Sunday, July 18, 2021

France still tops CAP money league

Some useful data here about agriculture in each member state and the EU as a whole:

France still receives the greatest share of CAP expenditure, €9,448m or 17 per cent of the total.  Spain receives €6,908m and Germany €6280m followed by Italy on €5,778m.  These four states account for 52 per cent of expenditure.

Poland is the leading East European state on €4615m.   Malta receives the smallest amount at €19m.

Monday, July 12, 2021

German commission calls for CAP reform

A broadly based German commission has called for the reorientation of agriculture and food policy:

The report calls for a phasing out of direct payments and a reorientation of the CAP in the direction of environmental, animal welfare and climate change goals. 

The timing is a little odd as the EU has recently agreed the next five year plan for the CAP and the challenge now will be to maintain momentum.

Thursday, July 08, 2021

CAP deal looks like business as usual

After months of difficult negotiations, a compromise was agreed on the next phase of the Common Agricultural Policy, but inevitably not everyone is happy, not least in France:

The new five year framework starts on 1 January 2023.  Direct payments to active farmers will account for 70 per cent or €192bn of the budget which still amounts to over a third of the overall EU budget.  However, at least 25 per cent of this support should be spent on eco schemes such as organic farming or integrated pest management.   Worthy those these schemes may be, do they represent any kind of strategy for tackling agriculture's contribution to climate change?

There is also a €450m a year reserve to bail out farmers in times of market crisis.  This is a substantial sum and it will be interesting to see how it will be triggered.

For all the bells and whistles such as member states being able to impose caps and reductions on direct payments to larger farms, this does look very much like a 'business as usual' settlement despite claims of a fairer, greener and simpler CAP:  Farm organisations have given it a lukewarm reception which suggests that it is not all that bad for their members.

Farmers in Britain are concerned that their competitors will continue to receive direct payments just as they are phased out in the UK.  Their continental counterparts will not be exposed to trade deals that facilitate cheap imports.

Monday, February 08, 2021

Some early reflections on the impact of Brexit

This article appeared in the latest issue of South-East Farmer:

Many farmers breathed a sigh of relief when a last minute trade deal was agreed between the UK and the EU, avoiding the threat of tariffs and quotas on agricultural exports.   Of course, this would have affected some sectors more than others, notably those farming sheep.  Such enterprises exist within the south-east of England, but they are more characteristic of remote hill farming areas in all the four nations of the United Kingdom.

I must admit to having a personal interest as my brother-in-law and nephew are sheep farmers in a remote part of Wales.   They have merged three farms in order to run as lean and efficient an operation as possible.   However, the whole enterprise is reliant on selling sheep for meat and the price they receive is influenced by the 40 per cent or so of total output that goes to mainland Europe.   The price received for wool scarcely covers the cost of shearing, if that, and rental income from properties and telephone masts is very much secondary.   The suggestion made by one politician that sheep farmers could shift to beef ignores the realities of production.

Farmers are generally enterprising and keen to keep input costs under control.   One farmer I know in Yorkshire produces honey with a distinctive taste from the moors, but still principally relies on his contract with a leading supermarket.   The more general point here is that the basic payment received by farmers under the Common Agricultural Policy is being replaced by a smaller domestic payment that is being phased out more quickly than some had anticipated, particularly for larger scale farms.

Other new forms of payment will be available, principally the Environmental Land Management Scheme, although that is still being developed and tested.  Along with other payments, it will fall well short of compensating farmers for the loss of the basic payment which made the difference between profit and loss for many farm enterprises.    It will also involve form filling to obtain, along with monitoring of outcomes, and is likely to be more suitable for farmers in remoter areas.   This is not necessarily a bad thing from an overall policy point of view, but it may prove challenging for, for example, larger scale arable farmers in south-east England.

In areas like the south-east there are, of course, opportunities for diversification that may not exist in remoter areas, particularly those that are less suited to tourism.   In this area as well, farmers have been very innovative in the range of ideas they have put into practice.   There can, however, come a point where one is no longer running a farm business, but a farm that enhances other projects such as wedding venues, restaurants, shops and petting zoos.  [I have just read about a farmer who is made £50,000 by loaning out a goat for video calls].

It is, of course, a personal business decision how far to go down this route.   A note of caution is necessary for late adopters.  Much of the low hanging fruit has already been taken.   The capital costs can be considerable and the skills required can be very different from decisions about what to plant, when to spray and when to harvest.   That said, many farmers manage to both farm and run complementary businesses.

Agriculture was the dog that didn’t bark in the night time in the very long legal text arrived at between the UK and the EU.   Indeed, listening to the discussions during the negotiations, one was left with the impression that fisheries were the really vital sector despite the fact that it accounts for a smaller share of the economy than agriculture.   Fish did enjoy considerable symbolic value in terms of ‘taking back control’.

There was an annex on trade in wine.   This is not really my area of expertise, apart from enjoying it and investing in one well-known business in the South-East.  As with most such agreements, the devil is in detail, but I would have thought that at first glance it was broadly acceptable to those growing grapes and producing wine in England.  [A subsequent article in the Financial Times refers to certification costs which could add £1.50 to a £12 bottle of imported wine.  This, of course, could make domestically produced wine more price competitive, although factors other than price can play a big part in purchase decisions].

In simple terms what the annex says is that EU and the UK should import and consume each other’s wine, although the flow is clearly from the EU direction.   The documentation required is limited to a certificate which can be produced electronically.   The self-certification is limited to eleven relatively straightforward questions.  The agreement will be reviewed after three years, a shorter period than for fisheries.

Wednesday, November 11, 2020

The CAP in review

The CAP will continue after Brexit, albeit with somewhat less money, but will needed changes be made, particularly in terms of 'greening'?   I give an overview here:

This has attracted some attention on Twitter and I am grateful for the feedback received.   One comment was that 'Seems to suggest that nitrates have been addressed by the ND....if only that were true. There is large scale non compliance with the ND standards never mind the more ambitious water framework ones.' This is a fair criticism, I simply didn't have the word budget to deal with the issue in more depth.

I should have remembered that 'many years ago the OECD “Producer Subsidy Equivalent” was renamed the “Producer Support Estimate” because not all policy transfers are subsidies but some are payments for public goods.'

'Another quibble, but not so minor: at over 30% of its budget, EU expenditure on agriculture is called "substantial", because agriculture is only 1.6% of EU GDP. Unfair comparison: the whole EU budget itself is less than 2% of EU public expenditure.' I can see where this comment is coming from and it is not without validity, but agriculture still secures a disproportionate share of the EU budget.

Friday, May 29, 2020

EU lays down the gauntlet on biodiversity

The EU has set out a new biodiversity strategy.   When I have studied it in detail I will provide some analysis, but for now the summary can be found here:

It is clear that a particular vision of farming is inherent in the document which states: 'certain agricultural practices are a key driver of biodiversity decline. This is why it is important to work with farmers to support and incentivise the transition to fully sustainable practices. Improving the condition and diversity of agroecosystems will increase the sector’s resilience to climate change, environmental risks and socioeconomic shocks, while creating new jobs, for example in organic farming, rural tourism or recreation.'

In other words, intensive forms of farming may face challenges.

The Commission's new Green Deal also has implications for agriculture and it has been leaked ahead of publication:

The recovery plan from Covid-19 'aims to digitalise and modernise the farming sector to increase the EU's resilience and to lower EU's dependency on third countries.'

Something similar may find favour in the UK after Brexit.