Has leaving the CAP been good for English farm policy?

The Economist thinks that getting rid of the Common Agricultural Policy has led to a more effective farm policy in England so it is one example of a Brexit dividend (Wales and Scotland are different cases).

The journal comes from a stance that favours market oriented policies so the views expressed in an editorial and article are no great surprise.  In broad terms I agree with them.   This doesn't mean that Brexit was a good idea viewed in the round, but the CAP remains a dysfunctional policy in many respects.

First, I think that blanket subsidies for farmers related to the size of farm discourage innovation.  They could well be used for personal consumption rather than investment in the enterprise.   Scotland continues to give direct subsidies as part of a generous package for farmers (but they have elections in May).  Wales offers such support to a lesser extent.

Funds should be linked to specific policy targets and in particular genuine public goods such as the environmental benefits specified in current policy.

Given the sector's poor productivity record and the need to take advantage of digital technology, money should be made available for capital investment and training.  New capital grants have recently been announced, but the funding does not match the scale of the problem and is likely to run out quickly.

The conflict in the Middle East has given farm organisations the chance to bang the food security drum to justify a restoration of direct support, but food security is a merit good rather than a public good.  Our imported food comes from a wide range of countries.

As The Economist points out, diversification has been important for the viability of farm businesses.  A family moved from Wales to the better land of Warwickshire in the 1930s.  The land is still farmed and the farm manager was short listed for farm manager of the year a few years back

However, their main now comes from a very successful removals and storage business (I am a satisfied customer of both aspects of their operation).   Business is so good they have a coffee shop on site.

Watching the latest series of This Farming Life on BBC2 it is also evident that many farms rely on the off farm income of at least one partner.  (One farming relative has married a university lecturer).

Farming involves hard physical work, good business sense and long hours, but this doesn't justify distorting subsidies.

CAP will be tricky subject if Iceland joins EU

The news that Iceland is to hold a referendum on joining the EU in August reminds us that, apart from fisheries, agriculture is likely to be one of the most difficult topics in any negotiations.   Iceland has a producer subsidy equivalent three times the OECD average and farmers on average receive nearly half their income from the state.

It is a small and shrinking sector, but is cherished and has some interesting innovations such as using geothermal power to grow tomatoes.   Cucumbers and herbs are also produced in this way all year round.

The sheep sector is unsurprisingly the largest and there is some dairy production.

CAP budget stays stable but different winners and losers

Professor Alan Matthews writes:'The likely size of the CAP budget in the next programming period 2028-2034 has been highly contentious since the publication of the Commission’s MFF proposal last July. Among agricultural stakeholders, the AGRI Committee in the Parliament, and the AGRIFISH Council, the amount available for the CAP under its two Pillars in the current programming period was compared with the size of the minimum ring-fenced amount for CAP income support in the proposal and found wanting.

The Commission, on the other hand, has insisted on the potential for a larger CAP budget depending on the choices made by Member States. In my latest post Professor Matthews concludes that the Commission is broadly right. 

Assuming the Commission MFF proposal is agreed (a big if!), the CAP budget will be broadly similar to the current CAP in current prices and possibly bigger. However, its distribution between Member States will be different. For some Member States, especially Denmark, Austria and Ireland, it will not be possible to maintain their current CAP receipts, but other Member States already have a larger CAP budget than in the current period assuming they fully use their 'Mercosur' concession.

Full analysis here: https://capreform.eu/the-likely-size-of-the-cap-budget-in-the-next-mff-reprise/

Manure crisis hits Dutch farmers

Just before Christmas, Dutch farmers received long-feared news from Brussels: they would have to drastically cut the amount of manure they put on their land because too much nitrogen was leaching into watercourses, damaging local wildlife.

The disposal of animal excrement has convulsed Dutch politics for years. When the government tried to compulsorily buy out livestock holdings to reduce production, it sparked a wave of rural protests that could return just as a new and fragile governing coalition takes office.

The densely populated nation of 18mn has almost as many farm animals as people, and the strain on nature is showing. Hundreds of farms are closing every year, and pig, sheep and cattle numbers are declining as their impact on the environment hits strict EU limits on nitrogen, phosphorus and nature restoration. It is a wrenching process for a country that is the world’s second biggest food exporter by value after the US (some of that is re-exports).

The impact of environmental rules has combined with subsidy reductions, soaring prices for inputs such as herbicides and fertilisers, and volatile agricultural prices to cut into morale in rural communities, Bart Millenaar of farmers’ union LTO told he Financial Times. Nitrogen levels are constantly monitored, while farmers must secure permits to add to their livestock herds. The crisis has fed into the country’s turbulent politics.

Rural disaffection and the pure PR system propelled a populist coalition of parties led by the far-right Geert Wilders to power in 2024. But within a year Wilders had pulled out, leaving a caretaker cabinet to limp on until this month. The Farmers-Citizen Movement, part of the outgoing government, was punished for failing to deliver on promises to farmers that it could solve their problems — including by convincing Brussels to extend the exemption to the nitrogen limit.

Following elections last year, the liberal D66 in January announced a minority government with the centre-right VVD and Christian Democrats. After two years without a clear farm policy, incoming prime minister Rob Jetten has pledged to cut nitrogen emissions from agriculture by 42 to 46 per cent from 2019 levels by 2030, and said the government will continue buying up farms to reduce livestock. He also wants to fund innovation including plant-based meat alternatives and sustainable pesticides.

Millenaar, of the farmers’ union, said farmers had been buffeted by the changes. “They want stability. In six years we’ve had three governments with different policies,” he told the FT.

Now one more safety valve is being taken away. While the EU limits nitrogen emissions to 170kg per hectare per year, the European Commission had allowed Dutch farmers to use 250kg because of its large animal herd. The Commission ended that exemption in a letter on December 23.  Jessika Roswall, the EU’s environment commissioner, wrote that “the Netherlands continues to face very serious challenges in managing nitrates and nitrogen. A further derogation would add to these pressures at a time when water quality and nitrogen pollution remain a pressing concern.” She said the government had not implemented an action plan to cut nitrogen emissions, which also come from vehicle fumes, industry and households. The limit will be gradually reduced to 170kg over the coming year.

The Netherlands is not alone in struggling to meet the nitrogen ceiling: it is being breached across the wet, northern countries that produce much of Europe’s milk and cheese. Ireland has been given three more years of higher limits but is reducing its dairy herd before it is too late. Belgium and Germany have been given warnings by the Commission.

Analysis by academics at Wageningen University in January found there were only three potential solutions to the crisis: reducing livestock numbers, improving manure processing to export more or reducing the protein content of cattle feed. But such measures come too late for many farmers.

Weather in Soutrhern Europe hits food supplies

Fence to keep out wild boar on a family member's farm in Spain

Voters and consumers particularly react to food price inflation which has remained relatively high.  I certainly notice it on my trips to the supermarket and I am not a poorer consumer.   The least well off spend a great portion of their budgets on food and often have to rely on food banks.

One of my children has a small retirement farm in Spain and tells me that January has been unusually cold and wet, albeit that has replenished their water source.   The almond trees do seem to have blossomed more or less on schedule.

A lot of big fruit and vegetable producers in the UK decamp to Spain for the winter.   The carbon footprint of growing tomatoes under heated glass is greater.

A wave of extreme rain and flooding across the Mediterranean countries and north Africa has battered the winter growing regions that feed Europe, disrupting supplies of fruit and vegetables and threatening food price rises. Spain, Portugal, Morocco and parts of Italy and Greece function as Europe’s winter “pantry”, exporting tomatoes, cucumbers, avocados, peppers, berries and citrus fruit northwards when domestic output is limited.

But extensive damage to crops and infrastructure in recent weeks could quickly ripple through wholesale markets and supermarket supply chains, warn economists. “When you have the types of floods that we’re seeing in Europe and north Africa, combined also with the very wet winter here in the UK . . . there’s no way around it: we’ll see the pressure on vegetable and fruit prices,” David Barmes, policy fellow at the London School of Economics’ Centre for Economic Transition Expertise told the Financial Times.

Spain, which recorded its wettest January in 25 years, has already recorded damage to 22,000 hectares of agricultural land, according to insurance association Agroseguro. Luis Planas, Spain’s agriculture minister, told the Pink ‘Un that the affected area could “nearly double” once assessments were complete. The ruin extends beyond crops to irrigation systems, farm machinery and rural roads, complicating harvesting and distribution even where produce survives.

The concentration of European winter fruit and vegetable supply in a handful of regions makes markets particularly sensitive to weather shocks. In January last year, Spain accounted for more than 70 per cent of UK sweet pepper imports and 65 per cent of cucumbers, while Morocco supplied more than a third of British strawberry and raspberry imports, according to UK trade data.

“The biggest, probably most proximate impact [from the recent weather] is the impact on fresh produce from Spain and Morocco,” Tom Lancaster at the Energy and Climate Intelligence Unit, a UK-based think-tank told the FT. “If supply tightens, buyers may find themselves competing for smaller volumes,” he said. “You might also see an impact on quality: fruit damaged by heavy rain doesn’t travel or store as well.”

The Netherlands imports 35-40 per cent of its fresh vegetables from Spain, Morocco and Portugal, which together also provide 15-20 per cent of its fresh fruit imports during January and February, according to ING.    (Perhaps that explains why there are so many Dutch expats in my daughter’s area of Spain, indeed my great-granddaughter has a decent command of Dutch).

 In Andalusia, one of Spain’s main agricultural regions, farmers’ association Asaja estimates that 20 per cent of all production has been lost. In one province alone, Córdoba, Asaja said losses totalled €700mn, with olive groves accounting for €550mn of that sum and further damage to cereals and citrus. Last week Pedro Sánchez, Spain’s controversial prime minister, visited the storm-hit town of Huétor Tájar, west of Granada, where the mayor explained that 80 per cent of its population depended directly or indirectly on the region’s asparagus production. With harvesting due to begin within weeks, mayor Fernando Delgado said that as much as a third of the crop remained underwater.

The adverse weather across Andalusia and other major growing regions in southern Europe meant “prices would be higher year on year”, Thijs Geijer, a senior economist covering food and agriculture at ING told the leading economics and business paper, adding that consumers would see fewer discounts. But he noted that the effect on inflation data could be muted in the Netherlands, where the affected products carry little weight in the consumer price index.

 Barmes said that the latest storms were part of a wider pattern of climate shocks feeding into food price inflation. His recent research has shown that the gap between UK and euro area food inflation in recent months was largely driven by a small number of climate‑sensitive items — including chocolate and olive oil — some of which carry a much heavier weight in the UK shopping basket, leaving British consumers more affected when extreme weather hits.

“To me, there’s little doubt that we’ll see pressure on food prices later in the year, even if some of it will be more short term,” he told the FT. “It’s very difficult to substitute away from Spain and Morocco in particular for certain parts of the winter vegetable basket, so I think we’ll see that [impact] quite soon, and then later, we’ll probably see effects also on fruit, and then also on meat and dairy . . . and olive oil.”

Central banks have begun acknowledging the influence of extreme weather on inflation dynamics. In its August 2025 monetary policy report, the Bank of England noted that climate-linked disruptions were contributing to higher UK food prices and complicating efforts to return inflation to its 2 per cent target. Governments have pledged support for affected farmers through insurance payouts and EU crisis reserve funds linked to the bloc’s Common Agricultural Policy.

Spain has vowed to give farmers €2.2bn in direct aid and spend €600mn on rebuilding infrastructure.  But economists say the broader concern is structural. “I think we’re really seeing that this is not a one-off,” said Barmes. “These types of climate-related supply disruptions are becoming more frequent, severe, and geographically widespread.”

Member states to do more on CAP, EU institutions less

Interesting blog post recommended by Professor Alan Matthews: https://capreform.eu/institutional-reform-will-shape-the-next-cap/

This authoritative post is well worth reading in its entirety.   The conclusion is: 'We can expect the trend already visible today to intensify, widening disparities between countries, resulting in very divergent emphases within the CAP, not always because of different structural needs, but because of different political priorities.  Meanwhile, the big questions, how the CAP contributes to climate and biodiversity, the future of livestock, the prospects for young and small/remote farmers, will remain only half-answered. Dissatisfaction will not vanish. The main difference is that Member States will now carry more responsibility for better policy and progress, while EU institutions bear a little less.'

Where are farm incomes heading?

Summary of key insights on farm income trends from a recent study commissioned by the Agri Committee of the European Parliament: https://www.europarl.europa.eu/RegData/etudes/ATAG/2026/759350/CASP_ATA(2026)759350_EN.pdf

Farm incomes are more volatile and subject to external shocks.  Discrepancies in farm income across the EU are explained by structural factors such as farm size and specialization.

The case for a protein crop stategy

 Professor Alan Matthews writes: 'The Protein Project has just published this beautifully-produced report with detailed analysis and recommendations for a coordinated value chain approach to bringing protein crops back into the mainstream of European arable farming. Using the fava bean (also known as broad beans) as its exemplar, it makes a convincing case for what is needed for a protein crop strategy to succeed. 

Broad beans are a particular favourite of mine, I have strong memories of sitting in the summer sunshine by the kitchen door as a child shelling broad beans that my father had just picked from the vegetable garden, but it is not easy to find them in supermarket aisles today.'

The report can be found here and is a significant contribution to the debate about more economically and environmentally sustainable policies: https://www.theproteinproject.eu/publications/towards-a-legume-renaissance