29 July 2015

On Sunday, French farmers in the north-eastern Alsace region used tractors to obstruct six routes from Germany in a bid to stop trucks crossing the Rhine carrying agricultural goods. Franck Sander, President of the local branch of the FDSEA farming union, told AFP, “We let the cars and everything that comes from France pass,” guessing that over a thousand agricultural workers were taking part in the roadblocks. Tractors have also blocked inbound routes from Spain.

Germany’s Agriculture Minister Christian Schmidt has been less than sympathetic, reminding the French government that it must “stick to the rules” of the single market.  “I don’t see French farmers hindering their exports, so imports should not be hindered either”, he said, advising French farmers to instead ask why their industry is so uncompetitive.

And this is the crux of the issue. French farmers have seen their market share of exports to other EU states fall by over 20% since 2005.

French farmers are losing market share while German and Spanish farmers have remained competitive

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However, as the chart above shows, they haven’t lost out to Spanish or German farmers but to the new member states in Central and Eastern Europe (the A10 Member States) that joined in 2004 and 2007. These countries’ share of exports within the single market has increased by over 80% since 2005. But, whereas Spain and Germany’s agricultural industry has managed to remain competitive in the face of lower labour costs in the countries to the east, France’s has singularly failed to do so.

This is despite – or possibly because of – France’s status as the single largest recipient of CAP funding; €62.8bn over the current 2014-2020 EU budget. As we pointed out in our report on the CAP back in 2012,

By providing income support irrespective of whether any meaningful economic activity takes place on a farm, direct CAP subsidies often act as an outright disincentive for farmers to modernise, in turn locking in unviable business models and hurting Europe’s competitiveness.

Open Europe: More for Less: Making the EU’s farm policy work for growth and the environment, February 2012

Ultimately, the declining competitiveness of its farming sector is only one of several big economic challenges facing France. The country also has stubbornly high unemployment, high and rising unit labour costs, and declining exports (all of course linked). As such it seems in part to be the manifestation of a wider economic malaise. The risk is that rather than embrace economic reform to boost competitiveness, public opinion increasingly turns against competition within the single market. Of course, this is far from a new phenomenon in France and also happened when EU enlargement was first on the agenda. Incidentally, the Front National have made a living off this type of issue and this could further boost its already rising popularity.