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Struggling farmers face more competition

Swiss farmers face a toss-up: compete or go under Keystone Archive

The government is to cut agricultural subsidies while increasing direct payments to farmers in a move aimed at increasing competition.

This content was published on February 2, 2005 - 17:26

Farmers say they will fight the plans, which they deem unacceptable.

On Wednesday, the government announced a SFr13.54 billion ($11.35 billion) package for farmers. The figure, earmarked for 2008-2011, is SFr634 million less than the existing four-year agriculture budget.

The central aim of the four-year programme is to reduce subsidies, such as those used to underpin butter prices, and to increase direct payments.

Economics Minister Joseph Deiss said the government was looking to cut subsidies to make the sector more competitive.

The new financial programme, which has to be approved by parliament, is designed to comply with the demands of the Geneva-based World Trade Organization (WTO).

“This is a difficult time on a human level, but necessary in view of our international obligations and the [state of the] federal finances,” said Deiss.

Last August Switzerland signed an international agreement with the WTO, which foresees the gradual phasing out of protective tariffs and subsidies for farmers.

But the Swiss government has come under fire from the world trade body for moving too slowly towards reducing agricultural subsidies.

In a report issued in December, the WTO said the level of state subsidies for farming had not changed for four years, although it noted a gradual move away from price support towards direct payments.

“Certain quarters will say we are not going far enough,” added Deiss. “But I cannot recall any sector that has had to undergo such a major restructuring in the past 15 years.”

Bitter pill

The Federal Agriculture Office has warned that farmers stand to lose up to SFr2.5 billion from 2008 because of the new WTO rules.

Under the government’s proposals, state subsidies between 2008-2011 would total SFr300 million a year, against the SFr700 million being paid today.

Direct payments would be worth SFr11.25 billion over the same period.

The package, which is around SFr400 million less than Deiss was hoping for, will be put out to consultation in the autumn.

Farmers’ unions have already taken steps to reduce production costs – one of the main reasons food prices in Switzerland are generally higher than in other European countries.

Union leaders announced measures to cut costs by SFr500 million in October.

Farmers are also having to contend with the liberalisation of the cheese market in 2007 to bring it into line with the European Union, as well as the gradual abolition of milk quotas.

The Swiss Farmers’ Union said on Wednesday that it would oppose the agriculture budget, which it deemed unacceptable.

It also criticised the government for moving too fast with its reform of the farming sector.

The changes have hit Switzerland’s farmers hard. Around 2,000 farms – out of a total of 65,000 – go out of business every year.

swissinfo with agencies

Key facts

The new WTO rules are hitting Swiss farmers hard.
Farmers face widespread reform of the agriculture sector.
There are 65,000 farms in Switzerland.
But they are disappearing at a rate of 2,000 a year.

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