By Daniel Williams
Olive Oil Times Contributor | Reporting from Barcelona
The European Commission, the executive body of the European Union, proposed June 30th to suspend agricultural aid and farm subsidies to countries with excessive deficits in an effort to prevent another debt crisis like the one that exists currently. In this proposal, the Commission has the right to halt EU agricultural aid to those states that violate budgeting rules, like those that expressly forbid deficits of more than 3%.
As it stands, most EU states have deficits that far exceed this 3% limit and the most serious offenders are some of the world’s olive oil producing leaders: Greece, Spain, and Portugal. Under these new sanctions, if these countries fail to tighten their budgets they could lose farm subsidies and other forms of EU agricultural aid. This could prove devastating for olive oil farmers and producers who court EU aid to revamp outdated production methods and could cause pricing woes for countries that rely on EU subsidies to store olive oil to limit output and rescue falling prices in the sector.
Europe’s Stability and Growth Pact requires states to keep public deficits under three percent of national output and debt at less than 60 percent of GDP. Until now however, none of the proposed sanctions have ever been implemented due to a lengthy and complicated punishment procedure. Under this new plan, however, the EU promises swifter and harsher action, promising to first suspend aid payments to states and then, if no efforts are made to improve deficits, vowing “the cancellation of the budgetary commitments and the definitive loss of payments for the country concerned.”
The European Union is, by far, the largest olive oil producing and consuming region on the planet with olive oil making up a whopping percentage of GDP for the Mediterranean countries hit worst by the current economic crisis. Olive cultivation is significant to the rural economies of many of the EU’s 27 countries as well as to the environmental equilibrium of the olive oil producing regions.