Monday, March 30, 2009

Into the lion's den

The Franco-British Council invited me to a large seminar in London yesterday on the Common Agricultural Policy. It was a very interesting day, although it was somewhat disconcerting to be asked questions in French about the policy from its defenders. Those present were a mix of academic and practitioners.

The meeting was conducted on Chatham House terms, but it gave an interesting indication of both current French and British thinking on the future of the CAP. Over the next week or so, I will reflect on some of the arguments put forward. The overall atmosphere was one of constructive dialogue, although one French speaker had to get in a dig about Britain not having learnt anything from BSE.

Much of the discussion focused on Pillar 2 issues in terms of rural development and how the CAP could be developed to meet the challenge of climate change. Indeed, one argument put forward from the British side was that the distinction between the pillars had become unhelpful and what was needed was a blended rural and environmental policy.

I wouldn't claim that the French participants necessarily bought into this, but I think there was an acceptance that there had to be debate about the underlying principles and goals of the CAP and without this one would not be able to arrive at better policy.

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Sunday, March 22, 2009

Why CAP reform happened

The latest Journal of Common Market Studies (vol.47, 2, March 2009) contains an important article exploring the determinants of CAP reform. It is written by Alan Swinbank, a distinguished agricultural economist and a leading proponent of reform and Arlindo Cunha who was chair of the Agriculture Council in 1992 at the time of the MacSharry reform.

They have used a particular method, the Delphi technique, to survey a range of key influentials including Ray MacSharry and Franz Fischler. It allows them to analyse how the drivers of reform have changed over time through the 1992, 1999 and 2003 reforms.

Among the key findings were:
1. The Agriculture Commissioner has a key entreprenurial role (as I argued in my 1997 book on the CAP, 'the Commissioner makes a difference'
2. International trade negotiations were a major driver of reform (in this case providing confirmation of a widely held view)
3. Pressures from environmental groups, and from the media and public opinion, were identified as of growing importance, from a low base in 1992 to real significance in 2003. By contrast, farmers' organisations, the food processing indsutries, consumers and academics were judged to have had little influence on the reform process.

The European Parliament was seen as being of little influence in the reform process. Pressures from the European Council and the finance ministers in ECOFIN were seen to be more important in promoting the reform agenda than the Farm Council. Views on the role of the Farm Council were more divergent than almost any other subject covered in the survey. Some thought it had been conservative for a long time, running behind events, others took the view that it softened the Commission position.

The need for a better relationship between agriculture and the environment was seen as of little importance in 1992 but became particularly important in 2003. The need to find more funds for rural development also became important in 1999 and 2003. Ensuring the international competitiveness of agriculture also showed an increasing importance over the three reforms. Consumer concerns about food safety also became more important over time, but the importance of the 'European Model of Agriculture' seems to have peaked in the Agenda 2000 discussions when it was first presented.

Sunday, March 15, 2009

A disappointing interview

I realise that opposition politicians have to say all things to all persons and jump on any bandgwagon that's going on, but I must say that I found an interview with Nick Herbert, the shadow Defra secretary, in Farmers Weekly a bit disappointing.

It remains to be seen whether the MP for Arundel and South Downs will be Defra secretary in Dave Cameron's government, or even whether Defra will remain in his present form. However, if his thinking is typical of that in the shadow cabinet on agriculture and food matters, it's a bit worrying. It looks as if we could be lurching back towards productionism.

Perhaps that is not entirely surprising as there has always been quite a close informal relationship between large-scale farmers and the Conservative Party. Unlike smaller farmers (who often vote for the Lib Dems or the Nationalists or even Labour), they are overwhelmingly Conservative voters. Many of them hold office in local Conservative associations.

Herbert thus goes for a badger cull, even though the scientific evidence is contradictory and culling can actually spread Bovine TB by disturbing social groups of badgers. It is also unlikely to win the Conservatives friends among the well-organised badger lobby. I would not rule out culling in any circumstances, and it will be interesting to see whether the proposed policy experiment in Wales goes ahead and, if it does, what its effects are. Herbert is chair of the all-party group on badger TB and one would have hoped that he could have been a bit more cautious before trying to score a few partisan points over Hilary Benn, whatever the latter's shortcomings.

What really concerns me is the following set of statements: 'We need to re-address the balance of food production. Total self-sufficiency isn't the right objective, but we do need increased production on the foods we can grow and rear domestically. We are a trading nation with important export markets and, while I'm not a protectionist, it's madness to import food we could be producing ... We should be maximising food production in a sustainable manner.'

Let's try and deconstruct these statements:
1. Addressing the balance of food production. This is part of the current fashion for re-balancing the economy, but I am far from sure that governments should set targets for the share of the economy undertaken by particular sectors.
2. Autarchy is impossible (good), but we should maximise domestic production. How? At a cost to the taxpayer or to the environment?
3. It's madness to import food we could be producing. Supposing that food is cheaper and of an equivalent quality or offers a better price/quality mix. The only way to keep that food out of the UK market is through protectionism which is what the CAP does at the moment.
4. How does one maximise food production in a sustainable manner? Of course, there are policies like Integrated Pest Management that need to be pursued, but there is something of a contradiction in this statement.

On the CAP, Herbert says, 'I would rather make decisions here. There's too much nonsense coming out of Europe and we need to minimise here.' Of course, the Conservatives are Eurosceptic, but I have never heard them advocating withdrawal from the CAP (unlike the CFP).

To be fair, there is a possibility of greater co-responsibility in the post-2013 CAP. Member states might be able to vary the level of subsidy provided. The problem with that approach is that it undermines the internal market which is one of the major achievements of the EU. Herbert's own answer is to have greater scrutiny of regulations in the Commons. There's nothing wrong in that, but I don't think it's the answer.

More thinking needs to be done between now and the election.

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Spending money to pay it out

One of the many drawbacks of the CAP is that it costs a lot of money to run which reduces the sums that reach the supposed beneficiaries.

It has now emerged in response to a parliamentary question that each claim for the Single Farm Payment (SFP), irrespective of its value costs £742 to process. Junior Defra minister Jane Kennedy said that the figure was obtained by considering the direct processing costs and the total number of claims received.

A significabt number of SFP claims are worth around half of what it costs to process them, although this should change after the implementation of the Health Check reforms which are intended to cut very small payments to, for example, 'hobby farmers'. There were 14,465 payments under £400 in 2007 and 636 under £50. There were five payments made under £5.

It's a classic example of deadweight loss at the expense of the taxpayer. And it isn't helping farmers.

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Thursday, March 12, 2009

Vision for the future of the CAP

The influential Land Use Policy Group will be launching their vision for the future of the CAP after 2013 in Brussels on March 30th. This will be an important event in the long-term effort to clarify thinking about future policy so that it delivers benefits to the environment and rural communities.

The Group wants to progressively transform the CAP so that it is focused more clearly on rewarding the environmental services arising from land management where the market fails to do so. These rewards should reflect the services provided and the costs incurred. The new policy should in the Group's view:

• Have a clear role in mitigating and adapting to climate change, addressing water and biodiversity management and ensuring that farming and forestry have the capacity to deliver environmental security and sustainable production in the long term.

• Promote the sustainable use of the natural resources on which all production depends through the use of good practice guidance together with agreed environmental standards, enforced by risk-based regulation which is binding on all land managers.

• Reward the positive management of existing biodiversity, cultural landscapes, carbon and water resources whilst securing improvements in the environmental quality of all rural land.

• Help reduce the environmental footprint of agriculture and forestry, by targeting capital investment on environmentally beneficial technology and infrastructure.

• Integrate sustainable land management with economic and social policy in order to encourage integrated land use that enables rural communities to benefit from the economic potential of their environment.

• Ensure that progress towards environmental, social and economic objectives is monitored, evaluated and regularly reported on.

The group admits that, 'Transforming the CAP in this way will take time. Any income support retained in the short term should be targeted, with conditions, on those farming systems making the greatest contribution to the management of environmental services for the benefit of society. Research and development should be focused on the challenge of enhancing long-term productivity in ways that reduce environmental impacts and help adapt to climate change.'

The Group states, 'We see our proposals as providing a sustainable justification for a “new contract” between predominantly urban taxpayers and those who manage rural land.' It will be interesting to learn more about the proposals when they become available. The principles are good ones, but to an extent the devil is in detail.

There is also the political problem of overcoming the resurgence of support for productionist solutions, the argument being advanced that protecting the environment is a luxury good that can be set aside in a recession. As evidence accumulates about the effects of climate change and their possible acceleration, future agriculture and rural policy must embed measures to mitigate climate change as a key priority.

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Tuesday, March 10, 2009

The future of the CAP

An excellent new site on the future of the CAP is now available organised around the theme of '2020: debating the future of the CAP': CAP 2020 . It has a particular emphasis on environmental issues, but has a broader focus than that.

Backed by the knowledge and expertise of the Institute for European Environmental Policy, this is going to be a key resource for analysts of the CAP. Indeed, it is going to eclipse anything that can be offerd on this blog or even what Jack Thurston has been able to achieve on CAP HealthCheck. He has been reorienting his interests in any case: Health Check

This blog will be kept going as from time to time I may be able to draw on my experience and contribute something to the debate. However, the debate is clearly moving on.

A document I saw recently suggested that the UK Government now has the ambition of phasing out the CAP as a protectionist and subsidy providing policy package by the year 2020. Even before the recession, I would have been sceptical about that ambition, given the strength of the political constellation that defends the CAP.

However, we now face a long and deep recession that it is going to have profound implications for the future role of government. Although the 'regulatory state' will probably be strengthened as a result, whatever government is in power in a particular country, it is going to have to cut public expenditure and raise taxes to pay off debt.

This might seem a golden opportunity to reduce the large sums that are spent on subsidising agriculture. However, even though the debate on the CAP has become more transparent, and significant changes have been achieved in the way in which it is delivered, the politics of bringing about change in the CAP remain challenging and complex. The policy will probably outlive me.

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