccadilly or occupying Trafalgar Square in anger? Cultural differences may play a role but a structural feature of the EU explains why European farmers are revolting and British farmers are not.

“British farmers are also facing an existential threat and they are not blocking motorways”

In theory, the EU is all about free-market liberalism; in reality, it began life as a cartel of coal and steel producers who, openly and legally, controlled prices and output by means of a multinational bureaucracy. That bureaucracy, the first European Commission, was vested with legal and political powers superseding national parliaments and democratic processes. And its first task was to remove all restrictions on the movement and trading of steel and coal between member-states. After all, what would be the point of a cross-border cartel if its products were stopped at borders and taxed? Brussels’s second step was to expand the scope of the cartel beyond coal and steel, co-opting the electrical goods industry, car manufacturers and, of course, banking. The third step, once tariffs on manufacturers were removed, was to remove all tariffs.

Alas, that meant, among other things, untrammelled competition from imported milk, cheese and wine for French and German farmers. How could Brussels secure the consent of these larger, richer and therefore politically more powerful farmers to a European free-trade zone? By handing them a chunk of the heavy industry cartel’s monopoly profits.

That’s precisely what the Common Agricultural Policy (CAP) was. You can see it in the Treaty of Rome, which established today’s EU: it is a contract between Europe’s heavy industry cartel and Europe’s wealthier farmers, according to which the largest chunk of the European budget, generated by the former, would be sprinkled upon the latter. In 2021, the EU allocated €378 billion for CAP: 31.8% of its total budget for the six-year period 2021-2027. Of this mountain of euros, about 80% ends up in the pockets of the richest 20% of Europe’s farmers. And the worst thing is, it’s hard to see a way out: these mind-boggling sums, and their unequal distribution, are based on the mid-Fifties deal that gave us the original EU; they’re baked into its structure.

That unequal distribution was justified by claims of “productivity”. Large landowners are far more profitable per acre cultivated, or per farmworker. For instance, according to the Financial Times, in 2021, each additional worker boosted the net value of a small farm — defined as a farm with a total output worth between €4,000 and €25,000 — by around €7,000. By contrast, an additional worker increased the net value of a large farm — one with an output worth more than half a million euros — by €55,000.

As a result, traditionally most farmers in the south of Europe — including in large parts of France, where farm plots are much smaller than, say, in Germany or the Netherlands — merely survived. Meanwhile, their northern colleagues commanded substantial profits, resources and subsidies.

This explains why Greek, Spanish, Southern Italian and French farmers always had the greatest tendency to block roads: six decades ago they were cut a deal that didn’t serve their best interests. Today, however, with de-industrialisation now proceeding apace even in Germany, the original, pan-European industrial cartel that was meant to pay for the rich farmers’ generous subsidies is also in decline.

As for farmers such as Manos, a combination of old problems and new calamities has taken its toll. Last autumn, the climate crisis paid his valley a visit when Storm Daniel destroyed all his equipment by submerging his land in metres of water, before moving south to drown thousands of people in Libya. The usual, ridiculously long, delays that characterise bureaucracy in Greece meant its insurance companies were slow to come to Manos’s help.

But an even uglier source of discontent among his peers is the mass repossessions of farms by the numerous vulture funds. Taking advantage of Greece’s long-standing bankruptcy, they have entered the country to purchase non-performing farmers’ loans, at five cents to the euro, before auctioning off the land. In this way, oligarchic interests grab fertile agricultural land and, with grants and loans from Brussels, cover it with solar panels. Farmers and urbanite Greeks then pay through the nose for the electricity it produces. And as the former are squeezed, domestic food supplies become scarcer.

Now, similar stories are playing out in wealthier parts of the EU: in the Netherlands and Germany. Here, there are three main triggers. Firstly, having surrendered what used to be public electricity utilities to the private cartel hiding behind the Dutch auction houses, the EU does nothing to protect farmers from the voracious appetites of energy speculators and rentiers. Secondly, there is the bureaucratic nightmare farmers must endure before they apply for the smallest of benefits, or even for the right to trim a tree whose branches poke them in the eye as they pass by in their tractors. Thirdly, there is Ukraine: not just the heightened fuel costs and the competition from €13 billion worth of “solidarity” imports last year alone but, more importantly, the prospect that, were the war-torn country to join the EU, most countries that are now net recipients of CAP funds, including Poland, will become net contributors, with their farmers bearing the brunt.

And then, of course, there are the two elephants in the room. One is the EU’s Green Deal. Brussels makes all the right environmental noises, demanding immediate green action, but lacks the ability to pay for it. Take the Dutch farmers’ bone of contention: the clear and present danger of nitrates in the water table, which must be addressed. After decades of turning a blind eye to the problem, their government — pressured by Brussels — suddenly demanded that Dutch farmers solve it by, among other measures, “eradicating” one in three cows.

Even more intractable is the second, and larger, elephant: a 15-year European economic slump that, to my eye, can be entirely explained by the inane handling of the euro crisis. This slump explains why the continent is deindustrialising. It’s why the Common Agricultural Policy can no longer respect the original, Fifties-era deal between Europe’s industrial and agricultural cartels. And it’s also the reason why the EU’s Green Deal is just another European Potemkin village — another product of the EU’s penchant for announcing big numbers that dissolve under closer scrutiny.


Yanis Varoufakis is an economist and former Greek Minister of Finance. He is the author of several best-selling books, most recently Another Now: Dispatches from an Alternative Present.

yanisvaroufakis

Join the discussion


Join like minded readers that support our journalism by becoming a paid subscriber


To join the discussion in the comments, become a paid subscriber.

Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.

Subscribe
Subscribe
Notify of
guest

30 Comments
Most Voted
Newest Oldest
Inline Feedbacks
View all comments
Jim Veenbaas
Jim Veenbaas
3 months ago

Ugh. I genuinely support farmers and I despise net zero, which is a threat to the prosperity of us all, but I found this essay cringeworthy.

The language is way too hyperbolic. He talks about cartels and oligarchies and vulture funds – like there is a cabal of Rockefellers running the show for the last 50 years. Show me. Don’t tell me. Everything is vague and slippery.

He talks about vulture funds buying Greek farms at 5% of the value and selling them to solar farms – even though the average Greek farm is 7 hectares in size. Show me. Don’t tell me.

At best, this essay is lazy journalism.

Hugh Bryant
Hugh Bryant
3 months ago
Reply to  Jim Veenbaas

Varoufakis has always been prone to hyperbole. He lives in a world where the good people are unimpeachably good and the bad people are irredeemably bad.

Nik Jewell
Nik Jewell
3 months ago

I think Manos’s farm was visited by bad weather, not a mythical ‘climate crisis’. I don’t think the deindustrialisation can be explained entirely by the economic slump and euro crisis. Globalisation and Germany’s insane energy policies are big factors here, too. One might argue that the latter was not a major driver but has merely delivered the final coup de grace.
Other than that, it is an interesting article and one of the few about the farmers avoiding using the terms ‘populism’ and ‘far right’ so beloved by legacy media, especially The Guardian.

Hugh Bryant
Hugh Bryant
3 months ago
Reply to  Nik Jewell

Varoufakis writes eloquently about the evils that result from the concentration of too much power and wealth in the hands of too few people – but his typical leftist solution is to concentrate still more power and (therefore) wealth into the hands of even fewer people. It’s a shame.

Nik Jewell
Nik Jewell
3 months ago
Reply to  Hugh Bryant

I love the analysis in his books and wrote a very favourable review of Technofeudalism on my Substack last year, but I was somewhat less enthusiastic about his solution. To be fair, though, I don’t think you could accuse it of being based on centralisation and the concentration of power, but nevertheless, it remained too technocratic and totalitarian for my liking.

Martin M
Martin M
3 months ago

I agree with the author that the CAP (so often pilloried in “Yes, Prime Minister”) is an abomination, but the fact is that European farmers are going to have to be internationally competitive to survive.

Nell Clover
Nell Clover
3 months ago
Reply to  Martin M

Why is it a fact farmers are going to have to be internationally competitive to survive?

Our banking and finance sectors rely on huge, explicit guarantees from the ECB and BoE and occasional large dollops of subsidy. Internationally competitive they are not, they work inside a strict protectionist framework that amongst other things demands physical presence. As do our legal and government sectors despite much of what that do being perfectly easy to open to global markets. We choose protectionism for these because of special interests as much as any strategic importance.

Nothing however is more strategic than food production. It literally stands between life and death. Europe has, just about within living memory, faced starvation due to international crises. Less stable continents are less stable precisely because food supply is so precarious. The Arab Spring happened precisely because of instability in international food markets.

For 60 years Europe’s protectionist food production has shielded its people from the worst of global food price instability. Like any insurance policy, a small premium has been paid but in return Europe has benefited from that most priceless of commodities: social stability.

Every round of globalisation so far has ushered in the near total destruction of European industry, a relocation of production to one or two dominant centres of production developing economies, and the emergence of internationally dominant players controlling the routes to market in Europe.

Europe could barely act against Russia because it was so dependant on international markets for energy. Europe is facing general consumer goods price rises from Spring 2024 thanks to the diversion of shipping away from the Red Sea. We would have to be insane to allow politicians to trade away food security in an era when we have lost the ability to control our nearest and most important shipping lanes.

Ben Scott
Ben Scott
3 months ago
Reply to  Nell Clover

Very well said. Thank you

Peter B
Peter B
3 months ago
Reply to  Nell Clover

If only it has been a “small insurance premium”. But it wasn’t.
Agricultural subsidies have delayed improvements in agricultural productivity and raised food prices across the board in the EU.
Worse, the capital squandered in these wasteful subsidies is money that could have been put to better use. The EU has been in catastrophic relative economic decline against the EU and parts of Asia for the past 3 decades.
And we could have had more efficient, more productive agriculture in Europe without the subsidies.
Check what happened in New Zealand when they scrapped their farm subsidies from the mid 1980s.b That’s been a huge success for NZ.

Charles Stanhope
Charles Stanhope
3 months ago
Reply to  Peter B

Through NO fault of my own I inherited a reasonable slice of England and thanks to frankly unbelievably generous subsidies over many years have seen agricultural land prices rise to a staggering circa £9,000 an acre! (Billions more if one is fortunate enough to be allowed to build a few ‘hovels’ on it.)

Now I am being ‘paid’ to repair the damage done by my forefathers who in turn were subsidised to ‘wreck’ the place in the name of productivity in the first place!

We even had the wonderful set-aside scheme, “here’s the money but please DONT grow anything!

Finally, we deserving few are blessed with the unimaginable joy of being able to avoid that most pernicious of ALL taxes, the dreaded IHT*.

O happy days indeed.

(*Inheritance Tax.)

Mint Julip
Mint Julip
3 months ago

God surely smiled on you, Mr Stanhope.

Martin M
Martin M
3 months ago

Good to hear from you, Your Grace!

Martin M
Martin M
3 months ago
Reply to  Peter B

Absolutely! NZ is an excellent example of a country that has found itself a niche in producing premium quality agricultural produce! The fact is that farmers who are looking to the public purse aren’t innovating, and they aren’t marketing!

Martin M
Martin M
3 months ago
Reply to  Nell Clover

Why is it a fact farmers are going to have to be internationally competitive to survive?
Because they are competing in a global market. Admittedly I live in Australia, but a lot of what I eat is flown in from other parts of the world (even though Australia produces lots of food).
For 60 years Europe’s protectionist food production has shielded its people from the worst of global food price instability.
Translation: For 60 years, Europe’s protectionist food policy has ensured Europeans pay too much for their food, while simultaneously paying lazy farmers to (in many cases) do nothing.

Matt M
Matt M
3 months ago

I believe the new post-Brexit agricultural subsidies scheme in England is pretty popular with farmers. The scheme essentially pays the farmer to leave land fallow when out of rotation (i.e. instead of planting a break crop, you get a payment). There are also a number of “Sustainable Farming Incentives” like payments for maintaining dry-stone walls or hedgerows or not using insecticides.
Not so in Wales, where they have a bonkers scheme demanding that all farms plant 10% trees.
Harry Metcalfe explains it here (from about half way through) https://www.youtube.com/watch?v=DnSXwrlrwIE
It shows the advantage of parliamentary sovereignty over EU membership in England. And perhaps the dangers of it in the Welsh case.

glyn harries
glyn harries
3 months ago
Reply to  Matt M

why is it bonkers to increase tree cover? it has the potential to significantly reduce flooding etc. sounds like the plan wasn’t negotiated carefully but it’s sensible.

Matt M
Matt M
3 months ago
Reply to  glyn harries

The value of an arable acre is all about flexibility. You can plant wheat one year and switch to barley the next if the market looks favourable. If you plant trees, you cannot farm that land for 50-100 years, you just have trees. And so an acre with some trees is worth 30% less (according to Harry the farmer in the video) than one left open for cropping. He explains it in the video – a great channel to follow to understand British farming.

Matt M
Matt M
3 months ago
Reply to  glyn harries

I replied to you yesterday but my comment has gone AWOL!
According to Harry Metcalfe, the farmer in the video above, the problem with planting trees on arable land is that it reduces the flexibility of the land. Once you plant the trees you cannot plant wheat or barley or whatever the market demands. And so the land is worth less. And arable acre with 10% trees is worth 30% less than one without according to him. And the massive amount of compensation that the government would have to pay the farmers for this loss of value is unlikely to be forthcoming.

Francisco Menezes
Francisco Menezes
3 months ago

What is happening in Greece with vulture funds aquiring farm land is the exact threat the Northern European farmers are faced with. Evict them from their properties and convert them into a latifunda with a third feodality of share croppers. That is als known as a WEF food hub. The Dutch queen is now called a WEF-prostitute when she appears in public. Of course, the readers will understand that the Dutch being a blunt and direct people will use a more vulgar word for the oldest profession. They globalist elites want to control the food supply.

Peter B
Peter B
3 months ago

Grow up Varoufakis ! Yet more juvenile economic fantasies.
The CAP was designed to support small farmers in France as well as large farmers in the Ile de Paris. de Gaulle took great care to keep the UK out of the EU while the policy as being established for just these reasons.
Of course, the day finally arrives when the subsidies run dry (running out of other people’s money) and the smaller farmers have to face economic reality.
Just how hard up is Manos if he can afford to drive a tractor 400km to Athens and back again ? And is that – it’s a lot of expensive diesel – “making the right enviornmental noises” (to use Mr Varoufakis’ words).
Varoufakis seems to want to continue subsidising inefficient, below scale agriculture and then wonders why the EU is faling behind … . Trying investing in new, high growth industries rather than subsidising failure.
I’m not without some sympathy for small farmers. But they’ve had decades to see what’s coming and adjust. Which is more than most of us get when economic and technical change comes for us.

Edward De Beukelaer
Edward De Beukelaer
3 months ago
Reply to  Peter B

Dear Peter,

I can follow your logic from a pure financial and market point of view. This would indeed be a reasonable opinion if we deal with a commodity that only needs to have the intrinsic value of stopping us from being hungry. If we consider food to be part of overall health, do they not say ‘you are what you eat’, I think the logic may not work. But this if of course for society to decide
I propose we ask ourselves whether the economic powers really want to produce nutritious, non-toxic food?? I think the farming industry just like the f(ph)arma industry just wants to make money (their duty is to their investors). See what this has brought: a medical service of which only about 35% of the interventions have good evidence of efficacy (Howick J, Koletsi D, Ioannidis JPA, Madigan C, Pandis N, Loef M, Walach H, Sauer S, Kleijnen J, Seehra J, Johnson T, Schmidt S (2022): Most healthcare interventions tested in Cochrane Reviews are not effective according to high quality evidence: a systematic review and meta-analysis. Journal of Clinical Epidemiology 148: 160-169. )
You can only grow healthy food on healthy land: this needs more than efficient industrial processes. These ‘efficient’ processes tend to have the opposite effect.
Of course it is all a matter of choice and preference… but if you want to create a healthy society, which is likely a successful society, you have to start by the land where the food is grown; everything is just connected in life, you cannot get away from this. Once you start putting everything in silos, this makes it easier to control things but the fabric of life will crumble and then you get societies where lots of things go wrong. The things going wrong are the symptoms of the society that is not healthy.
This may sound romantic, yes, but it is real. Mechanistic thinking in relation to life does not work, it just suits interests. I propose you do a search on the internet on System biology and system thinking…

Paul T
Paul T
3 months ago

Oh, is it “EU bad” week?

Martin M
Martin M
3 months ago
Reply to  Paul T

You’d have to admit that the EU is unique, in that it has made the Right hate it for being too Socialist and bureaucratic, and made the Left hate it for being too neoliberal and Capitalist.

Alex Lekas
Alex Lekas
3 months ago

There is something fascinating, like slowing down to observe a train wreck fascinating, in people getting the sort of policies they want and then being upset by the foreseeable consequences. When you organize a cartel, and isn’t that what the EU is?, you can’t dress it up as an ode to free market liberal trade.
There is also the insistence of clinging to religious belief, like this sentence: Last autumn, the climate crisis paid his valley a visit when Storm Daniel destroyed all his equipment by submerging his land in metres of water” Has Yanis forgotten or is he purposely ignoring that the genesis of the Dutch farmer revolt was govt measured aimed at mitigating the alleged “climate crisis.” Flooding is not new to human history. Nor is drought, cold, tornadic activity, hurricanes, earthquakes, or tsunamis. To think that a bunch of elected and appointed officials can magically control the climate is lunacy. These people cannot manage the basic responsibilities of govt.

Daniel P
Daniel P
3 months ago

Europe needs to get its head out of its collective asses and wake up.

If they do not get their act together on energy, defense, manufacturing and finance independence then they are doomed to a long, slow collapse that will see them impoverished and vulnerable, they will wake up one day to find that almost all their valuable assets are owned by foreigners and that as a result they are powerless to push back.

Walter Marvell
Walter Marvell
3 months ago

The convulsions in farming presents a terrible portrait of and portend fpr the future of the 30 year old Progressive/EU New Order. Market forces have been systematically obliterated by the distant Blob in farming energy housing labour.. everything. Instead of trusting in that nstural equilibrium, protectionist interventionist Europe has layered a top down heavy handed ideological regulatory order which has twisted warped and strangled the life out of all, leaving States dependent on magic money bailouts (CAP/Housing Benefit/Energy payouts) to preserve the fiction of stability. But this is Soviet and Gosplan Lite anarchy. And it will end in the same way. Traumazone.

Roddy Campbell
Roddy Campbell
3 months ago

There’s a couple of useful principles worth re-stating here.

1. As disposable incomes rise (which they have done as a general rule), the proportion of peoples’ salaries that is spent on food as opposed to other things reduces, because an individual can only consume a certain weight of food each day. So farmers’ income remains static while everyone else’s goes up. So farmers become relatively poorer in society.

2. As farming becomes more efficient, farmland produces more food which further depresses prices, applying the law of supply and demand.

These are gross oversimplifications, but the general principle remains: societal prosperity makes farmers poorer compared with everyone else.

Traditional methods of addressing this disparity have involved agricultural subsidies (CAP for instance) and, more recently, removing farmland from production (as in the UK’s wildflower meadows handouts or set-aside subsidies).

It’s a schizophrenic sector. We want food security. We want cheap food. We want to export. But we also want economically viable farms, and we don’t much like subsidising farmers, particularly not paying them not to farm.

The answer might be a small number of gigantic, super-efficient farms. But we actually quite like what small farms do for our countryside and communities.

I’m not sure anyone has come up with a satisfactory solution that pleases everybody.

Martin M
Martin M
3 months ago
Reply to  Roddy Campbell

Most of us don’t eat subsistence level food. We are happy to pay extra for gourmet items. Smaller farms can service that market.

Steve Jolly
Steve Jolly
3 months ago

It’s interesting to see how many supposed bastions of classic laissez-faire capitalism and “free” trade have their roots in anti-competitive arrangements between huge corporations, cartels, and governments. That the EU, bastion of neoliberal globalism, had its origins in a profit sharing scheme between wealthy cartels strikes me as perfectly exemplary of a larger phenomenon of capitalism being twisted into something completely other than what is was or should be.

A lot of people my age and younger tend to view capitalism with skepticism while citing the problems of modern western society. What they fail to grasp is that what we have today isn’t capitalism the way Adam Smith or most anyone else envisioned it way back in the first half of the 19th century. It’s a twisted, collectivized, corporatized version of capitalism that long ago traded the efficiencies created by competition for the efficiencies of scale and the collective profits of a temporarily expanded (but now rapidly shrinking) capital class. Corporations, insofar as they are collective entities sanctioned by nations, are by their very nature anti-competitive. Smith himself harshly criticized those first companies such as the British East India company, and their pursuit of monopolies on certain goods. Since then, the western world has doubled down many times over on corporate capitalism rather than the ‘pure’ capitalism that has been so rarely ever seen in human history. Governments further empowered these non-persons by giving them rights as if they were individual persons empowering a collectivism that is entirely at odds with individualistic capitalism, risk, reward, and responsibility. At the same time, they passed laws to protect the interests of stockholders, who could not be held personally accountable for the failure of the company. To say that this empowers the worst sort of mob psychological phenomena and encourages the sort of collective failure of responsibility so well documented in human psychology is a gross understatement. Corporations misbehave for the same reason that Internet chat rooms are a cesspool of bad behavior, a toxic combination of collective thinking and anonymity. Corporate misbehavior, increasing proportionally with size, is nearly a logical certainty.

Capitalism is supposed to work efficiently because nobody is large or powerful enough to affect the entire market. Profits are supposed to be limited by competition because if one firm charges too much, they’ll be undercut by someone else. It’s supposed to be organic, like nature, a sum total of millions or billions of small interactions from which order emerges on a larger scale, not a top down order imposed by some class of wealthy overlords. Globalism pushes corporate collective power even further by reducing and eliminating the power of the nation states who originally created the corporations, thus instead of serving the states which correspond however imperfectly to basic tribes of humanity they become the rulers. I trust I don’t have to explain how far we are down the road to ruin at this point. Generations of economists have piled on the apologies for this form of capitalism, partially on pragmatic and partially on ideological grounds, but the fact is what we call capitalism today bears only a passing resemblance to the 1790’s version that helped animate the American and French revolutions.

The modern day critics who see ‘capitalism’ as the problem are simply victims of generations of deceptions by generations of the wealthy and powerful piled up one upon the other, a tower of lies built so high that the monstrosity is now an ugly, misshapen thing that few people want, let alone care to defend or fix, while the next stiff breeze is likely as not to topple the whole thing. My advice to anyone today is the same advice I would give anyone standing near the bottom of a large tower of garbage with questionable structural integrity, that is to mind which way the wind is blowing and try to stay out of the way when, not if, it falls.

Martin M
Martin M
3 months ago
Reply to  Steve Jolly

A lot of people my age and younger tend to view capitalism with skepticism while citing the problems of modern western society.
That is probably because they haven’t experienced the horrors of socialism.