Outright opponents of the European Commission's sugar reform plans have now shrunk to five countries, not enough to block the proposal. The five outright opponents are all marginal sugar producers: Finland, Greece, Ireland, Portugal and Spain. Ten countries including the UK, France and Germany are broadly happy with the proposals.
In between is a range of countries such as Austria and Cyprus who said that the thrust of the proposals was right, though the price cuts went too far, while the compensation was inadequate. Others, such as Poland and Italy, are more reluctant in their support.
If Italy and Poland joined the no camp, a blocking minority would exist. However, a source close to the Commission commented, 'they may be bought off with bounties.' Side payments to win support are certainly a well established CAP tradition.
Saturday, July 23, 2005
Sunday, July 17, 2005
No change to CAP for years - Beckett
British farm minister Margaret Beckett has said that the UK was not expecting an overhaul of agricultural subsidies to come into force before 2014. This is somewhat at odds with what Tony Blair has been saying, but came after Mrs Beckett faced a rough ride in the European Parliament. She was heckled and after she failed to elaborate British plans to reform the CAP, some MEPs walked out in protest.
Farm commissioner Mariann Fischer Boel recently questioned whether Britain's reason for putting the CAP reform issue back on the bargaining table was 'just a gimmick or game plating.' Certainly the UK has failed to explain what kind of farm reform it envisaged, suggesting that little forethought was given to the call for further reform.
The UK is sensitive to accusations that its stance over the budget is damaging to new member states because delay would restrict their access to EU funds. UK officials argue that, with or without the budget rebate, the UK is paying more for the ten newcomers than France.
Asked why they did not oppose the 2002 Franco-German agreement on farm spending at the time, they claim that doing so would have prompted President Chirac to block EU enlargement.
Not all new member states are concerned about the size of the farm budget. With its sizeable agricultural sector, Poland clearly is. But countries like Estonia would be quite happy to see the CAP share of EU spending reduced.
Some observers assume that the debate on the financial perspectives will now be frozen until Austria takes over the presidency in January 2006.
Farm commissioner Mariann Fischer Boel recently questioned whether Britain's reason for putting the CAP reform issue back on the bargaining table was 'just a gimmick or game plating.' Certainly the UK has failed to explain what kind of farm reform it envisaged, suggesting that little forethought was given to the call for further reform.
The UK is sensitive to accusations that its stance over the budget is damaging to new member states because delay would restrict their access to EU funds. UK officials argue that, with or without the budget rebate, the UK is paying more for the ten newcomers than France.
Asked why they did not oppose the 2002 Franco-German agreement on farm spending at the time, they claim that doing so would have prompted President Chirac to block EU enlargement.
Not all new member states are concerned about the size of the farm budget. With its sizeable agricultural sector, Poland clearly is. But countries like Estonia would be quite happy to see the CAP share of EU spending reduced.
Some observers assume that the debate on the financial perspectives will now be frozen until Austria takes over the presidency in January 2006.
Wednesday, July 13, 2005
Hill farming crisis raises broader issues
The UK charity, the National Trust, has warned that the country's hill farmers are on the brink of a national crisis. The charity has stated: 'Hill farming is on the brink of a rapid and unmanaged collapse without help through the major changes it faces. The separation of support payments from agricultural production has exposed the stark reality that livestock farming in the hills simply is not profitable.'
The National Trust bases its conclusions of a survey of sixty of its tenanted farms which suggests that the majority of upland farms are facing severe falls in income. Recently the Trust let out a farmhouse to a non-farming tenant much to the anger of neighbouring farmers in the Lake District.
Some farms will see their support payments halved over the next five years which could force large numbers of farms to go out of business. The UK govermment's stated intention is to scrap the Hill Farm Allowance, which is funded out of the national budget, in 2006. The National Trust, however, would like to see its funding increased from £27m to £50m.
This crisis does raise broader issues. Recently, farm commissioner Mariann Fischer Boel argued that the level of support for agriculture was exaggerated as it constituted less than 0.5% of European GDP. However, that overlooks the fact that farming is a business activity. Should any commercial activity receive a general subsidy?
Where a subsidy is justified is for the non-marketable benefits that farming produces such as an attractive landscape and countering rural depopulation. If hill farming ceased, the landscapes that attract visitors to areas such as the Lake District would disappear. Drystone walls would crumble and the grazed landscape would revert to bracken and scrub, making it less accessible to walkers. Yet, as we know, the majority of CAP subsidies go to large-scale arable farmers.
Marginal farmers do deserve assistance, although it has to be packaged in a way that delivers environmental benefits and assists rural development.
The National Trust bases its conclusions of a survey of sixty of its tenanted farms which suggests that the majority of upland farms are facing severe falls in income. Recently the Trust let out a farmhouse to a non-farming tenant much to the anger of neighbouring farmers in the Lake District.
Some farms will see their support payments halved over the next five years which could force large numbers of farms to go out of business. The UK govermment's stated intention is to scrap the Hill Farm Allowance, which is funded out of the national budget, in 2006. The National Trust, however, would like to see its funding increased from £27m to £50m.
This crisis does raise broader issues. Recently, farm commissioner Mariann Fischer Boel argued that the level of support for agriculture was exaggerated as it constituted less than 0.5% of European GDP. However, that overlooks the fact that farming is a business activity. Should any commercial activity receive a general subsidy?
Where a subsidy is justified is for the non-marketable benefits that farming produces such as an attractive landscape and countering rural depopulation. If hill farming ceased, the landscapes that attract visitors to areas such as the Lake District would disappear. Drystone walls would crumble and the grazed landscape would revert to bracken and scrub, making it less accessible to walkers. Yet, as we know, the majority of CAP subsidies go to large-scale arable farmers.
Marginal farmers do deserve assistance, although it has to be packaged in a way that delivers environmental benefits and assists rural development.
Fight against sugar reform gathers pace
Opposition to the EU's proposed sugar reform is gathering strength with a blocking coalition of member states emerging. The nine main objectors are Poland, Italy, Spain, Ireland, Greece, Portugal, Finland, Latvia and Lithuania. Between them they have 132 votes which would be more than enough to block the plan as only 90 are required under qualified majority boting. Moreover, there are another five states who are waverers: Austria, Cyprus, the Czech Republic, Hungary and Slovenia.
The opposition states argue that the 39% cut in the intervention price over two years was excessive in its size and its timescale while the proposal to offer 60% compensation to farmers within the Single Farm Payment system was seen as insufficient, as was the compensation on offer for permanently ending production.
The drastic nature of the cuts was driven by the WTO dispute settlement mechanism decision that declared that much of the regime constituted in effect an export subsidy, plus the arrival of tariff free sugar from least developed countries under the Everything But Arms agreement in 2009. Practical politics dictates that some concessions on the plan will have to be made but not to the extent that it is unable to ready the EU for these changes.
Poland, which is a leading opposition state, was partially mollified by the removal of cross-border exchanges in quota, although that is exactly what should happen in an internal market. They were also given a relatively generous offer of a 300 000t increase in the isoglucose quota, an issue that they pressed hard on in the accession negotiations.
It is likely that the 60 per cent compensation level will eventually be raised, although that would mean cuts elsewhere in the farm budget. It might also just be possible to phase the price cut in over a longer period even though that would mean difficulties in meeting the WTO deadline.
The opposition states argue that the 39% cut in the intervention price over two years was excessive in its size and its timescale while the proposal to offer 60% compensation to farmers within the Single Farm Payment system was seen as insufficient, as was the compensation on offer for permanently ending production.
The drastic nature of the cuts was driven by the WTO dispute settlement mechanism decision that declared that much of the regime constituted in effect an export subsidy, plus the arrival of tariff free sugar from least developed countries under the Everything But Arms agreement in 2009. Practical politics dictates that some concessions on the plan will have to be made but not to the extent that it is unable to ready the EU for these changes.
Poland, which is a leading opposition state, was partially mollified by the removal of cross-border exchanges in quota, although that is exactly what should happen in an internal market. They were also given a relatively generous offer of a 300 000t increase in the isoglucose quota, an issue that they pressed hard on in the accession negotiations.
It is likely that the 60 per cent compensation level will eventually be raised, although that would mean cuts elsewhere in the farm budget. It might also just be possible to phase the price cut in over a longer period even though that would mean difficulties in meeting the WTO deadline.
Friday, July 08, 2005
How could CAP budget be cut?
Tony Blair has recently suggested for the first time that scrapping the CAP is a British objective. Philippe Douste-Blazy, France's foreign minister, has said that France is happy to discuss the modernisation of Europe but not at the cost of the CAP 'one of our most successful common policies' (which it certainly has been for France).
The Commission would certainly not countenance the dismantling of the CAP and the renationalisation of farm policy. But there is real pressure to cut the CAP share of the EU budget and not at the expense of rural development policy. How could this be done? One possibility would be to introduce degressivity so that the CAP budget would be reduced year on year. One could also cap payments over a certain level. But this would hit large scale farmers and has been opposed in the past by Britain and Germany. Another possibility would be co-financing so that Pillar 1 expenditure would be partly met out of national budgets. However, such a big step towards renationalisation would be opposed by the Commission and also by national farm organisations who fear that national governments might not pay out their share in full.
As NFU policy director Martin Howarth has commented, 'Any way you look, the issue is in which way is the CAP budget to be cut.'
The Commission would certainly not countenance the dismantling of the CAP and the renationalisation of farm policy. But there is real pressure to cut the CAP share of the EU budget and not at the expense of rural development policy. How could this be done? One possibility would be to introduce degressivity so that the CAP budget would be reduced year on year. One could also cap payments over a certain level. But this would hit large scale farmers and has been opposed in the past by Britain and Germany. Another possibility would be co-financing so that Pillar 1 expenditure would be partly met out of national budgets. However, such a big step towards renationalisation would be opposed by the Commission and also by national farm organisations who fear that national governments might not pay out their share in full.
As NFU policy director Martin Howarth has commented, 'Any way you look, the issue is in which way is the CAP budget to be cut.'
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