Tuesday, December 09, 2008

The Estonian vision

A charming young Estonian woman greeted me at the European Parliament yesterday when I went to give evidence to the Agriculture and Rural Development Committee (of which more in due course). Of broader significance Estonia is orobably the only new member state with a clear concept of how the CAP should evolve. This is outlined in an Agra Focus interview with farm minister Helir-Valdor Seeder.

Estonia's view is that reform has not gone far enough and believes that we need a significantly reformed CAP. Seeder's view is that 'the system of direct aid today is innovative in its form ... but in practice it is the factual continuation of the 1992 MacSharry reform where farmers were compensated for the internal market price drop.' He argues there should be a continuing base payment to farmers to compensate for the EU standards they are obliged to follow.

However, more payments should be targeted. He sees the future in terms of a Common Rural Policy which should be open to entrepreneurs in rural areas, but 'should not be a cartel for the farmers club.'

He argues that price volatility requires a single intervention mechanism that would enable the EU to offset the negative effects of extreme temporary price drops. However, why not deal with this through some kind of insurance mechanism that had EU backing? It would be less market distoring.

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