Friday, September 21, 2012

'Greening' remains controversial

Last week’s informal Farm Council meeting in Cyprus – the first since the summer break – reminded decision-makers that gaining consensus over the ‘greening’ requirements for direct payments is one of the biggest obstacles for CAP reform.

As Cypriot farm minister Sofoclis Aletraris admitted to Agra Europe at the meeting, while the greening of the CAP is a desire for all member states, the exact definition of what ‘greening’ means, or should mean, varies across the EU. Indeed, it's a bit like being in favour of motherhood and apple pie. No one is likely to argue for 'browning' the CAP, but the devil is in the detail.

One of the issues is the impact on profitability. The current chair of the EU Farm Council also admitted that greening will be a “tax” for farmers and that the final system must ensure that farming is still profitable to avoid people leaving the profession.

EU Farm Commissioner Dacian Ciolos insists that progress on reaching an agreement is being made and that the European Commission plan to link 30 per cent of farm income support to three EU-wide environmental requirements is now better understood by governments and farmers than it was before. That doesn't mean they like it any more and it has been my view that is a rather blunt instrument as a means of achieving environmental objectives.

Ciolos again defended the plan at the meeting and reiterated the EU executive’s offer of ‘equivalence’ − whereby a farmer involved in Pillar Two agri-environment/climate or national certification schemes would qualify for one or more greening requirements − to satisfy the many critics.

Greening is not a measure against increased production but rather a way of maintaining sustainable production in the medium-term by protecting water, soil and biodiversity, he argued.

There is an underlying tension here between economic and environmental sustainability. Reconciling them is not easy and arguably needs a more fine grained approach with more sophisticated policy instruments.

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Good Food March on Brussels

Protesters from a variety of environmental organisations from the Slow Food Movement to Friends of the Earth converged on Brussels this week in the Good Food March: Good Food

They consider that the CAP pays too much attention to the needs of agribusiness and want a CAP that is fairer to smaller producers and family farming while protecting the environment and the interests of developing countries.

It has to be said that the event was greeted with a certain dismissive cynicism in Brussels: Organic cake

The protesters place great faith in the involvement of the European Parliament in the decision-making process, but many of the traditional interests are strongly represented there and all it may do is water down and delay an already difficult reform process.

A video interview with a Friends of the Earth Europe representative on the march can be found here: Friends of the Earth

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Wednesday, September 19, 2012

The structure of the wine market and the issue of quality

I have been reading an interesting paper about 'Quality Classifications in Competition: Price Formation in the German Wine Market' by Jorg Rossel and Jens Beckert from the Max Planck Institute in Cologne.

One conclusion that can be drawn from the paper is that the market has some very distinctive characteristics. This does not mean that no more general lessons can be drawn from it, particularly given the EU's drive to promote high quality, value added production in European agriculture.

Although the authors don't say this, one lesson you can draw from their paper is that if you price something high enough, the initial reaction of consumers will be that it is high quality. Consider the market in jams and marmalades. There are commodity products sold in supermarkets, although there is some price and quality differentiation. Then there are high quality products sold in farmers' markets and (in the UK) in National Trust shops. These can be two or three times as expensive as the commodity product, but there is no system of classification as there is for wines.

A central theme of the paper is the existence of two systems of classification in Germany, one established by the regulatory authorities, ranging from table wines to quality wine with distinction. Then there is a separate system established by artisan producers which place considerable emphasis on the concept of 'terroir' which has been so important to French wines. Their approach is 'based on the conviction that the soil and microclimatic conditions as well as the craftsmanship of the wine producer determine wine quality.'

But how can the consumer tell that something is good quality? There are, of course, plenty of wine experts whose advice is widely disseiminated in the print media and online. However, the literature which the authors review very effectively casts doubt on this expertise. Most of a group of students of enology from Bordeaux were not able to distinguish white wine from red wine just by taste. A series of experiments show that wine experts do not exhibit a consistent quality scale in their judgments.

Quality assessments are very contingent. Today dry wines are seen as being of high quality and enjoy high legitimacy in the market. Only a century ago sweet wines merited high regard. One might add that medical advice is to drink red rather than white wine and dry white rather than sweet, but this is not a factor that the authors mention.

The authors make it clear that wine drinking habits are influenced by social class and status. The phrase 'wine snob' comes to mind, although it is not one that the authors use. The authors note, 'Becoming competent in the terroir philosophy, and the status differences of wine established through it, demands high cultural capital and is therefore also socially exclusive.'

Quality in the terroir philosophy, the authors argue, remains an abstract and evasive concept: 'it can be understood only by actors possessing high cultural capital in the field and can be bought only by those consumers with enough economic capital to pay for the "taste" of authenticity. The system allows for evocative fantasies to be aroused based on the qualities symbolically represented in a wine. These fantasies can be translated into status differences and thereby provide "good reasons" to purchase the high priced wine.'

The authors' underlying theoretical perspective, drawn from economic sociology, is that 'In an increasing number of markets, there is uncertainty among buyers as to the quality of products.' They link this increasing uncertainty with an increasing aesthiticization and moralization of everyday life and consumer products.'

As the authors note there are 'markets where the quality of the product is assessed based on "functional performance" that can be measured objectively.' But, in agriculture, this often involves products that are transformed before reaching the final consumer. For example, wheat can be assessed by its moisture content but this is of little relevance to the final consumer who buys bread according to its perceived quality in the different forms in which it is offered.

Wine is a very distinctive product in which much of the perception of quality is very subjective and open to manipulation of the image of the craft skills of the individual winemaker and the specific qualities of a certain vineyard. Specific knowledge is required to make judgments about wine. Neverthless, in European food markets more generally, the market for high quality products is limited by income and the willingness of consumers to purchase an image of the production process as well as the product itself.

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Thursday, September 06, 2012

Cypriot presidency contemplates CAP budget cuts

The informal meeting of farm ministers in Nicosia from 9 to 11 September which marks the effective start of the Cypriot presidency after the August holiday break is going to focus on water scarcity, land abandonment and soil erosion. These are important topics, against the background of climate change, and especially important to southern member states, but they are not at the heart of the CAP reform agenda.

However, the word is that the Cypriot presidency thinks that there will have to be much bigger cuts to the CAP budget in the next seven year cycle than contemplated hitherto. This comes against the background of talk of a €100m cut in the EU budget to match austerity at home. As the largest budget line, the CAP would have to take its fair share of the pain.

It is being said that direct payments to farmers and rural development would take the biggest hit which makes sense as they are the largest components of the budget. There might be more flexibility to switch between these two budget lines.

Needless to say, some member states are already gearing up to oppose any such move. The other difficulty is that there is a great temptation in such circumstances to reduce spending by x per cent across the board without considering which spending offers a cost effective way of achieving policy objectives. But, then, that has been the story of the CAP.

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Tuesday, September 04, 2012

Double change at Defra worries farmers

The double change at Defra of secretary of state and farm minister has worried farmers and their friends, although new secretary of state Owen Patterson is said to be on message on badger culls: Defra

Patterson asked Hilary Benn 500 questions on badger culls when he was at Defra and has been on a study tour in the United States to look at bovine TB and its control.

Caroline Spelman was never fully convincing as a safe pair of hands in what admittedly is a disparate and challenging portfolio. However, what really worries farmers is the departure of Jim Paice as farm minister who was seen as having an understanding of the industry and a sympathy with farmers as one himself. Ironically, Dave Cameron sacked him by mobile phone when he was announcing the new code of practice for dairy farmers which many saw as his biggest achievement. Tributes to him from farming leaders here: Paice

However, the arrival of David Heath in his place means that the Lib Dems at last have a representative in Defra, a suprising omission given where they hold many of their seats. It also means an end to the experiment of Isles of Scilly MP Andrew George as Lib Dem liaison person, something that never really worked.

Whether the presence of a Lib Dem will mean any change in policy remains to be seen. The real need now is for Britain's voice to be heard effectively in the CAP negotiations in order to bring them to some kind of reasonable conclusion and not hopelessly behind schedule.

Elsewhere Lib Dem Jo Swinson, until now PPS to Nick Clegg, is reportedly in at BIS and will be responsible for the Grocery Adjudicator Bill, a key topic for those in the food chain.

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