Friday, August 22, 2014

Agricultural policy outside the EU

There has been relatively little discussion so far of what kind of agricultural policy the UK might have if it left the EU and hence the CAP. Agricultural economist and CAP expert Alan Swinbank has been trying to stimulate debate on this issue, but so far with little success. His latest effort is in the journal EuroChoices.

He notes, 'Successive British governments have repeatedly argued for more radical reform of the CAP than the EU has been willing to accept ... To what extent these aspirations would translate into a reduction of support for British farmers, and a greater emphasis on the provision of environmental public goods, should the UK exit the EU is open to question ... British farmers might bitterly complain that they faced an uneven playing field as their competitors were better able to remain in business as a result of more generous Pillar 1 payments subsidising their farming activities.'

Swinbank also poses the question: 'Could a WTO compatible agri-food trade agreements be negotiated with its former EU partners, or would Irish and Brazilian beef face the same tariff barriers on imports into the British market?'

My initial thinking has been that the single farm (soon to be basic) payment should continue during a transitional period if the UK left the EU, but at a somewhat reduced percentage of the current rate, e.g., 90 per cent, 85 per cent, 80 per cent over three years. However, there is danger that this could become set in stone and we would be left with an historically determined form of subsidy rather than debating and re-thinking the pattern of support.

As Swinbank argues, the alternatives do need to be spelt out so that voters can make an informed choice in any referendum.

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Tuesday, August 19, 2014

How the EU is handling Russia's food import ban

I have written on this subject here: Food Import Ban

Thursday, August 07, 2014

Big changes at ComAgri

With the extension of co-decision to agricultural policy by the Lisbon Treaty, the European Parliament's Agriculture and Rural Development Committee has become a much more important player in the decision-making process. It has tended to contain MEPs from agricultural and rural constituencies, or with interests in the sector, and in that sense has sometimes been a brake on reform, with the chair in 2009-14 insisting that the CAP budget be maintained in real terms with more money for farmers and more flexibility on how they spent this publicly funded largesse: Handouts

The committee's composition in the new Parliament has changed substantially, creating more uncertainty about its stance, although it will be chaired by the centre-right EPP. ComAgri’s political breakdown is based on the election results. The European People’s Party (EPP) came first so gets 13 of the 45 seats, with the Socialist and Democrats (S&D) next with nine seats and the other groups getting between three and five each.

A number of old hands who played key ComAgri roles in 2009-2014 are back, including former chair Paolo De Castro (S&D), Albert Dess (EPP) and Jim Nicholson (ECR). Notable absentees include ALDE’s George Lyon and the S&D’s Luis Manuel Capoulas Santos.

Of the 45 new ComAgri members, 23 were re-elected to the Parliament, of whom 20 sat on ComAgri in 2009-2014. New to ComAgri but not to the Parliament are Portugal’s Nuno Melo (EPP), the UK’s Richard Ashworth (ECR) and Dane Jens Rohde (ALDE). The other 22 are newly-elected to the Parliament. This reflects dramatic changes to the Parliament’s political make-up brought by the elections, with eurosceptic, anti-EU parties significantly increasing their MEP numbers – as well as some left-wing anti-EU parties.

The expanded Europe of Freedom and Direct Democracy (EFDD) group has increased its ComAgri representation from two to three MEPs. Back is Stuart Agnew from the UK’s Independence Party (UKIP), which wants the UK out of the EU altogether, but has a poor record of voting and committee attendance in the Parliament. UKIP's position is that UK farmers would then receive a version of what has been the Single Farm (to become Basic) Payment, but that it would be capped to limit the amount going to larger farmers, something the UK has always fought within the EU. Agnew is joined this time by Giulia Moi and Marco Zullo from Italy’s Five Star Movement – a populist party born out of a protest movement led by a comedian.

One of the three non-attached members, Edouard Ferrand, is from France’s far-right Front National, which increased its Parliament MEPs from three to 24. The FN is a critic of the CAP, lamenting the loss of control on farming decisions and arguing that the CAP has not helped agricultural earnings or done enough to protect French farming.

As for the Greens/EFA group, outspoken French MEP José Bové and German Martin Häusling are joined by new MEPs Bronis Ropé from Lithuania and Jordi Sebastià Talavera from Spain’s Compromis party. Bové was once involved in physically dismantling a MacDonalds that had set up in a cheese producing region and is a staunch opponent of GM.

The left-wing alliance GUE-NGL has four brand new MEPs on ComAgri. Two from Ireland – Matt Carthy and Luke ‘Ming’ Flanagan – are joined by Antje Anna Helena Hazekamp from the Netherlands’ Party for the Animals (PvdD) and Spain’s María Lidia Senra Rodríguez. We might expect more attempts to pursue animal protection issues.

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Ciolos odds on favourite for farm commissioner

Dacian Ciolos looks like he is the front runner for re-appointment for a second term as farm and rural development commissioner. He has not offended any major players among the member states and has been careful not to upset the French, being perceived originally as a French-approved appointment. He is strongly backed by his own government with farming being a more important part of their economy than in most member states.

From a reform perspective, he has been a disappointment, but that is not surprising. It is difficult to get reform through in the face of the vested interests of member states. The farm share of the budget is dropping, but relatively little has been done to make the CAP responsive to climate change.

There is an argument for continuity for the CAP, as Cioloș would be able to oversee mid-term reviews of ‘greening’ and other 2014-2020 reforms that he proposed back in 2011. But 'continuity' can be another way of saying 'business as usual'. The inefficiencies of the CAP are bound to be an agenda item in any referendum debate in the UK.

Ireland is always keen to get the farm commissioner's post and has done well in the role in the past (think of the MacSharry reforms). The Republic's Phil Hogan, who has served as Irish environment, community and local government minister since March 2011, is being advanced as a candidate. Hogan, from the Fine Gael party that is in coalition government with the Irish Labour Party, also has experience in EU issues and is being backed by fellow Fine Gael politician and MEP Mairead McGuinness. McGuinness, from the EPP group and an active member of the European Parliament’s agriculture committee (ComAgri) throughout the CAP reform process, is now a vice-president of the Parliament.

There are a couple of dark horses and one former Spanish agriculture minister Miguel Arias Cañete, since elected to the new European Parliament. Yet the chances for Italian Socialist (S&D) MEP Paolo de Castro, who was ComAgri chair in 2009-2014, appear slimmer.

Although there is much horse trading to come, Ciolos must be the odds on favourite.

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Getting a start in farming

If you don't have a farm to inherit, getting a start in farming is difficult. The capital costs of setting up, equipping and stocking a viable farm are huge. For some the practical route is to become a farm manager, but then you are working for someone else.

Perhaps surprisingly, there are people from a non-farming background who want to become farmers. I say 'surprisingly' because it is hard physical work, requires a wide range of skills including dealing with a lot of paper work and the returns are often poor and uncertain. There are some jobs I could never do and farmer, actor and politician are top of the list. But I appreciate that there are those who have a real and genuine commitment.

One route in has been through county council farms. These are not usually large and may have to be combined with rented land to be viable. When I have interviewed such farmers, the off farm work of their partner (or even the farmer) has often been a key contribution to the household budget. They tend to be livestock farms, raising beef or sheep or a dairy enterprise. Smaller arable farms have been squeezed as yields have flat lined for some thirty years and economies of scale have becoming increasingly important in that sector.

However, cash strapped county councils have been selling off their estates. Since 1964 the council farms estate across England and Wales has shrunk by 37 per cent to 111,650 hectares in 2012. Total holdings have fallen by 79 per cent to just 3,442 as they have been combined to try and make them more viable.

Average size has gone up from 10.9 hectares to 32 hectares, but arguably that is little better than a large smallholding. In some cases, part of the holding has been sold off for housing, sometimes the most productive land. When councils sell holdings off, tenants can purchase at market value, but there is no way that a farm of, say, 125 acres with a book value of £1.2m could support a large mortgage.

I don't think county farms are the way forward for the future, but the measures taken under the CAP don't help much either.

Finally, can I give my nephew Deiniol Williams a plug. He has left the family farm where his brother will carry on as, I think, the eighth generation. But he has started a ceramics business and uses a kiln on the farm: Ceramics

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Wednesday, August 06, 2014

Wellcome result for Co-op

The Co-operative Group has sold its farm business to the Wellcome Trust for £249m. This is indeed a welcome result as it ensures a benevolent owner for the business which takes a long-term view and shares many of the ethical standards of the Co-op. As Danny Truell, its chief investment officer, put it, the trust values 'responsible stewardship over quick profits'.

Dedicated to driving improvements in human and animal health, the trust is the world's second highest spending charitable foundation. In effect, they function as another research council for the UK. I have had some loose association with their veterinary work and I have been favourably impressed.

The trust already has significant agricultural holdings in Cambridgeshire, Hertfordshire and Cheshire. It rarely sells businesses once it has acquired them.

The Co-op estate is made up of nearly 40,000 acres of land, 15 farms, three pack houses, and almost 130 residential and commercial properties. Its apple orchards at Tillington in Herefordshire were purchased in 2008, thereby preserving more than 1,000 rare varieties of British apples that were threatened with extinction.

This is one of Britain's largest land sales in decades and one of the largest global deals of its kind. It ends an association between the troubled Co-op and agriculture that dates back more than 100 years.

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Thursday, July 31, 2014

Call for major changes to food and farming policy

A coalition of NGOs including the RSPB and the National Trust working with the Centre for Food Research have called for UK food and farming policy to be reoriented around ecosystems and the promotion of healthy food in a report entitled Square Meal.. You can read more about the report and download it here: Square Meal

They state in a press release, 'The organisations involved have joined forces to highlight the overwhelming evidence that demonstrates the need for major changes to national food and farming policy. Square Meal aims to start a collaborative discussion in the run up to next year’s general election and to influence future government policies on these issues. [One suspects that the report is really addressed at a possible Labour Government]. It calls for stronger government leadership in planning the future use of land, food policy, farming and conservation in England and for wider public engagement on issues that affect the whole of society.'

One interesting question is how far these issues are within the domain of national politics. The increasing demand for a sugar tax clearly is, but many practical farming decisions are influenced by the CAP. This has a substantial emphasis on protecting the environment, but does not tackle health related issues.

On the CAP, the report says, 'The Common Agricultural Policy spends €1 billion a week of taxpayers’ money across the EU31– a vast amount that could be doing so much more to support and incentivise those farmers doing the right thing for society and the environment and push up standards across the board. But only a tiny proportion of this expenditure represents good value for money by being targeted at sustainable farming. Much of the rest ends up in the coffers of big business or capitalised in agricultural land prices, delivering little more than private profit or too often is supporting unsustainable farming systems, stifling innovation and hampering competitiveness.'

It is open to question whether large farms do stifle innovation, particularly technological innovation. The tone of the report is very critical of the market economy and praises regulation. It may be, however, that some of its objectives could be achieved within a market economy, or at least by using market based policy instruments. The UK's track record at exercising leadership on the CAP, which is called for in the report, has not been impressive so far, despite valiant efforts to secure reform, in part because of the vested interests of member states.

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Tuesday, July 22, 2014

The EU, Britain and agriculture

Defra has published the 'balance of competences' report on the relationship between the EU and Britain in the area of agriculture. At first glance there is a lot of 'x stakeholder says this' and 'y' stakeholder says that, but it will certainly repay further study. The full report can be downloaded here: Balance of competences

The executive summary states: 'The debate on EU competence for agriculture as set out in the evidence submitted was strongly supportive of EU competence in relation to the Single Market for agricultural goods and to the EU’s role in negotiating global trade deals for agricultural goods. In relation to the Common Agricultural Policy (CAP), there was a recognition that it had changed significantly from its post-war origins, particularly over the past 30 years. The most damaging and trade-distorting elements had been removed and the UK had played a significant role in driving reform.' In short, things have been worse, they have got somewhat better, we deserve a pat at the back for that and anyway there is no alternative.

The summary continues, 'However, respondents put forward evidence that, notwithstanding the reforms, the CAP’s objectives remained unclear and that the criteria for allocation of funding were irrational and disconnected from what the policy should be aiming to achieve. The majority of respondents argued that the CAP remains misdirected, cumbersome, costly and bureaucratic. Environmental organisations advanced detailed evidence about how historically, market intervention and direct payments had led to negative impacts on biodiversity and the farmed environment. The advent of agri-environment schemes had been beneficial across Europe and provided a regime for conservation that might not otherwise exist.' In short, this is a badly designed and implemented policy.

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Saturday, July 19, 2014

New farm minister owns wellies

Liz Truss is the second woman MP from South-West Norfolk to hold the post of farm minister. Her predecessor Gillian Shephard held the portfolio from 1993 to 1994. There has been a long line of agriculture ministers from East Anglia.

Farm leaders wanted to keep Owen Paterson in post, but a lack of wellies during the floods undermined his reputation. His tough line on the badger cull earned plaudits from farmers, but leaving aside opposition from wildlife campaigners and many scientists, the cull failed on its own terms, targets not being met. Paterson then rather unfortunately complained that the badgers had moved the goalposts.

Some commentators, such as the Spectator think that he was targeted by pressure groups. This view has been pursued by Paterson who argues that he was the victim of a powerful self-serving environmental lobby he termed the 'green blob': Green blob . The Economist suggested that he should never have been appointed in the fisrt place.

As far as Farmers Weekly is concerned, Truss does have one of the main qualifications for the post, her own pair of willies, white to judge from the accompanying photograph, thus appearing stylish while avoiding the green colour favoured by urbanites in the countryside. She also takes a hard line on badgers.

The real difficulty for any Defra minister, apart from the fact that most agriculture policy is decided in Brussels, is Defra itself. It is a real mish mash of a department, uncertain whether its main role is to reform the CAP, boost the rural economy (of which agriculture is an important but only one part) or protect the environment. No wonder it has already finished off two ministers, but Ms Truss may be made of sterner stuff.

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