The European Union agreed on Monday to revamp its policy on subsidised cotton production, making technical changes to a 2004 reform that had run foul of Europe's highest court, the EU's executive Commission said.
In September 2006, the European Court of Justice annulled the EU's cotton reform after a challenge by Spain, saying a key part of its new subsidy system was flawed and arbitrary. The 2004 reform deal set down that for cotton, 65 percent of EU payments would be decoupled - delinking the amount of Brussels subsidy that a farmer receives from the amount he produces - and 35 percent converted into area-based payments. Under the revised deal agreed by EU farm ministers, that split remains in place, although the maximum area for subsidised EU cotton-growing falls from around 450,000 to 320,000 hectares.
Greece gets the lion's share, as the EU's leading cotton grower with around 76 percent of the bloc's raw cotton output. Greek cotton growers will qualify for a subsidy of 251.75 euros ($390) per hectare over a maximum area of 270,000 hectares. Spain, the EU's second-largest producer, receives a subsidy rate of 400 euros per hectare for up to 48,000 hectares. Bulgaria and Portugal are given very small growing areas.
"I am happy that the long discussions and court cases regarding the reform of the cotton sector have now been brought to a positive conclusion," EU Agriculture Commissioner Mariann Fischer Boel said in a statement. "The reform maintains the 65-35 division between decoupled and coupled payments, respects our international commitments, and is budget neutral," she said. Spain filed its complaint over the EU's final political deal, claiming the revamped cotton regime would encourage farmers to drop cotton growing in favour of competing crops, with negative consequences for cotton-dependent farm regions.
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