Is there still life in fat taxes?

Bruce Traill, the president of the Agricultural Economics Society, writes in their latest newsletter: 'Denmark is abandoning its short-lived experiment with the world’s first fat tax just as the use of fiscal measures to improve diets and offset the social costs of unhealthy eating appeared to be gathering momentum; the UN Special Rapporteur on the Right to Food, the National Heart Forum and the European Heart Network, have called for the use of various forms of food taxes and subsidies in the past year. Even David Cameron floated the idea in 2011.'

'The Danes taxed products with more than 2.3% saturated fat content at 16 KR (c£1.75) per kg of saturated fat (13% of current retail full-fat butter prices). This was deemed sufficient to have driven hordes of Danes into the welcoming arms of German and Swedish retailers, "exporting" 1300 jobs (according to the Danish Food Workers Union). It’s a pity there wasn’t time to evaluate the impact of the measures on consumption (Copenhagen University’s finding of a 20% fall in purchases of fats and cooking oil in the 3 months from introducing the tax were skewed by hoarding in the run up to the tax and cross-border shopping).'

'Small taxes (and subsidies) on foods or nutrients are never likely to have a big impact on consumption and health, but they do raise a lot of money and are cost effective according to OECD; the Danish tax raised about £150m in a year, the French soda tax a similar amount. Fiscal measures also give incentives to producers to reformulate their products. The EU EATWELL research project recommends ring-fencing revenue generated by a tax for use in other cost-effective healthy eating programmes.' [Although one might add that politicians are never keen on hypothecating revenues because it restricts their freedom of manoeuvre.]

'The US Supplemental Nutrition Assistance Programme and Women, Infants, Children schemes, targeted at subsidising healthy foods for poor consumers, would be good candidates. They have been shown to be highly cost-effective and would be good models for wider adoption in Europe. As they specifically target disadvantaged groups, they partially address a criticism that fiscal food measures are regressive. And if the taxes were applied Europe-wide, the Danes would have to travel a long way to find cheap butter.'

Irish presidency searches for consensus

Monday’s Farm Council meeting in Brussels kicked off with Irish agriculture minister Simon Coveney reaffirming that his country’s Presidency’s 'ambitious' aim will be to reach a consensus among member states on a 2014-2020 CAP by March 18-19 this year, with European Parliament approval by June reports Agra Europe. He believes there are '30 or so' elements of the reform proposals still dividing member states, which he stressed was a 'manageable number', while EU Farm Commissioner Dacian Ciolos said the proposed timetable was 'difficult but not impossible' (which means that it probably is unattainable).

Coveney urged his fellow ministers to start moving from 'fixed' to 'compromise' positions so the Council can reach a common position. 'This hasn't happened yet and it needs to start happening now,' he warned, noting wide support for Dublin's work programme and the 'extraordinary' job by the Parliament's agriculture committee (ComAgri) to establish its negotiating position last week.

Ministers raised a number of lingering individual concerns at Monday’s meeting, notably the need to make the 'greening' requirements of the proposed reforms simple and workable and the risk to certain sectors posed by the planned equalisation of subsidies within member states or regions by 2019.

The plan to tie 30 per cent of direct payments to new environmental requirements - and for recognition of 'equivalent' measures - remains a big concern for many countries, with the Dutch delegation warning there is still 'a lot to do' at both a technical and political level. The UK, Denmark, Latvia, Estonia and Slovenia all reiterated calls for states to have more flexibility to implement greening, though French agriculture minister Stéphane Le Foll urged ministers to focus on reaching a compromise based on the Commission's proposals.

Briefing on CAP developments

Here is a video briefing by agricultural journalists on latest developments in the CAP as the Irish presidency starts: Briefing

Not sure if all the foot traffic in the background is meant to provide authenticity, but it could be distracting.

Farmers could not survive without subsdies

Almost three quarters of farmers say they could not survive without subsidies, according to a Farmers Weekly poll: Subsidies

How does one wean farmers off their subsidy dependence so that they become more like any other business that relies on returns from the market? No one is suggesting that they should be withdrawn overnight. The official Defra position is to phase out the single farm payment and that is resisted by most other member states.

Part of the solution must to be to ensure that farmers are better able to earn a return from the market through competition policy measures that redress the balance between them and supermarkets. But the politics of that are complicated as supermarkets deliver cheap food to consumers whose budgets are already under pressure.

Defra boss upsets farmers

Defra secretary of state Owen Paterson has upset farmers by calling for direct payments to them to be scrapped as possible. He argues that taxpayer subsidies should be limited to public goods: Paterson

His predecessor had a farm organisation background so such plain speaking may come as a shock.

The Irish presidency

In this video interview, Irish farm minister Simon Coveney looks at the challenges facing the Irish presidency in terms of securing CAP reform: Presidency