Pubdate: Wed, 10 Nov 1999
Source: Financial Times (UK)
Copyright: The Financial Times Limited 1999
Contact:  1 Southwark Bridge, London, SE1 9HL, UK
Fax: +44 171 873 3922
Website: http://www.ft.com/
Author: Michael Smith in Brussels

FARMING: EU SUBSIDY ABUSE MEETS SUBSTANCE ABUSE

European Union farmers have found a relaxed, if illegal, route to
riches. They plant cannabis and then claim subsidies from the EU's aid
regime for hemp, a member of the same plant family.

Fraud detectors struggle to tell the difference between the
plants.

Today the European Commission is expected to approve a crackdown on
subsidy abuses as part of a wide-ranging reform of the common
agricultural policy's hemp and flax regime.

But cannabis is just one of the problems of a regime for which annual
costs have exploded from E74m (UKP47m) in 1995 to nearly E158m this
year.

There have also been problems with farmers claiming subsidies for flax
and hemp crops they planted but did not harvest.

In addition, farmers have been moving into flax and hemp production
specifically to claim subsidies rather than meet a market need, and
land given over to the two crops has tripled in five years.

Flax and hemp are used in industries including paper, furniture-making
and textiles. The reforms would cut per hectare aid for the crops, but
would introduce supplementary assistance for quality varieties.

Rules would be simplified and spending limited; the Commission expects
expenditure would fall to a third, or E50m, in 2005.

To tackle unintentional cannabis subsidies, the Commission plans to
stop paying aid for hemp plants in which the level of
tetrahydrocannabinol - the chemical responsible for the intoxicating
effect - is above 0.2 per cent.

Surveillance would be tightened and subsidies only paid where entire
crops were sold under contract to authorised primary producers "for
use other than human nutrition", according to one of the two
directives which will be approved today. 
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